The Modern CFO Understands The Value of Culture

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When it comes to achieving successful long term outcomes for an organisation, spending time, money and effort on culture has always been the last thing of the list of priorities for many CFOs.

Countless hours could be wasted on working with consultants to try to create the perfect strategy

justifying projects that wouldn’t get done or defining a host of KPIs to measure how badly the organisation is doing. But spending $50,000 – $150,000 to develop the one thing guaranteed to deliver all of that? Not a chance.

Building culture was seen as a ‘right-brain’ activity and phrases such as ‘fluffy stuff’, ‘airy-fairy’ and ‘no tangible payback’ were wheeled out to stop anyone with any passion for creating a vibrant environment dead in their tracks.

Talk of creating award-winning culture was often seen as the brainchild of a charismatic leader or the job of someone in HR, not the mechanism by which sustainable results can be achieved. All this despite the fact that culture has been proven, time and time again to be the difference between those organisations that survive difficult times and those that don’t.

Thankfully CFOs who understand the requirements of humans in order to do their best work are now putting spend on culture at the top of their opex, not at the bottom. It’s seen as critical work, not a ‘nice to have’.

These forward-thinking people recognise their role in supporting the definition of ‘new ways of behaving’ and ensure that they are at the forefront on its continual evolution.

Alongside the CEO and People and Culture Manager they have a responsibility to not only drive cultural investment and activity, but to role model the behaviours that they’re looking for from others. They have moved away from the ‘what’s the ROI of doing culture work?’ to ‘what’s the impact if we don’t?’ approach of 2019 and beyond.

And I don’t mean investing in quick-fix solutions such as going open plan, rolling out the latest management method of choice, or shifting the deckchairs on a sinking ship. I mean specific activity aimed at placing the definition of the culture required to achieve the strategy in the hands of the people that truly own it, the staff.

And building a vibrant culture has many tangible benefits to keep CFOs happy, including:

  • Greater productivity
  • Increased sales
  • Higher customer satisfaction
  • Increased likelihood of competitive achievement
  • Retention of key staff/performers
  • More ideas and innovation

To achieve these results requires two things; emotionally intelligent people who care about their what the organisation is trying to achieve.

The former has been a problem for far too long. Command and control structures and individuals who seek to attain power or bully staff have been the preferred route for many high-profile financial (and other) institutions out of step with the way that culture actually works.

The Hayne Royal Commission delivered a damning report into the cultural practices of financial institutions. Westpac were the first to make theirs public and admitted to creating a culture of bureaucracy, complexity and one where staff didn’t feel safe enough to speak up. APRA (Australian Prudential Regulation Authority) ordered the big three banks to put $0.5bn aside for them to address culture.

Here’s the thing though, they didn’t create that culture. It created itself as a result of poor behaviours and practices that were ignored or worse, excused. That’s the thing about culture, it evolves whether you work on it or not. It’s just that if you choose not to work on it, it gets worse.

I recently had the chance to question Scott Schafer, GM Finance of Zappos in Las Vegas, about this very issue. An online shoe retailer, Zappos are famous for spending lots of time and money on culture and as a result have seen double-digit bottom line growth for the last 10+ years.

Schafer attributes the continues growth to culture and recognises the role of his own department in this.

Finance have to ensure that money is made available and is spent sensibly and wisely in a way that contributes to the culture and doesn’t detract from it.

As Schafer himself said, ‘Nobody wants to interact with finance if they act like a bunch of assholes.’

According to research company Gallup, ‘The world’s best organisations don’t simply promise a great employee experience; they create a culture of engagement in which employees can continuously develop and thrive.’

This means taking the time to ensure that people understand each other and know how to communicate, building strong emotional connection across the organisation. Defining a vision that inspires them and a set of values and behaviours that act as a moral compass.

These new skills can then be used to challenge the way that collaboration happens incorporating new ways of working, whilst injecting some new ideas to keep the culture and vital revenue streams relevant for years to come.

The modern CFO sees it as their responsibility to provide the support and money to ensure this work is done well. It’s good for the humans within the culture and the fact that it happens to be good for the bottom line too is no coincidence.