Balancing control and empowerment: the CFO’s role in fostering a performance culture

It might sound counterintuitive but having a group of individual high performers or even high-performing teams does not always translate to a high-performing organisation. To achieve consistent results and foster a high-performing culture, your employees need to have a strong sense of belonging, ownership, and accountability. This is essential for individuals and teams to be more motivated, engaged, and productive, and in turn, enable your organisation to thrive.

In our recent research, a senior finance executive perfectly captured the challenge of empowering employees to take more ownership of their work, make decisions, and be accountable for business outcomes while protecting the business from financial and operational risks. They said: “We have a lot of policies to put people in the square and say, you cannot move out of this square. Many of them complain and say, ‘Oh, but it’s not aligned with our message to behave like an entrepreneur’”.

Managing risks to the business often falls to the CFO. For the CFO, the temptation to control risks by boxing people in with a framework of coercive controls can be high. After all, they are here to protect the business. However, coercive controls, which are based on compliance-oriented systems, processes, and procedures, can create a culture of fear of failure. This type of environment discourages individuals from stepping up, inhibits decision-making, and risk-taking, and can contribute to creating a confused and disengaged workforce.

The problem is no CFO wants to see financial or operational losses on their watch, which is why many control frameworks are coercive. Yet, it is crucial to recognise that while these controls can safeguard the business, they can also stifle innovation, business performance, and employee engagement.

But the CFO is also a business’s most senior business partner. They are a consultant, trusted adviser, and confidant of the executive team, who enables the business to pursue growth opportunities and take calculated risks through the provision of accurate, relevant, and timely information for strategic decision-making and judicious capital allocation.

The CFO has therefore dual responsibilities. On the one hand, they are expected to protect the business from risks, but on the other hand, they are pressured into enabling the business to take on calculated risks to succeed, which can create friction between their controller and enabler roles.

Coercive controls certainly have their place in business. The CFO’s role significantly hinges on the robustness and relevance of the data upon which business decisions are based. Management information and decision-making systems rely heavily on rigorous coercive controls to ensure accuracy, compliance, and reliability. The CFO cannot compromise on the standards of these controls without jeopardising their position as trusted advisers to the business, and perhaps the business itself.

However, the key to being an effective CFO is balancing coercive controls with enabling controls. Long-term business success depends on the executives’ ability to create a culture of employees who are empowered, motivated, passionate, and invested in their work that is driving strategy and creating value — or what we call a performance culture. In a performance culture, growth and innovation will be driven by enabling controls that allow flexibility and adaptability and contribute to a no-blame culture. In this type of environment, people feel engaged in driving business strategies and taking on challenging responsibilities that propel the organisation forward.

Sounds straightforward, right? Well, I have got one more challenge for you.

Any individual presented with a challenging goal for recognition and career advancement will most likely weigh the opportunity against the potential consequences if they were to fail. For example, when the consequences of failure risk outweighing the rewards for success, employees avoid taking responsibility for risky challenges by negotiating activities and targets into their comfort zones, which can hinder long-term business success. In addition, having too many controls in place that constrain how the work can be done could also be an issue for the business. Why? This is a form of coercion that can undermine an individual’s judgement or authority to make decisions and divert their focus towards compliance, instead of innovation, responsiveness, and customer service.

To create a workforce that feels motivated to take responsibility and is comfortable with being held accountable for the outcomes, the business must align its values and expected behaviours with its purpose, strategic ambitions, and controls. To this end, it is crucial that the CFO works with the CHRO or COO to ensure between values and the control framework, minimising value vs. control conflicts across the organisation. Unfortunately, in our research, we found that for the most part, finance and HR teams continue to work in separate silos despite “cross-functional collaboration” being one of top ten common values in Fortune 500 and FTSE 100 businesses.

Ultimately, creating a high-performing organisation requires more than having top talent or strong teams; it calls for a culture where employees feel valued, empowered, and accountable. A key part of achieving this is finding the right balance between coercive controls, necessary for compliance and risk management, with enabling controls that foster autonomy, innovation, and adaptability, supporting a performance culture where employees are motivated to drive strategic goals without feeling restricted by rigid frameworks. By working closely with other leaders, the CFO can help align the organisation’s strategic goals, values, and control frameworks to create a cohesive environment that drives innovation and growth across the business. This is crucial for building resilient, dynamic, and high-performing organisations.

Comments are closed.