To help their organizations navigate the challenges and complexities of today's business environment, financial executives must become leadership stewards. Why and how to do that are explained here.
Leadership failures and ethical scandals make headlines nearly every day. Unfortunately, they are not isolated examples. Business today is mired in the scourge of "short-termism." Some executives engage in "suicide by quarter:" catering to day traders, tapping reserves, manipulating earnings and pulling sales forward from the next quarter--all to make their quarterly numbers. If they don't, they reason, the stock will tank, bonuses will drop or the C-suite may get cleaned out.
Before the HealthSouth Corp. indictments and multibillion-dollar restatement of financial performance in 2003, the firm had met earnings predictions to the penny for 47 straight quarters. Coincidence? Old news? In a large-scale study of financial executives by Duke University in 2005, 78 percent of the managers surveyed admit to sacrificing long-term value to achieve smoother earnings.
What, if anything, can financial executives do about certain unethical and unsustainable practices?
One of the causes is that too many leaders aren't clear about their ultimate aims and behavioral standards. When they demand results, as they should, it goes unsaid whether there are limits or not on how those results may be achieved. To resolve this, leaders should commit to three aims:
* Excellent: achieving exceptional results;
* Ethical: doing the right thing, even when it is costly and hard; and
* Enduring: standing the test of time, operating sustainably.
These are the building blocks of "triple crown leadership," and financial executives are critical in practicing and promoting such leadership.
Financial Executives as Leadership Stewards
Financial executives are uniquely positioned to go beyond their functional roles and become leadership stewards, providing the active checks and balances the enterprise needs to be its best, guarding the organization's values, monitoring its ethics and evaluating both short- and long-term considerations.
Leadership stewards model the desired behavior of the enterprise. They work on the business, not just in it. Stewards actively step outside their functional positions to influence how others behave, reinforcing the shared values and culture. They develop, nurture and protect a culture of character in the organization through their leadership practices.
In a stewardship role, for example, the chief financial officer takes...