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Improving Employee Healthcare: The Vital Role of the CEO

The healthcare industry in the U.S. is in the midst of major market disruption.  As systems condense and integrate and nontraditional players enter the marketplace, guiding this transformation will require smart, bold action on a variety of fronts.

Human Resource teams and insurance companies have traditionally led the way when it comes to initiating and implementing improvement efforts. While they have achieved some level of success, there is opportunity to do more. Surprisingly, in the abundance of material on healthcare improvement planning, we find very little that speaks to the role of one central individual—the CEO. What precisely should be the task of the CEO, and how is this role different from that of other executives or other stakeholders?

In today’s fast-moving business environment, companies cannot settle for incremental improvement; they must occasionally make radical changes to remain competitive. This is particularly true in the age of market disruption.  In this post, we’ll look at some of the market dynamics that are driving the need to improve the healthcare delivery and cost model and examine several best practice actions CEOs can take to help accelerate these improvements, including: 

  • Clear communication
  • Strategic collaboration
  • Leading by example

Healthcare as a core business issue

A fundamental management tenant is that leaders take personal ownership of their company’s toughest challenges. Still, despite persuasive arguments, many CEOs have not treated health care costs as a central business issue. They often transfer the responsibility to other internal teams or departments that lack accountability for the company’s financial performance. This is not the optimum approach.

Getting CEOs to approach health care costs like they do other parts of their business can deliver substantial performance results. Key attributes CEOs can bring to the forefront are their motivational and influencing capabilities. They can help bolster improvement efforts by communicating the rationale for healthcare changes, securing beneficial alliances and modeling the desired changes. 

  • Clear communication. CEOs regularly make gutsy decisions that affect employees, from closing business units to discontinuing strategic operations. They make clear the reasons for the changes, and employees acknowledge them as a part of their workplace reality. Communicating health care changes should be no different.

The area of cost containment and balancing rising healthcare expenses with employee expectations is a good example. Controlling costs often requires steering employees to providers that can deliver high-quality care at the lowest price.  But imposing limitations or implementing any type of healthcare change can be met with stiff opposition—even though the change may be in the best interest of all parties.

This is where honest, transparent communication is vital.  Case in point: Walmart confidently uses financial incentives to guide employees toward a number of pre-selected centers of excellence— specialized programs with concentrated areas of expertise— for expensive medical procedures. The practice has resulted in significant cost savings. Employee complaints have been minimal because the company’s leadership has effectively communicated the reasoning and logic for the practice just as they do with any other important change in company strategy.

  • Strategic collaboration.  Strategic partnerships are essential for remaining competitive in today’s highly disruptive business environment. To become more entrenched in the ecosystems that employees engage in, it’s important for CEOs to strengthen and expand their alliances with a broader range of partners in and outside the healthcare market. CEOs are ideally positioned to work with potential partners to identify ways to work together for mutual advantage.

The trend toward value-based care will continue to drive companies to closely scrutinize their healthcare options and fine-tune their cost management approach. Business can’t do much about shifting market dynamics. But they can team together to more effectively negotiate with providers and help ensure that healthcare quality is in line with costs. Bottom line: CEOs who form smart alliances and are proactive in their collaborative approach will save more on health care as will their employees.

  • Leading by example: When substantial financial risk is at state, CEOs have a fundamental duty to roll up their sleeves and get personally involved. Leaders who give only lip-service to an improvement effort will find everyone else following suit.


Modeling the behavior you want and creating a personalized story will help employees buy into in the improvement approach by answering their pressing questions, such as “What are we changing?”  “How will it be implemented?” and “How will it impact me?” People will go to surprising lengths for issues they believe in, and a compelling example set by the CEO will establish and reinforce their loyalty (and participation) in the effort.

Key takeaways

CEOs are uniquely positioned with the responsibility and authority to articulate the strategy, vision and goals that frame every new business challenge or initiative. This is especially true when it comes to managing a transformation as significant and sensitive as employee healthcare.

For CEOs leading healthcare transformation, there is no single model for success. But they can place the odds in their favor by focusing on several core leadership actions: making the changes understandable and meaningful; modeling the preferred behavior; building a reliable and loyal team; and relentlessly pursuing results. Together, these efforts can generate the synergy needed to achieve tangible, lasting improvements.

Should you hire a head of HR? How to Know It’s the Right Time

If your business is like most, in the early stages it was all-hands-on-deck with everyone doing whatever it took to keep the organization afloat. You likely pieced together a human resources process with several people taking on various duties.

Managing HR may be something you can’t – or shouldn’t– use your valuable time to do, depending on the scale of your organization. If the leadership team of your small to medium sized business has been handling the HR tasks it may be time to hire an HR pro. However, how do you evaluate when is the right time to make that decision – and who you should hire to do which HR tasks?

In this post, we’ll discuss

  • Growing pains that indicate it’s time to add HR to your team
  • Tactical and strategic HR tasks
  • Types of HR employees
  • HR technology and outsourcing

Growing Pains

You’ve pieced together an HR process that seems to be working. Recruiting and hiring are handled by the business founder who’s been tasked with building a team from scratch. Your CFO manages payroll and compensation and handles benefits issues. Meanwhile, your admin or office manager processes new hire forms and requests for time off.

Then you hit a snag.

  • You’re not attracting the best candidates
  • An overburdened key employee quits
  • You face legal and compliance issues
  • You don’t have a process to make essential hires quickly and effectively

With so many competing priorities, you may find it challenging to prioritize HR. Perhaps your top pick for a critical role turned you down because you haven’t had the time to research what’s in a competitive benefits package, let alone put one together. You missed out on another candidate when they lost interest because you spent your time screening candidates for a different role instead of getting back to them. Then your admin quit because she couldn’t keep up with her “other duties as assigned” HR tasks while also assisting customers and supporting your sales team.

If that wasn’t bad enough, your legal fees are starting to add up. An employee filed a sexual harassment claim against your company. Then, because you misclassified a team member as exempt to avoid paying overtime, you’ve got a wage dispute on your hands.

But bad news isn’t the only reason to add HR to your team. Perhaps you landed a big contract and you need to add 20 people to your service team – yesterday. An important client wants you to add a second team to support another of their facilities. An online marketing campaign is bringing in three times the orders your staff can handle, and you’re starting to get backed up. HR issues can arise as your company grows because your existing team is just too busy to do it all. Other times, it’s because you “don’t know what you don’t know” when it comes to HR.

HR Duties

Low unemployment, new technology, and increasing employee expectations have caused basic HR processes to become much more involved. Putting thought into what your organization really needs in terms of HR support can help determine your long-term HR strategy. There are tactical and strategic aspects of modern HR teams. You can hire someone to prioritize tactical or strategic HR tasks: however, it’s difficult and impractical to hire someone to handle both these types of HR tasks.

Tactical HR

A tactical HR team member focuses on the manual administrative and technical tasks of HR.

Tactical duties:

  • Post job openings
  • Track and screen candidates
  • New employee orientation
  • Prepare and update employee records
  • Organizing and storing employee data
  • Ensuring state and federal compliance regulations are met
  • Processing payroll
  • Benefits administration
  • Time-off requests
  • Track mandatory compliance training

Strategic HR

Strategic HR focuses on your organization’s growth and long-term HR planning. A strategic HR staff person is more likely to be part of your leadership team than tactical HR staff. In today’s competition to recruit and retain the best talent, adding an HR strategist to your team often makes good business sense.

Strategic duties:

  • Company culture development
  • Employee engagement planning and implementation
  • Professional development and training
  • Job description creation and updates
  • Hiring to develop future leaders
  • Employee retention plan

Types of HR Employees

You can learn more about various HR positions through the Society for Human Resources Management (SHRM) or other sites such as Human Resources Education. We’ll give you examples of a tactical HR position and a strategic HR position typical in small to medium-sized businesses.

Human Resources Specialist (Tactical)

A Human Resources Specialist typically has a bachelor’s degree and is early in their HR career. They are a generalist more focused on tactical HR tasks rather than strategic HR tasks.

Duties

  • Recruiting: Coordinate job postings, process resumes, and applications, screen job candidates, perform background checks and conduct initial interviews
  • Records: Prepare and update employment records related to hiring, compliance, promotions, and terminations
  • Onboarding: Conduct new employee orientation by explaining employment policies, procedures, job duties, schedules, and benefits
  • Discipline and complaints: Address work complaints and harassment allegations, tracks employee discipline

The U.S. Bureau of Labor Statistics notes that the median pay for an HR Specialist in 2018 was $60,880 or $29.27/hour.

Head of People (Strategic)

You can count on a strategic HR hire to handle the overall administration, coordination, and evaluation of your HR plans, programs, and goals. This person typically has five or more years’ experience in HR and a bachelor’s degree. The strategic HR hire is your organization’s link between employees and your leadership team.

Duties

  • Management: Develop and administer your HR records, plans, procedures, programs, and budget and manage other HR staff or personnel tasked with HR duties
  • Programs: Develop and manage compensation program, personnel policies and procedures, employee handbook, employee evaluation process and benefits, and wellness programs
  • Recruiting: Develop staffing plan; create and revise job descriptions and employment ads; oversee all recruitment; develop interview process; and conduct new employee orientation
  • Retention: Develop employee recognition program and professional development plans; manage employee relations counseling, and conduct exit interviews
  • Planning: Develop corporate culture with the leadership team and recommend new policies, programs, and procedures based on long-term goals and current HR best practices

Although the paygrade for this position will vary greatly commensurate of the candidate’s experience level, the salary for an HR Manager can be used as a point of comparison. The U.S. Bureau of Labor Statistics notes that the median pay for an HR Manager in 2018 was $113,300 or $54.47/hour.

You may save on salary costs initially by hiring a less experienced HR team member, but someone who has been keeping up on HR trends and technology may save you money in the long run. Rather than focus on hiring when employee count reaches a specific number, think about who’s handing HR now and whether that time could be put to better use generating revenue or innovating new products.

HR Outsourcing & Technology

Now that you have a better idea of what an HR team member can do for you and what they’ll cost, you may be thinking hiring another full-time person just doesn’t make sense at this time. Utilizing HR technology and outsourcing HR tasks may be a more cost-effective solution for your business.

Outsourcing can help you to adapt to your changing HR needs as your business grows. Working with an HR partners also ensures your HR technology will meet the expectations of today’s tech-savvy millennial workforce. Your outsourced HR partner will track and provide data to help you better manage all aspects of HR as you grow your business and your team.

HR Technology

Launchways offers the top HR technology and can advise and customize based on your business needs. Launchways HR technology solutions ensure your business can effectively handle tactical HR duties such as:

  • Payroll
  • Compliance
  • Recruiting and application portal
  • Time scheduling and tracking
  • Online benefits portal
  • Online performance reviews

Outsourcing
Launchways offers fully-outsourced solutions for payroll, benefits administration, and compliance. Working with the Launchways team ensures all these important aspects of your business are handled correctly, while freeing up the time of your leadership team for more important duties.

Key takeaways

When your organization is experiencing growing pains – and ideally before you run into compliance and other legal issues – it’s time to add to your HR capabilities. HR duties are many and varied, from time-consuming tactical administrative tasks to strategic HR planning to help your organization be more attractive to top talent.

In many cases, outsourced HR help can be the most cost-effective option for growing businesses. Learn more about Launchways’ custom HR solutions.

Massive Changes to Healthcare Will Effect Your Business: What You Need to Know

Massive Changes to Healthcare Will Effect Your Business: What You Need to Know

The healthcare industry in the U.S. is uniquely ripe for transformation. It is a dynamic and growing market with rampant inefficiencies that attracts new technology-savvy players seeking opportunity. Case in point: Ecommerce giant Amazon recently entered into a joint venture with Berkshire Hathaway and Chase Manhattan to enter the healthcare space. Amazon’s health offering will disrupt long-time insurance incumbents like Blue Cross, United Health Care, Aetna, Humana and Cigna.

This competitive repositioning will force employees to change the way they consume healthcare (i.e., go to the doctor, fill prescriptions, etc.). Companies that begin to plan now for this change will have a significant advantage over those that wait.

In this post, we’ll take a look at some of the key factors driving healthcare disruption and outline several best practice steps you can take to position your company for long-term success, including:

  • Don’t do it alone
  • Prioritize the disruption
  • Accelerate innovation
  • Extend traditional boundaries

Market forces are accelerating the pace of change

In healthcare, progress has moved forward in fits and starts. Overall, however, the pace of change is accelerating. We’ve already seen consumers shift away from brick-and-mortar stores in other markets, and it was only a matter of time before healthcare followed the same pattern.

Consumers are accustomed to quick responses, electronic access to information, and the ability to be more engaged in decision making. With purchasing power tilting more in favor of consumers, it’s natural that they would opt for more easily accessible options when seeking   the healthcare services and products they need.

The forces that have managed to disrupt other markets—from travel to media to retail—have so far made only slight intrusions into healthcare. But that is changing. Big technology companies like Google and Apple are also moving into the healthcare space, bringing unique capabilities such consumer recognition, extensive supply chains and powerful analytical capabilities—all backed by vast financial resources.  

Other market entrants adding to the disruption include leading pharmacy retailers such as CVS and Walgreens, which are integrating their e-commerce systems with their numerous retail outlets and walk-in clinics to create new healthcare delivery platforms. All of these efforts seek to address long-time service delivery shortcomings while leaping ahead of incumbents.

In the coming years we can expect a number of industry trends to play a central role in re-shaping the patient care and healthcare delivery landscape.

  • Data as a strategic asset. One of the most valuable resources in healthcare is data. Access to data and the ability to leverage that data is essential to creating consumer-centric models of care, improving outcomes, and reducing costs. To that end, many traditional technology players today are building connected tools, wearable devices and healthcare applications, allowing patients to track and monitor their treatment progress and send data back to the healthcare provider. Meanwhile, insurance companies are partnering with drug manufacturers to utilize patient data to personalize patient care and improve the consumer experience.
  • Better decision making through AI. According to Accenture, the artificial intelligence (AI) health market is expected to grow to $6.6 billion by 2021—a compound annual growth rate of 40 percent. A number of factors are driving that growth:
    • Patient management. AI tools can help doctors and insurance providers better identify and prioritize patients to deliver the optimum level of resources to minimize costs and enrich patient outcomes. The technology will be instrumental for analyzing large volumes of data to evaluate and develop future treatments. 
    • Diagnostic insight. AI is assisting researchers and doctors in diagnosis and understanding of complex diseases. Case in point: the FDA recently approved artificial intelligence tools to detect bone fractures and diabetic responsiveness in patients, helping to reduce time from onset to therapy.
    • Labor shortages. AI tools can help reduce the burden of providers performing documentation and data management. They have also proven highly effective in helping triage patients so doctors can focus on patients with the most critical need.
  • Managing social determinants. Most health outcomes are the result of circumstances outside the healthcare system. These social determinants, such as the conditions in which people are born, live, work and age, undergird many of today’s healthcare challenges. As social determinants become a greater focus in healthcare treatment and delivery, care spending is expected to drop while quality of life would improve for impacted communities. In many areas, this has already begun, as hospitals and health insurers work with local health departments to identify social determinants and address community health concerns.  

Taking a strategic approach to transformation

With the healthcare market poised for major disruption, business leaders are rapidly developing strategies to remain competitive. Disruption is not all doom and gloom. With the right approach, it can be as much of an opportunity as it is a threat. How you respond can make all the difference. Following are some best practice steps that can help you take control of your response effort and better position your company to capitalize on this market shift.

  • Don’t do it alone. Working with a strategic employee benefits broker is essential for gaining an edge and avoiding obsolescence in today’s fast-moving digital world. Find digital-savvy partners willing to challenge traditional thinking and make sure your strategic approach is aligned with market realities. The right broker will ensure your business is not only poised to adapt to any market changes, but will also leverage those changes to your business’ advantage.
  • Prioritize the disruption. The scale, the reach and the quality of the experience are three dimensions in which digital disruptions can be viewed. Your ability to accurately assess these dimensions can provide important market advantages. How will the disruption effect your business and your employees? With new value will it bring? What challenges will you need to tackle? How will it impact other aspects of your business operations? Disruptions that impact two or more of these elements should be given priority focus.
  • Accelerate innovation.  To survive and thrive in the digital era, companies must be able to innovate faster than their competitors. Driving innovation at this speed requires a culture that encourages and celebrates innovation.  Many organizations have little tolerance for risk or failure, but risk-taking is the lynchpin to innovation. Companies that encourage creativity, set bold objectives and aren’t afraid of failure are better equipped to succeed in the face of market uncertainty. While innovation is vital to your response strategy, ultimately your company’s core goals and mission should drive your business focus and transformation initiatives.
  • Extend traditional boundaries. Carefully examine what organizational changes your company may need to become more collaborative and open. This requires an objective and honest assessment of people, processes, and technologies across the organization. Be prepared to question beliefs based on history, long-held practices and accepted patterns. Consider why and how these beliefs are held and assess and weigh current practices to previous patterns.  Set aggressively high targets that extend traditional boundaries and requires people to think outside the box. A willingness to break from established practices can open the door to creativity, allowing your team to see the possibilities often hidden behind the status quo.

Key Takeaways

When it comes to pioneering innovation, the healthcare industry presents a paradox. Although life-changing medical breakthroughs often come about at a rapid pace, the manner in which healthcare is delivered has been painstakingly slow to improve. But change is indeed coming and the winners will be those that figure out how to best prepare for, navigate, and benefit from this massive disruption.

The one decision business leaders need to make when it comes to healthcare disruption is how to respond to it. Taking effective action will often requires leading a journey into unfamiliar territory using new tools and processes. Uncertainty is inevitable. Instead of trying to change that, explore what is technologically possible, understand the risk-reward tradeoffs, and then rally the best resources to bring the vision to life.

Whatever the approach, one thing is certain: disruption waits for no one—there’s no time to waste in moving from awareness to action.    

As A CEO Your Job is to Get the Right People in the Right Seats: Here’s How to Do It

The key to a healthy, productive business is to build a team of the right people and to make sure that employees are in the roles that fit them the best.

Companies commonly make the mistake of hiring employees for their technical skills and experience, rather than trying to assemble the best team possible. It is most important to ensure that new hires are great cultural fits so that they will contribute to the shared work of achieving your company mission/vision and stay with the company long-term.

At the same time, you cannot build an effective team if you promote the wrong people into the wrong positions. You need to have clear and transparent performance evaluations and promotion policies so that you can identify ideal candidates, help employees fill skill gaps, and maintain team morale.

Both hiring the right people and putting them in the right positions is necessary for a robust company culture, employee performance, and retention. While the stakes are high, you can make a huge difference through a few simple changes in your hiring and advancement practices. Let’s examine each component in more detail and explore some simple steps you can take to make sure that you are on the right track.

Hiring the Right People

Why Is Hiring the Right People So Important?

Why is it important to have the right people on your team? The fact of the matter is that employees are the life blood of your company and define your company’s success and its culture. If employees are a bad fit for the company they can drive down their teammates’ productivity, damage team cohesion, and cause retention problems.

On the other hand, being strategic in who works at your company enables you to craft teams with an eye for culture, collaboration, and productivity. This is why it is important to take a hard look at your hiring procedures. Bringing on new employees is a huge commitment. You need to make sure that your priorities in the hiring process match what you need to create and maintain a team of the best people for your organization.

Hiring Mistakes to Avoid

Before we get into what you should be looking for when hiring, let’s look at some common practices that cause companies to end up with the wrong people.

All too often, companies hire for skills only. When they see the candidate with the most experience and technical expertise, they fight hard to bring them onboard whether or not the potential employee shows any interest in the company mission/vision or culture. This is a critical mistake that is easy to make; most employers do hire for skills and experience. However, nine out of ten times the reason why they let people go is because they are a poor cultural fit. Why not skip the middle step and only hire people who fit your company culture?

Another trap that employers fall into is believing that employees will change. They know that the candidate is not a good cultural fit, but they believe that they will start buying into the company culture and taking ownership over the mission/vision once they join the team. This is not hard to do; after all, you believe in what you are doing and the culture that you are fostering, so why wouldn’t the candidate believe too once they had experienced life in your company? But the sad fact is that most employees simply won’t change and become a good cultural fit.

Even when they find the perfect candidate, many employers miss the opportunity to bring them on board because they aren’t willing to work with the potential hire to make sure that the job meets their needs. Even if you have a hard budget and cannot make salary accommodations, it is often worth it to make compromises on vacation time, remote work, and other quality of life benefits to bring the right people into your organization.

So, What Should You Do Instead?

The most important action to take to ensure that you have the right people working at your company is to put culture at the center of every step of the hiring process. Obviously, it is important to hire qualified candidates. But hiring people who are great cultural fits will do wonders for employee morale, retention rates, and productivity. Make it clear to candidates what your company stands for and make sure that they will buy into and add to your company culture.

You may be wary of scaring job seekers away by focusing too much on company culture during the hiring process. Don’t be, you want to weed out people who are opposed to your company culture. People who will buy into the culture when they sign-on will appreciate your focus on culture and the efforts you take to make sure they understand what it entails. If a candidate believes in your company’s values but is put off by how seriously you take your culture, then this probably isn’t the best person to bring on to your team.

Another factor to take into account is who you put in charge of interviews and hiring decisions. You want a “true believer” in your culture handling hiring. So, do not be afraid of bucking seniority to make sure the right person is in the interview room. Every person at your organization that touches the hiring process must strongly believe in the company mission/vision and be a clear representation of your company’s culture.

Proper Promoting: Get the Right People in the Right Seats

Why & What

As much as hiring the right people is important, it can be even more important to promote the right people into the right positions.

Emphasize Performance Tracking and Communication

It is important to determine how employees are doing so that you can be sure that you are promoting the right people. The more objective your advancement process is, the easier it is to avoid nepotism and other toxic promotion practices. Transparency not only allows you to find the right candidates for each position, it also holds existing employees accountable and empowers you to move people who are a poor fit for their current position.

You can drive accountability by tracking key performance metrics, setting clear goals, and measuring success against those goals at every level. By tracking performance in a clear and objective way, you can see employee strengths and weaknesses and quickly identify candidates for promotion.

Another important aspect to consider is feedback and communication. Objective numbers and goal tracking is great when available, but a lot of performance tracking and advancement procedures will still have to be handled by employees’ managers. Don’t feel limited to annual reviews to evaluate performance or give and solicit feedback. Try implementing quarterly or even monthly reviews, encouraging feedback at weekly meetings and daily standups, and asking employees regularly how they want to expand their responsibilities and advance in the company. Not only will you have a better sense of which employees are ready for promotion, you will be able to identify which candidates are right for which positions based on their specific skills and priorities by tracking their feedback and performance.

Also, letting employees know how they are doing, and what is expected of them in order for them to be considered for promotion, helps job satisfaction and employee retention. That means that the same strategies you use to get the right people in the right roles can also keep them in those positions.

How to Determine Who is Right for Which Position

Just as in your hiring decisions, it is important to promote people who buy into your culture. Your managers are responsible for making sure that their teams are run according to the company culture and that their team members see how their work plays into the company mission and vision. No matter how many perfect cultural fits you hire, you won’t see the payoff in an engaged, mission-driven workforce if your managers are not the best cultural fits of all.

When considering each specific position, it is also important to promote the candidate who shows a natural intuition for the challenges and expected results of the role.  Some candidates may be deserving of a promotion, and absolutely ready for management, but not have the feel for a specific role. You want to promote someone who ‘just gets it’ and does not need you to browbeat them with what is expected of them. It can be helpful to consider candidates who have faced similar challenges before, and can articulate clearly how their past experiences relate to the position. Mostly, however, this is a less concrete component of finding the right person; it is often something that you will be able to feel out during the interview process.

Of course, you also need to promote people who have the skills and time necessary to take on the new role. Top performers may be overworked and unable to take on additional responsibilities. Other employees might be the perfect fit for a role except for gap in their skills or experience. In these cases it can be beneficial to figure out a lateral move that will enable them to gain the necessary experience and continue to grow within the company.

No matter how perfect someone is for a position on paper, they will not be a good fit for the role if they do not really want it. You want hungry managers who are eager to prove themselves, take initiative, and drive their teams forward. People who can come up with out of the box solutions and get the best results out of their team members because they genuinely want to make a difference. Within limits, look for the people who have been chaffing to change systems and strategies or who have started taking on some of the responsibilities of the new position within their current role because they care about seeing the job done.

Key Takeaways

We’ve covered a lot of ground about best hiring and advancement practices. Here are some key concepts to take away from this article:

  • Hire people who will make great additions to your team, not just who are the most qualified
  • Put company culture front-and-center in the hiring process
  • Track performance and encourage constant feedback to identify ideal candidates for each position
  • Promote strategically, again with an eye for culture but also looking at specific skills, experience, and mindsets necessary to tackle the given role

If you implement these principles in the way that you build your teams, you will see significant improvements in company culture, team cohesion, employee performance, and turnover rates. Your employees will be engaged in their work and in the mission of your organization.

Emotional Intelligence: An Increasingly Vital Skill for the Modern CFO

Many CFOs have built their careers on technical skills and financial smarts, but performance today is no longer solely measured on those abilities. For the modern CFO, a new set of soft skills built around emotional intelligence have become increasingly important in recent years for their ability to help business leaders build relationships, resolve conflicts, and motivate high-performing teams.

From understanding and managing emotions to aligning talent with business needs, the CFO as coach, collaborator and motivator is a growing trend. In this post, we’ll look at how emotional intelligence has become a critical skill set for today’s CFO and examine the five core components of emotional intelligence and the role they play in helping to bolster leadership performance.  These key components include:

  • Self-awareness 
  • Self-regulation 
  • Internal motivation 
  • Empathy  
  • Social skills

Changing the CFO skill set equation

The skill of emotional intelligence refers to the ability to identify, use, understand and manage the emotions of themselves and others in a positive way. For some individuals, the ability to understand and assess emotions may come effortlessly, but for others, not so much.

Since CFOs need to be able to induce change through others, this ability to inspire and influence has become a valuable skill in today’s collaboration-centered workplace.  CFOs need to be able to respond to divergent points of view and differences in the way people think. By extension, they need to harness their emotional intelligence to get through difficult situations.

With fewer layers of management in today’s organizations, leadership styles lean toward less authoritative. Moreover, the shift towards more knowledge-focused, team-based roles means that workers tend to have more independence and self-governance, even with lower levels of an organization. As a result, CFOs are finding themselves connecting and collaborating with people they would not likely have interacted with in the past.

Previously, the finance function required a number of core skills, including technical expertise, analytical thinking, comprehension, and assertiveness. While these attributes may not have changed, today’s CFO also needs to exhibit a wide range of soft skills, including an ability to collaborate effectively, build relationships and perceive, evaluate and manage emotions.

Clearly emotional intelligence is important to everyday social interactions, but how does it relate to CFO performance? When you make tough decisions based on hard data that can have an impact on non-finance departments, you could come across as tough or inflexible. Not a good reputation for a leader. That’s where emotional intelligence comes into play.

Growing need drives resurgence

Emotional intelligence first gained widespread attention back in mid 90s with the release of a book by Daniel Goleman simply titled, “Emotional Intelligence”. The subject has since been the focus of numerous studies, many of which point to it being a better predictor of leadership success than a person’s general cognitive ability. The reasoning? An executive skilled at understanding what makes people tick can better motivate teams and drive more effective interactions. 

Several factors are contributing to a renewed interest and growing need for leaders with strong emotional intelligence skills:

  • Market disruption.  New and emerging technologies are creating substantial market disruption and business transformation across industry sectors, resulting in corporate restructuring, flatter hierarchies and greater cultural diversity. 
  • New workplace demands. The digital age and broader enterprise connectivity is intensifying workplace pressures, creating the need for leaders with greater self-awareness, better emotional understanding and superb social skills. 
  • The need to innovate.  Rapid technology acceleration and the speed of new service deployments requires better collaboration, agile teams and a culture that allows for continuous feedback, honest communication and individual empowerment,  which are core emotional intelligence-based attributes.
  • Service-oriented economy. As we move to a more service-based economy and a more customer-centric focus, relationship building, superior communication skills and better self-management abilities become more important than ever. 
  • Globalization. The ability to empathize and relate to different attitudes, perspectives and cultures is essential in today’s global environment.  When managed properly, this diversity can lead to higher performance and better outcomes.

A recent report from World Economic Forum ranked emotional intelligence as the sixth most important skill needed in 2020 in order to manage the coming fourth industrial revolution.  Emotional Intelligence wasn’t even on the list for 2015. This may explain why many organizations have begun offering employees more opportunities to improve their emotional intelligence.

Gaining a performance advantage

According to the model developed by Goleman, emotional intelligence consists of five core components. 

  1. Self-awareness. Self-awareness is knowing your own feelings and understanding your strengths and weaknesses in relation to how they affect behavior. Leaders who are in tune with their own emotions are better able to control their own impulses and tend to enjoy better relationships. To improve self-awareness, take time to better know and evaluate yourself. Then understand how you relate to others.
  2. Self-regulation. CFOs need the emotional flexibility to collaborate effectively without letting egos interfere. Self-regulation is the ability to control outbursts, disruptive impulses, and moods. It also encourages a “think before acting” attitude. Instead of being held hostage by your emotions, learn to use them strategically as a performance improvement tool.
  3. Internal motivation. Internal motivation is the passion to work for internal reasons such as personal joy, curiosity or mental satisfaction. CFOs need to be continuously monitoring their performance, making sure they’re hitting their targets and dealing with issues when they arise. Internal motivation provides the clarity of focus and the drive needed to initiate change and take action while opening the door to positive feedback and learning. 
  4. Empathy. Most of us are not taught how to deal with our emotions or the emotions of others. Empathy requires reading feelings and understanding the needs of others. Learning to control your own emotions will enable you to help others manage theirs. By becoming more aware and understanding how others feel in various situations, you’ll be better equipped to inspire, motivate, and connect with others across the organization.
  5. Social skills. Having good social skills and sound situational awareness can be a powerful tool for leading a team. While a clash of opinions is sometimes inevitable in a cross-functional team, the ability to negotiate the needs and viewpoints of others and find common ground is vital for a CFO. Creating the harmony and agreement needed to move initiatives forward hinges largely on the ability to managing relationships. 

Key takeaways

It turns out cognitive intelligence and technical skills are an incomplete predictor of performance. The ability to influence, collaborate, and communicate effectively across departments, cultures and generations is a key component of effective leadership. 

The reality is there is a strong link between the emotional intelligence of its leaders and the financial performance of an organization. Today’s CFO needs to be both a strategic and tactical thinker. Not surprisingly, hiring managers are increasingly placing higher value on emotional intelligence and are incorporating these characteristics in their leadership search criteria.   

While technical and financial expertise is important, CFOs can take their performance to the next level by combining financial know-how with emotional intelligence. Like any form of self-improvement, building and strengthening your emotional intelligence will stretch your comfort zone and challenge some long-held notions about effective leadership styles. The good news is the effort you make to improve your emotional intelligence will pay dividends far beyond the initial investment.