It has never been more important for board members and the C-suite to align on the issues that pose the greatest challenges to their organisations. This is the opening line of an article written by Jim DeLoach, the MD of Protiviti (a global consulting firm) for the Forbes website. It is prophetic that this article was written when South Africa was charting a new course politically. The Government of National Unity (GNU) will strongly influence South African businesses and their ability to kick-start economic reform.
While there is a consensus that there is an alignment between the interests of board members and CEOs, a recent Protiviti survey points out that there needs to be more trust between directors and CFOs. How do we address this?
Are there opportunities for me to bridge or clarify approaches to related priorities?
The article points out that board members view crisis management and scenario planning as areas to which they do not devote sufficient time and attention. CFOs view compliance requirements, including data privacy, as a top board priority.
Can CFOs discuss data-breach scenarios (or the fallout of a major compliance failure) in the context of issues requiring contingency plans when the board addresses crisis management? Similarly, can CFOs ensure directors have visibility into the finance organisation’s use of advanced technologies and their outputs that support the board’s emphasis on innovation?
In addition to addressing these questions, finance leaders can foster greater alignment with board members through specific steps, such as the following:
Elevate and expand their involvement in managing talent risks
The article adds that, in recent years, CFOs have enhanced and refined how they address talent-related risks, particularly in the finance function. In fact, the ability to attract, develop and retain top talent, manage shifts in labour expectations, and address succession challenges represents a top concern for CFOs this year. That said, CEOs and board members in this recent study view talent as one of the top threats to the organisation’s short-term growth prospects; CFOs do not.
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The article points out that if this gap exists in the boardroom, it behoves the CFO to engage with the board in focused strategic conversations regarding the shortage of talent and skilled labour. Boards will be evaluating and advising executive leaders on investments needed to upgrade the organisation’s talent strategy and talent management so that they are aligned with market realities and the company’s overall strategy. CFOs should also expect their boards to subject succession planning and leadership development activities to more stringent oversight.
Fortunately, the survey indicates that CFOs, CEOs and boards agree that corporate culture warrants more board attention. This alignment on corporate culture can be leveraged to build and refine an authentic, connected and transparent culture that turbocharges recruiting, reskilling and retention activities.
Prioritise crisis management
The article points out that board members see a need to devote more time and attention to crisis management. This point of view likely associates the spectre of crises with the disruptive change and uncertainty from surging geopolitical, economic, environmental, social and cyber-related threats, as well as the potential disruption from the record number of national elections occurring worldwide this year.
CFOs should leverage and explain their risk management, scenario planning and continuity management expertise and activities to support the board’s desire to better address various crisis management scenarios. More importantly, they should be prepared to explain what the company is doing in evaluating plausible as well as extreme scenarios affecting the execution of the company’s strategy.
Make a stronger case for organisational resilience
The article points out that boards and C-suite leaders also need to become more aligned on how they prioritise organisational resilience. Executives rate board preparedness in this area to be lower than do directors.
This disconnect can result in insufficient resources allocated to third-party risk management, innovation, cybersecurity and other areas that bolster resilience. CFOs should ensure that their board communications include periodic risk updates to the board while clearly articulating how the management of these risks generates value and preserves the company’s reputation, brand image and market permission to play.
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Enable director preparedness and engagement
The survey results show that CFOs and other C-suite respondents are less likely to agree that board members are sufficiently prepared for meetings and are constructively engaged during those sessions. CFOs can help facilitate board preparedness and engagement by being more selective and timelier in submitting pre-meeting materials to the board. CFOs and their colleagues can also encourage post-meeting feedback from directors regarding the quality of meeting materials.
The article points out that, to be sure, the primary difficulty of establishing and sustaining alignment between the CFO and the board stems from the high volume of strategic and operational risks the organisation confronts. Overcoming this challenge requires better communication as opposed to a major shift in mindset. CFOs are well-positioned to assume a leading role in board discussions of the above topics, including the implications of major crises in recent years. These interactions bolster the critical communications skills that CFOs need to ascend to the CEO position. In other words, getting the C-suite and board members on the same page regarding board priorities is a critical imperative. CFOs can contribute considerable value in achieving this alignment.
Fight the enemy where they aren’t
While many economists point out that economic reform hinges significantly on the ability of the GNU to find common ground, the South African business sector will drive economic reform.
Let’s reassess our strategy for tackling the economic crisis. As Sun Tzu wrote in The Art of War: “Fight Your Enemy Where They Aren’t”. Dictate the theme, whereabouts, and the aspect of the match-up where your enemy is bound to lose and avoid fighting with his conditions and terms. To achieve this, there needs to be alignment between the Board and every member of the C-Suite.
