Struggling to balance traditional transactional responsibilities with the need for digital innovation is not new to most CFOs. Many feel burdened by the day-to-day financial operations of their companies, leaving them with limited time and resources to focus on more strategic initiatives.
This may create a gap between CFOs and other stakeholders, with the latter feeling that CFOs are not doing enough to drive innovation and growth. If you’re a CFO, there are actionable steps you can take to bridge this gap and foster collaboration with all stakeholders.
5 Strategies Every CFO Can Follow to Build Trust Among Stakeholders
The role of the CFO has evolved to become more of a business partner. Establishing a reliable and efficient partnership with all decision-makers is now a crucial responsibility, but how can this be accomplished?
Here are six things you can do as a CFO looking to build a great relationship with other executives, decision-makers, and investors.
1. Communicate Clearly and Effectively
Make sure that everyone understands the financial information you’re presenting because if they don’t, they might make decisions that aren’t based on all the facts. Avoid using complicated jargon and instead present data in a way that’s easy to understand.
Consistency and transparency are also critical when it comes to communication. Share financial statements and other updates with your stakeholders regularly, so they always know what’s happening.
Remember that different people might have different levels of financial knowledge, so try to tailor your communication style to each person’s needs.
2. Understand Stakeholders’ Goals and Needs
Different stakeholders have different goals and needs depending on their roles and level of involvement with the company. You need to understand these differences to create effective communication and build stronger relationships. One way you can do this is by asking questions to understand their priorities better. You can ask about the following:
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- Financial metrics or KPIs they care about most.
- Their biggest concerns.
- What do they expect in the short and long term?
- What drives them?
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When you try to understand every stakeholder, you can tailor your communication style to align with their priorities. This helps build trust and credibility, leading to stronger relationships over time. Here’s how each stakeholder differs from one another:
Investors
Investors are often focused on return on investment, while board members may care more about strategic direction and risk management.
Employees
Employees often seek job satisfaction, career growth, fair treatment, and positive workplace culture.
Customers
Customers expect quality products or services, competitive pricing, and excellent customer service.
Suppliers
Suppliers look for reliable partnerships, timely payments, and a sustainable business relationship.
Government
Regulators and government agencies aim to ensure compliance with laws and regulations, protect stakeholders’ interests, and maintain market stability.
3. Be Proactive in Addressing Concerns
You can be proactive by keeping stakeholders informed and engaged. This can be done by sharing formal reports or just simple updates, ensuring they’re aware of any significant financial developments and clearly understand the company’s performance.
Be responsive when stakeholders have questions or concerns. It’s best to respond as quickly as possible, demonstrating that their input and feedback are valuable.
As a CFO, you should provide clear and concise answers and be open to dialogue to address any issues or concerns.
Provide stakeholders with accurate and timely financial information presented understandably to ensure transparency. This helps to mitigate any negative impact on the company’s reputation and fosters trust among stakeholders. Here are a few things you can do:
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- Share the company’s financial performance, risks, and potential challenges.
- Have clear financial policies and procedures for financial reporting, budgeting, and risk management.
- Engage proactively and explain the situation when issues such as revenue decline or an unexpected expense.
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5. Replace Spreadsheets With Visual Data Representation
Traditional use of spreadsheets for financial data handling may lack efficiency and fail to communicate financial information well. The transformation to visual data representation makes financial information more accessible to everyone and allows real-time access to reports.
Instead, use financial reporting and modeling platforms to create custom reports that are easy to understand and pleasing to the eyes, conveying the message to different stakeholders.
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- Use charts and graphs to illustrate trends over time.
- Utilize dashboards using tools like IBM Cognos, Python, Tableau, or Excel.
- Infographics create concise, colorful, and informative presentations.
- Use of traditional presentations like PowerPoint and Keynote.
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A Glance at JPMorgan Chase & Co. 2008 Crises
The 2008 financial crisis, also known as the global financial crisis, was a severe economic downturn that significantly impacted the world economy. JPMorgan Chase (JPMC) was one of the major financial institutions deeply affected by the events.
How JPMC Do Business
As a global financial institution, they wanted to contribute to a well-functioning global financial system, generate fair returns for shareholders, and positively impact the people and institutions they serve. They worked diligently to strengthen relationships with regulators, shareholders, and communities, fostering deeper and ongoing engagement.¹
CNBC Interview
When CNBC asked about the notable actions that shaped JPMC during the crises and contributed to its current standing, this is what its CEO, Jaime Dimon, had to say:
“During the global financial crisis, JPMC recognized its important role and felt a strong obligation towards those who rely on us. We understood the need to focus on our clients, support our communities, and safeguard our company amidst intense pressure from the markets and politics.”
The crisis showcased their collective strength and dedication to their employees. Despite the chaos and the aftermath, many of their team members worked tirelessly, round the clock, for months, teaching them that the quality, character, culture, and capabilities of their partners are of utmost importance.²
What Did They Do?
The bank’s management, led by Jamie, implemented proactive measures to reduce risk exposure and strengthen the company’s financial position.
Internal
JPMC emphasized transparency and open communication with its employees. Regular communication channels, including meetings and internal memos, were used to keep employees informed about the following:
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- Challenges the bank was facing.
- Steps being taken to mitigate risks.
- The overall strategy for recovery.
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They reassessed their practices to gain a fresh perspective on how they serve customers. Each of their business functions identified areas they could improve. These helped foster trust and collaboration within the organization, ensuring that employees remained committed to overcoming the crises.
External
JPMC engaged in proactive communication efforts to assure its clients, investors, and regulators about its stability and commitment to weather the storms. The bank provided regular updates on its financial position, risk management practices, and steps taken to address any issues.
By maintaining open lines of communication, JPMorgan aimed to preserve trust and credibility, which were crucial for its survival.
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References
1.”How We Do Business — The Report” JPMorgan Chase & Co., Dec. 2014, https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/investor-relations/documents/how-we-do-business.pdf
2. Son, Hugh. “Jamie Dimon says JP Morgan’s actions during ’08 crisis were done to ‘support our country'” CNBC, 14 Sept. 2018, https://www.usatoday.com/story/money/economy/2018/09/14/jamie-dimon-jp-morgan-memo-actions-financial-crisis/1304253002/