The six CFO leadership styles and how they affect business
Chief Financial Officers (CFOs) who embrace change and set challenging goals for the organisation are more likely to see profit growth, while a strict and traditional CFO could be bad for business, according to new research.
The Epicor study into the leadership and decision-making styles of 1,500 CFOs around the world found that they fall into six distinctive groups: politicians, revolutionaries, carers, conductors, traditionalists and visionaries.
Researchers found that revolutionaries were associated with companies that had the greatest profit growth, while traditionalists had the lowest profit growth.
The six CFO leadership styles
Politicians (27% of CFOs):
- A more cautious leader.
- Has a methodical, team-based approach.
- Likes to consult widely with staff on important decisions.
- More likely than average to believe that collaboration is a key challenge that needs addressing.
Revolutionaries (19% of CFOs):
- Happy to consider changing corporate culture and structures if need arises.
- Likely to set tough and challenging goals.
- Has a less structured approach and works outside of formal systems and processes.
Carers (19% of CFOs):
- Would rather delay making a decision than risk mistakes.
- Having a lack of accurate data is one of their greatest concerns.
Conductors (16% of CFOs):
- More likely to make decisions based on their gut-feelings rather than hard data.
- Happy to bend the rules and work outside of formal systems and processes.
- Likes to set tough and challenging goals.
Traditionalists (9% of CFOs):
- Strict and traditional by nature.
- Prefers to work within existing systems.
- Prefers not to be influenced by reputation and personalities when making decisions.
- Least likely to acknowledge any need for technological change.
Visionaries (9% of CFOs):
- Likes to make decisions based on experiences and intuition.
- They fear not having the time or resources to surface meaningful insights and embrace change.
- More likely than other CFOs to envision needing more team-based decision making in the future.
- Enjoys working outside of formal systems.
The study also looked at how and why CFOs advocate investing in technology and business systems. It found that visionaries are more resolute in the need for changing their IT systems in the near future, while politicians are likely to support investing in technology that addresses organisational collaboration.
Traditionalists were the least likely to acknowledge the need for changing their technology systems. Revolutionaries may have a 'maverick' style to improvising and sourcing data from other means outside of business systems.
Malcolm Fox , of business software company Epicor, said companies need to update their systems before they are outgrown and start to "erode the operational and financial health of an organisation".
He said: "It's not surprising Traditionalists – who were the least likely of all the CFO personas to acknowledge any need for change when it comes to technology systems – also tended to lead companies that were experiencing less profit growth than other CFOs in their peer group."
Dr Dimitrios Tsivrikos, of the Division of Psychology and Language Sciences, University College London, said that having a traditional CFO can have implications on business change and innovation, as they are less likely to take on new ideas suggested by employees.
He said: "CFOs need to take on new perspectives and be open to novel ways of doing things. This will allow them [and their businesses], to find optimal and creative solutions to problems, which will in turn foster innovation."