CFOs lose confidence in their C-Suite peers

CFOs are losing confidence in the C-Suite’s ability to lead through macroeconomic uncertainty, according to new research from consultancy firm Russell Reynolds.

The survey of over 1000 CFOs from across the globe revealed that CFO confidence in executive leadership teams dropped from 69.2 in early 2021 to 62.4 at the end of 2022—a decrease of 6.8 points. This is out of a possible 100 points.

The research also showed only 38% of CFOs said they had confidence in their C-suite – a concerning trend given the current economic climate.

Respondents to the survey expressed specific concern with regard to communication; only 28% of CFOs said they had regular conversations with their C-Suite colleagues, while only 39% said they felt their voices were heard.

Finally, only 40% of CFOs felt that the C-Suite was providing the necessary leadership to successfully navigate the company through the current economic conditions.

“We are actually seeing this in our daily interactions with CFOs beyond the survey,” says Jim Lawson, co-leader of the global financial officers practice at Russell Reynolds Associates.

“The CFO is the C-suite team member who’s often going to revert back to fiscal conservatism and preserve capital. In the past year, every investment a company wants to make, they’re paying a higher interest rate for it.”

Importance of confidence

Losing confidence in the C-suite is a serious risk for CFOs. When they no longer trust their colleagues, it can lead to a lack of accountability, transparency, and financial instability. In addition, communication may suffer, resulting in inefficiencies and low morale.

Moreover, if CFOs lack confidence in the C-Suite, they may be less likely to invest in new initiatives, which can hamper growth and limit opportunities. Additionally, CFOs who are unwilling to invest in new initiatives may be less likely to take risks and innovate – these organisations will struggle to stay competitive in an ever-changing environment.

“CFOs need to be careful not to prevent companies from making strategic investments during times of uncertainty. This may harm the company’s strategic position when the business picks back up,” says Lawson.

Ultimately, when CFOs lose confidence, it can have a damaging ripple effect throughout the entire organisation.

Increased collaboration and communication

There are several reasons for the decline in confidence in the C-Suite by CFOs, but a lack of understanding looks to be key.

Russel Reynolds’ survey noted a lack of communication between CFOs and the rest of the C-Suite; this will likely result in a potential lack of understanding of the complexities of the CFO’s role or a lack of appreciation for its importance.

Moving forward, there is therefore a very important role for CFOs to play in rebuilding confidence, notably through increased collaboration and communication. To start, CFOs should make an effort to understand their C-Suite colleagues’ roles and responsibilities and to build relationships with them.

Furthermore, CFOs should try to understand the complexities of their own roles and effectively communicate their contributions to the C-Suite. For example, CFOs can explain to the C-Suite why certain investment decisions might not be viable at this moment.

In taking their peers along the journey and really explaining the reality of the situation, CFOs can show leadership teams the information which is often rooted in numbers and data.

For this type of communication to be successful, however, there must be an environment of trust and openness. CFOs should be open to feedback and criticism from their C-Suite colleagues and should be willing to take the necessary steps to address any issues that arise.

Additionally, CFOs should provide relevant and accurate information to the C-Suite in a timely manner. This will help ensure that the C-Suite is making informed decisions and will help to build trust between CFOs and the C-Suite.

Benefits of improved confidence

In the current economic climate, greater CFO confidence in the C-Suite will likely result in better decision-making.

CFOs provide an important perspective when it comes to making decisions at the C-Suite level. With improved confidence, they can bring a greater sense of understanding and clarity to the decisions being made.

Efficiency gains are also likely; with improved CFO confidence, organisations can expect greater efficiency in their financial operations. A CFO who is sure in their knowledge and capabilities can help to streamline processes, allowing for more efficient operation of the business.

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