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Say what? How CFOs communicate uncertainty to stakeholders

Communicating uncertainty to staff and stakeholders can be challenging, but CFOs need to ensure decisions are clearly explained

Say what? How CFOs communicate uncertainty to stakeholders

Today’s fast-paced business world means cost-cutting measures, including job cuts, are often necessary for a company’s survival.

Communicating these measures, especially employees, is a delicate matter that requires careful consideration and a well-thought-out plan.

BlackRock CFO Gary Shedlin announced in December that the financial firm was freezing most hiring and reducing expenses, while PayPal CEO Dan Schulman recently announced the company would be laying off 2,000 employees, or about 7% of its total workforce.

Companies including Google, Microsoft, and Amazon have also announced layoffs, with approximately 12,000, 10,000, and 18,000 employees affected, respectively. Even the largest enterprises are being hit by the slowing of growth, higher interest rates, and fears of a possible recession.

As the finance leader of a company, it often falls to the CFO to communicate these cuts to stakeholders and employees. But how can they do so in a way that is transparent, compassionate, and effective?

Clear communication is key

Daisy Corporate Services’ CFO Kris Lee explains that transparency, an open-door policy, and empathy are among the key elements of how CFOs can handle communicating job cuts.

“Communication is key. There should be an ongoing dialogue between key stakeholders to ensure that there are no surprises,” says Lee. He says it’s also critical for the CFO to focus on transparency and honesty.

“This means being straightforward about why the cuts are necessary and how they will impact the company and its employees,” says Lee.

Empathy: the key to success?

Job cuts can have a significant impact on affected employees, both financially and emotionally.

CFOs must be mindful of the impact cuts will have on both those staying within the business and those being asked to leave.

“CFOs should put themselves in the shoes of those who will be affected by the job cuts and communicate the information in a way that is respectful and considerate,” Lee explains.

“Involving employees in the decision-making process, where possible, can also help to mitigate the negative impact of job cuts and create a sense of ownership and understanding among those affected.”

Not communicating cuts correctly has the potential to lead to decreased employee morale, decreased consumer confidence, and negative publicity for the company. Additionally, in some cases, it can be difficult to attract and retain top talent if employees perceive the company as unstable or uncaring.

Keeping communication channels open

While soft skills and clear effective communication to stakeholders have been emphasised to be key during turbulent times it has highlighted that that open communication channels and an open-door policy are however created during periods of normalcy in the business.

Mickey Kalifa, who is the CFO at DEPT says it all boils down to clear, ongoing communication. “We have a very healthy business, but from time to time we have to sort of cut our cloth accordingly and ensure that we maintain the targets that we’ve set,” he says.

Meeting these targets boils down to the communication around them which can be a challenge. Kalifa says CFOs need to ensure they avoid a “Draconian type” of leadership.

“Every team has its own goals and targets and needs to do their best to maintain those targets within those guidelines, but this is very much a delegated position,” he says.

“These are our people who manage their own teams, and so whilst we will give guidance and manage it from the top, the decision on how to manage one’s cost base is going to be delegated down to the CEOs of the different, teams that we have.”

Lee also highlights the importance of 360-degree feedback for CFOs with regards to their communication style and effectiveness. “I mean more than just speaking with stakeholders to say, are you happy with what you are getting? Is there something we can improve?” he says.

“This type of feedback can help identify areas for improvement and ensure that the communication process is as smooth as possible.”

An open-door policy is another key aspect of effective communication. Lee adds that anybody at any level in the organisation should be able to speak to him. “This type of policy can encourage employees to voice their concerns and provide feedback, which can help to build trust and prevent misunderstandings,” says Lee.

CFOs should also be aware of the importance of soft skills, such as active listening, and clear, concise communication. These skills can help mitigate the negative impact of job cuts and ensure that information is communicated effectively to all stakeholders.

Communicating job cuts is a complex and challenging task that requires careful planning and consideration.

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