Financial leadership is a skill that you may not even think about when it comes to times of volatility. But just as it is required to guide a company to liquidity and assets, your strengths in this area will be put to the test when times are bad, demonstrating just how much you can take.
Being able to withstand the storm of uncertainty while keeping a cool head and managing employees is a critical skill, as there will be many challenges. From communicating with teams, stakeholders, and customers to building relationships, here are some powerful financial leadership tactics.
A Willingness to Take a Loss
Effective leaders are able to steer the ship across troubled waters because they know calmer seas are just over the horizon. One of the most responsible things you can do as a business leader is to recognize that the company will lose money. One of the most effective ways to mitigate cash flow risk is to reorganize finances as needed through tactics such as invoice factoring, finding alternative funding models, and accepting unfavorable lines of credit.
Financial Leadership Needs Communication
Communication is a soft skill, but one that is much more sought after than people realize. In fact, 65% of hiring managers consider communication skills more valuable than a degree. Being able to convey information keeps everyone calm, and you can try this through uncertainty:
- Don’t wait for clients or employees to reach out with a proactive approach.
- Remind teams and customers that short-term volatility is a regular part of business.
- Avoid jargon and talk clearly about the potential impact of reduced cash flow.
- Let people know the steps that are being taken to offset potential losses.
- Act quickly to debunk and dispel rumors and ensure that people have only the facts.
Be Open to Your Teams
Effective leaders understand their teams and the needs of individuals within them. When times are uncertain, and markets fluctuate, employees need reassurance. As an effective leader or manager, an open system is a remarkably simple method of keeping thighs stable. Psychological safety is a priority when it comes to managing teams these days, and there are a few ways you can prioritize this, such as encouraging dialogue and effective team collaboration.
Demonstrate Empathy and Understanding
Further to working with teams and being open, addressing individual employee wellness is also pretty powerful. An empathetic and approachable manager or executive is held in high regard by workers at all levels. Uncertain times can cause a lot of stress among the staff, and some may even consider looking for employment elsewhere. However, this can be costly to the company, and every effort must be made to encourage team cohesion and worker assurance.
Explore Alternative Models and Strategies
Things often change in many sectors. Technological innovation, obsolescence, and economic conditions all impact a business. How you deal with these is what sets a winning company apart from the rest. Imagine if Blockbuster had taken that Netflix deal! No matter the sector in which you work, there will be challenges. Leadership demands that you take action by entertaining new models and ways of doing things, no matter how unorthodox they might initially appear.
Learn from Mistakes and Adapt
Just like uncertainty is inevitable, it is also highly likely that mistakes will be made. Mistakes can be made at a company level, such as boardroom decisions that don’t work. Or they can be made by an individual with a lot of responsibility, such as an executive officer. Either way, a mistake doesn’t define you, and it also doesn’t reflect poorly on your leadership skills. Unless, of course, you don’t take accountability for that mistake and learn from what it teaches you.
Financial Leadership and Values
There are many personal facets of financial leadership that you can learn over time. However, it is entangled with a healthy workplace culture and how the business operates based on this. Your actions as a leader can determine how the rest of the staff treat a situation, so you must be an example that workers can look up to. Around 75% of small business owners report losing sleep over market volatility, but challenges can be overcome by sticking to the core values.
Reassure teams about the company’s goals
There are always long-term goals and these should be relayed to teams. However, time is always on your side and you can commit to savings, planning and investment for later on.
Embrace the excitement of uncertainty
With a focus on volatility, you can focus on cost-cutting and reducing monthly business expenses. This is also an opportunity for accounts teams to come up with a new budget.
Look beyond only the finances
Cash flow is ideal, but it’s not the only thing a company can offer. The business and teams can engage in meaningful activities, such as volunteering time to charity after having hours cut.
Encourage positivity at all levels
It’s natural for the office to be downtrodden when things are uncertain. However, it is vital that you accept volatility for what it is, stay positive, and remind teams that it is always temporary.
Look for expert help and support
There are many external services that can help you get back on track. Support for employees is critical. But the business can also enlist the help of professional financial consultants.
Delegate Tasks to Trusted Teams
Why do you have teams? There are individuals who work for you inside those teams and with others who are highly effective at what they do. So, why would you not allow them to demonstrate how they can help and contribute to getting through company problems? There are likely to be teams and people who are effective at logistics, problem-solving, and blue-sky thinking. You can ease tension, assure teams, and encourage innovation through delegation.
Embrace the Changes Needed
When markets are volatile and revenue streams dry up, there needs to be some changes. However, these aren’t all bad and it can be an excellent time for reflection. Volatility can be hard on a business, its staff and even partners and suppliers. However, it forces an assessment and can be viewed not as a reason to bury your head in the sand, but a new opportunity to innovate and grow. Perhaps explore new markets, welcome innovative technology or reorganize teams.
Develop Long-Term Sustainability
All businesses should have short and long-term strategies. You never know what will happen from one day to the next, and contingencies can be a lifeline. Every legitimate company in the world faces challenges now and then, such as market crashes and pandemics. Yet, there are always some left standing. Why? These are the companies that maintain strategic goals for the long term. Dealing with volatility right now should be the motivation you need to do the same.
Be the Examples the Teams Need
It goes without saying that any effective leader should always lead by example. In times of economic uncertainty and volatility, this is especially true. Workers will look to you as their guide, which is pointless if you crumble and don’t act decisively. Even making tough decisions is part of the job and no one will judge you for it. A strong leader must be willing to do what is right in the face of adversity, and making the tough calls, with integrity and dignity, is sometimes necessary.
Financial Leadership through Relationships
Most business executives believe that relationships and networking are vital for success. Even so, HR Magazine reports that 80% of workers in the US think they have had a bad manager. Relationships are best when built at all levels, from ground staff to the highest executives:
- Work to build trust and credibility in order to influence and advocate financial strategies.
- Identify key stakeholders and cultivate friendly relationships to align company priorities.
- Work with teams across multiple departments and get them involved in decision-making.
- Understand and respond to the various levels of emotional intelligence across teams.
- Actively build relationships with teams through feedback and conflict resolution.
Work to Control Strength Areas
When times are volatile and unpredictable, there are always things beyond your control. Accepting this is a critical part of showing strength as a leader. However, that doesn’t mean you should let things slide. Volatility is an opportunity to refocus the efforts of teams and the company. Cutting the dead ends of the business becomes necessary, but it allows you to focus on the genuine strengths of what your company does best and forge stronger relationships.
Summary
Volatile times call for swift and effective decisions. How you act as a leader can have long-lasting effects on the business. However, you can ensure the damage is softened by using critical and key tactics that sustain the company, its employees and clients, and yourself.
Understanding that losses will occur is a cornerstone of financial leadership in modern business. Even through the worst storm, you can steer the industry and encourage positivity by staying true to the company values that make it great and focus efforts on controlling strength areas.
