Creating and implementing a culture of transparency and empathy 

A CFO’s role is often interpreted as the manager who creates true transparency. But transparency should, in fact, be assumed to be a prerequisite.

Blaming outdated IT systems and processes is no excuse for failure in delivering transparency for owners and ambitious CEOs – corporate headquarters or financial investors are ably equipped with talented analysts who can discuss financial matters eye to eye with the CFO.

Creating transparency is therefore top of the agenda. It is the requirement to establish trust with shareholders and improve dialogue with colleagues. It is the instrument to validate that change is required. But how do CFOs balance the time-intensive improvement of transparency against the ambitious shareholders who want data now?

Transparency tends to manifest itself as a communication process, though it is rare to see it well established within a finance department solely.

The best P&L and working capital details, product sales segmentation information, shareholder’s KPIs and measurable early warning indicators all can only be best understood and achieved through effective communication.

Agreeing on indicators that are measured consistently and aligned internally create a joint platform to discuss and calibrate ideas, for example with Capex investment considerations and their potential impact on KPIs.

Transparency tends to be a balance against effective reporting. Finance transformation has become a major topic for CFOs. Creating transparency with limited resources requires a strong and consistent process, as well as automation to the extent that is possible. We often see that an appropriate use of existing systems or, as an alternative, a slim performance management software can be sufficient to fulfill most needs, while being quick and straightforward to implement.

A good piece of advice for new CFOs is to clearly state a timeline for processes and numbers to be cleaned up. Honest communication describing the road ahead can buy a lot of time, versus aggressive promises for five minutes of glory in a board meeting that usually represent the starting point for failure.

Transparency and communication require one crucial characteristic – empathy; a true understanding of what stakeholders and colleagues really want, what they fear and what they appreciate. Empathy enhances perception and avoids falling into the trap of simply continuing what has been done in the past, with an open heart and mind for the need to improve and transform, translating these feelings into practical and creative solutions.

While the traditional professional qualifications and career path for a CFO may be relatively easy to analyze, charting the development of empathy in a CFO’s toolkit is much more difficult.

Recruiter Russell Reynolds* demands empathy as a “must have” for a CFO role, particularly after COVID-19. Casting the CFO as the “spider in the web”, this should hardly come as a surprise. Anticipating stakeholders’ areas of interest and orchestrating internal departments is crucial in creating value or managing change.

“… In a crisis situation, the challenge for a CFO is to balance demanding daily business needs with the implications of the ongoing digitalization processes. With a challenging supervisory board, this balance becomes more difficult and requires more alignment. Communication and leadership skills are crucial. I expect the CFO to have answers for the following questions:

  • How do I lead, motivate and ensure highest quality standards of a virtual group if financial work is conducted remotely?
  • How does change management work in a specific environment?
  • How do I successfully communicate and interact with all stakeholders, including the supervisory board, in a digital world?

The key message to all stakeholders has to be that the company and its employees are well prepared and positioned to successfully manage the downturn…”

Harry Henningsen, multiple CFO and supervisory roles and 
ex-starfighter pilot


Key actions for CFOs:

  • Create transparency in alignment with shareholders and stakeholders. Focus the messaging and use numbers consistently
  • Use aligned, agreed and communicated KPIs and include cash and forward looking or early warning indicators
  • Be empathetic to ideas and matters of improvement

* The Wall Street Journal, July 2020, COVID-19 May Bring Lasting Change to CFO Recruiting