Knowing when to compromise
Leadership teams are constantly having to make tough decisions to help build a successful company. As the CFO, you play a vital role in the decision-making process by sharing your unique perspectives.
However, conflict can easily arise amongst leadership team members with different views and this needs to be managed carefully to reach the best decision in a timely manner without damaging working relationships.
During this lesson, we will discuss why it is important for CFOs to know when to compromise and how you can go about making tough decisions without alienating yourself amongst the leadership team.
Your leadership team decisions will cover all parts of the business, such as where to open a new overseas office, how much to remunerate your workforce and which companies you should partner with.
Each member of the leadership team will have different perspectives during a decision-making process. For example:
- The sales director may be focused on creating opportunities to reach new customers.
- The product team could be concerned about sourcing raw materials from global markets.
- Your CEO will be keen to deliver your shareholder commitments.
These different perspectives are likely to lead to conflicts during decision-making processes. Such conversations can quickly transform into heated debates that may escalate people’s emotions!
As the CFO of your business, you will have a unique perspective regarding finance, risk management and a strong working knowledge of your company’s performance data. The chances are that you will also have strong views on which decision is the correct one and it is important that you voice this in an appropriate manner during the debate.
However, you need to balance the needs of the company with your own judgement to preserve your working relationships and ensure that things get done. This requires you to know when to continue pushing your case versus when to back down. In some cases, CFOs may need to compromise in order to get everyone on board with a decision. You also need to carefully listen to each person’s perspective and remember that sometimes your opinion may be wrong.
Here are five indicators that you may need to compromise:
- When there is a clear impasse and no one is backing down. If both sides are equally passionate about their position and not budging, then it may be time to look for common ground.
- When you’re the only one pushing for a particular outcome. Sometimes as the CFO you may be the only person who sees the financial implications of a decision. If the rest of the team is not seeing your point of view, consider compromising to avoid putting too much strain on the relationship.
- When you’re unsure of the data. When making a decision, it’s important to have all the facts and figures in front of you. However, sometimes there may be gaps in the data which can make it difficult to reach a conclusion. In these cases, it may be necessary to compromise in order to move forward.
- When emotions are running high. Emotions can cloud judgement and lead to rash decisions being made. If tempers are flaring, it may be best to take a step back and come back to the discussion when everyone has had time to calm down.
- When the stakes are high. If the decision being made could have major financial implications for the company, it’s important to be cautious and not take any unnecessary risks. In these situations, compromising may be the best way to protect the interests of the business.
Compromising doesn’t mean that you have to give in completely or that you’re agreeing with the other person. It simply means that you’re willing to meet them halfway and find a solution that works for both parties. As the CFO, it’s important to be able to identify when a compromise is necessary in order to avoid costly mistakes being made.
You also play a key role towards ensuring that decisions are made in a timely manner. Doing so will help move the company forward and deliver your financial plan. This requires you to carefully read situations and understand people’s mindsets so that you know when to push something further versus when to defer a difficult conversation to a more appropriate time.
It is essential that CFOs play a key role in decision-making, but understand when to compromise to help reach a decision. Strong levels of emotional intelligence allow you to have the right conversations with the right people at the right time, to help drive forward decisions and reach the best available outcome.