Recession Challenges Leadership Abilities

CFOs grappling with financial issues brought on by the current recession are also being tested in the area of leadership capabilities -- ensuring that employees maintain performance standards in a time of uncertainty.

According to the United States Department of Labor, the country lost 85,000 jobs in the last two months as businesses implemented economy-related job cuts. And when layoffs are managed poorly, remaining employees are more likely to fear for their own job security, often resulting in low performance.

The problem can be especially acute for new CFOs anxious to make their mark in an organization. A recent McKinsey study warns that the pressure this creates leads to acting on incomplete or inaccurate information and that challenging a business plan and a strategy isn't always about reducing investment and squeezing incremental margins. The big takeaway: CFOs (both new to the job as well as veterans) should give themselves time to conduct a value creation audit to understand fully what drives the company's business before making decisions about staff reductions and other defensive moves.

What skills do CFOs need to ensure that responses to tough economic times such as staff reductions don't derail the organization? Consultants at The Forum Corp. say that the best leaders successfully manage dilemmas to maintain focus on clear goals at times of upheaval; assign clear roles and accountability, enabling employees to understand their jobs and giving them the power to get them done; challenge the current state of affairs when necessary in order to ensure the organization stays on track and achieves its goals; establish a climate in which employees are confident to act on ideas and feel like they are important to the company's success; make the company more responsive and agile by incorporating non-traditional, non-hierarchical management processes and structures; manage dilemmas by adjusting plans in response to challenges while staying focused on overall strategic intent; actively encourage experimentation to drive learning, even in a down economy; and possess a deep curiosity about their customers and markets.

Most important, experts concur that as CFOs grapple with the strategic moves necessary to ensure the organization's success -- if not its very survival -- in a recession, they should spend a lot of time listening before taking action.