Modern organizations have been met with countless challenges, all of which require agility and commitment to successfully overcome. However, while an organization can certainly ”survive” as they are, in order to thrive in today’s changing business environment, more and more leaders (including experts at the College of Denver) are pushing for a shift. The efforts behind this shift are being made with the hope that more organizational executives will take on the role of financial stewards.
In fact, the Daniels College of Business went so far as to say it’s not just a perk or benefit, but an emerging requirement, stating: “To help their organizations navigate the challenges and complexities of today’s business environment, financial executives must become leadership stewards.” So, what exactly does that mean for your organization and how can you push your leaders to adopt the all-important role of financial stewardship?
What is Fiscal Stewardship?
Financial stewardship can be defined as a commitment to ethical, efficient and responsible financial decision-making and use of organizational resources.
Why Financial Stewardship is Important Among Leaders
It’s truly astonishing how short-term outlooks continue to plague today’s businesses, large and small. Every day, some organization is in the headlines for a blotched move on behalf of its leaders or even an unethical ploy that has now scarred the company’s very image. Unfortunately, examples of such acts aren’t becoming any more rare, either.
The Daniels College of Business goes in-depth, being almost as harsh as an exposé, stating: “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.”
While your organization likely isn’t practicing such blatant wrongdoings, these examples do help make the importance — and general impact — of leaders who are financial stewards very clear.
In the same piece, the college gave the example of HealthSouth Corp., highlighting a major, multi-billion dollar financial statement from 2003 that used practices similar to the above. After meeting their predicted earnings down to the cent for 47 quarters in a row, the organization began to draw attention to itself. Just two years later, some financial executives conducted a major study out of Duke University, revealing that nearly 8 in 10 managers in the survey admitted to making a crucial, unsustainable mistake of “sacrificing long-term value to achieve smoother earnings.”
It is these very short-term, even unethical, practices that can harm an organization’s ability to continue competing in the modern business market, and that’s why it’s of critical importance that more organizational leaders work to become good financial stewards.
How Lack of Stewardship Impacts Leadership
By far, one of the key causes of poor leadership styles and short-term outlook is the mere fact that many leaders are not “in-the-know” regarding the organization’s ultimate, long-term goals — much less the roadmap to reach them. For that reason, leaders often end up fulfilling what many consider to be the primary part of a leader’s duties (that is, demanding results), only to do so without considering realistic restraints.
The correct way of going about it is for leaders to focus on three key aspects. The first would be ethics, with leaders always emphasizing the importance of doing what’s right, even if that means more work and/or expense. Second, leaders should promote endurance, instilling a long-term outlook in their organization’s teams in order to come up with solutions and results that will last year-over-year, allowing for sustainable operations. Finally, leaders should place exceptional results as the third priority, only following the previous two standards.
When these three things are implemented wisely and with wholeheartedness, they make up the foundation for “triple crown leadership” that helps organizations perform and succeed in the long-term.
The Role of Financial Executives and Other Leaders
All leaders within an organization should strive to understand and take on the role of being fiscal stewards, and this effort may very well be spearheaded by financial executives who first work to take on the role as leadership stewards. From there, these people should discuss, brainstorm, and ultimately work to position every leader in the organization as a steward of financial health.
Active Checks and Balances
Ensuring accurate financial statements is one thing, but a system of active checks and balances goes further to prevent the unethical practices discussed earlier. With a system of active checks and balances, leaders can be confident of their numbers and better understand why they are what they are, be them positive or negative.
Meanwhile, this practice can go further to check internal spending, keep projects on track, and help every team and department better meet their goals by allowing them to better understand exactly where they stand. Ultimately, having accurate, up-to-the-minute data will play a major role in this aspect of promoting fiscal stewardship.
Monitoring Ethical Practices
Unfortunately, unethical practices within the financial sector are very common, and that’s why organizations should take a top-down approach when it comes to instilling ethics and monitoring teams and systems for potential signs of unethical standards and wrongdoings. After all, ensuring real numbers and accurate reporting is top-of-mind for organizations with a long-term outlook.
Through ethical initiatives, organizations will not only be guarding their long-term value, but also ensuring a culture where every employee and leader feels confident and reassured. In organizations where ethics and trust are everything, employees are found to be more satisfied, more loyal, and more productive.
Think Short-Term and Long-Term
While a strictly short-term outlook can land any organization in hot water fairly quickly, a strictly long-term outlook can also negatively impact a company. For that reason, organizations and their leaders should seek to achieve a balance between short-term and long-term expectations, hopefully by creating a roadmap of goals and working to ensure every department across the organization understands that roadmap.
Once an organization has a plan in place, ensuring that they are meeting both their near-term and long-term goals and milestones becomes substantially easier. With that roadmap, leaders will be able to sit down and analyze exactly where they stand and then make an informed decision that tells them what they should do to either meet a short-term goal or stay focused on the long-term.
Prepare Your Organization for What’s Ahead
Now that it’s clear just how important fiscal stewardship is for organizational leaders, the question easily becomes: “How do I begin moving towards this reality?” The fact is, the journey begins with data. In order for an organization to achieve successful, long-term fiscal stewardship amongst its leaders, it must first pursue transparent financials and data. That can only be done with the right software.
Here at Multiview, we help organizations every day who are on the path to achieving not only good fiscal stewardship, but better transparency and informed long-term outlook all the way around. With our software, organizations like yours are able to gain the insight they need to make predictions, set goals, and ensure they’re on-track with their long-term and short-term plans.
Through our software, businesses have been able to get more done with more confidence and fewer resources thanks to up-to-the-minute information that empowers collaboration, informed decision-making, and consistent yet autonomous action at every level. Those who work with us know that data is the key to ending the chase for numbers and empower data-centric business practices at every level.
Are you interested in learning more about Multiview and how our software can help you turn your leaders into fiscal stewards? Request a demo of Multiview to explore everything our software has to offer and better understand what it takes to empower your leaders and gain better insight, and outlook, to ensure sustainable growth.