Financial leadership skills aren’t just nice to have. In today’s digital age, financial leadership skills are becoming essential. But what exactly is financial leadership and what specific skills does the next generation of financial leaders need to possess?
With a better understanding of what financial leadership entails and why it matters, you can work toward building your own skills and advancing your career.
What Is Financial Leadership?
In simplest terms, financial leadership refers to a person’s ability to make strong business decisions that will result in better profitability, revenue, and growth for the company.
What Is the Difference Between Financial Management and Financial Leadership?
At first glance, it may seem as though financial management and financial leadership are terms that can be used interchangeably. In reality, however, financial leadership is more about guiding organizations toward the right business decisions that help them reach their long-term goals and visions. Financial management, on the other hand, is more focused on the day-to-day tasks of financial reporting and other short-term issues.
From Traditional to Digital: How Financial Leadership Has Changed
While financial leadership has always been important, the shift to a more digital world has made the need for strong financial leaders even more essential. In fact, in many ways, financial leaders have become among the most important decision-makers within a business — especially with the growing need for being able to manage risks and innovate in an increasingly digitized world that doesn’t slow down.
Key Technological Drivers Transforming Financial Leadership
There are so many emerging and growing technologies that have been transforming financial leadership as we know it, with some key drivers including:
- Artificial intelligence (AI)
- Machine learning
- Cloud computing
- Cybersecurity
- Automation
Essential Skills for Today’s Financial Leaders
There are many different essential skills that today’s financial leaders need to possess, ranging from a mastery of data analysis to critical thinking and communication.
Mastery of Data Analysis and Interpretation
Making informed financial decisions on behalf of a business now requires more data analysis than ever. As businesses continue to collect larger amounts of data, the best financial leaders are those who can carefully sift through and gain valuable insights from large amounts of data swiftly and confidently. These same leaders may also rely on data analysis and visualization tools to help them make the right interpretations and come to the right conclusions.
Strategic Thinking and Decision-Making
Today’s financial leaders are also inherently strategic thinkers. They’re no stranger to facing obstacles and other challenges in the workplace, but they’re always quick to come up with strategic solutions based on their past experiences and specialized knowledge. At the same time, financial leaders must keep the long-term goals and mission of the organization at the forefront when making recommendations and devising strategic plans.
Advanced Communication and Collaboration Techniques
Financial leaders are also faced with the challenging task of keeping many different stakeholders, higher-ups, and other decision-makers in “the know” at all times. This requires a great deal of solid communication, both verbally and in written form.
In addition to advanced communication skills, today’s financial leaders need to be prepared to follow a team mindset, motivating all stakeholders and team members to collaborate and work toward a shared goal.
Adaptability and Flexibility in a Rapidly Changing Market
Making decisions in today’s digital world also means that things can change in the blink of an eye. Because of this propensity for change, financial leaders must also be extremely adaptable and flexible in a rapidly evolving market. Being able to react quickly and confidently to unplanned changes while taking in new information isn’t easy, but it’s a learned skill that all the most successful financial leaders must possess and hone over time.
Knowledge of Regulatory Compliance and Ethics
Today, there are also more regulatory and compliance laws in place than ever before. This remains true regardless of the industry in which you may be working. Staying on top of changes in regulatory compliance and ethics requirements is a crucial part of the financial leader’s job, as failing to follow regulatory requirements could put the business in a precarious position of facing fines, penalties, or other legal issues.
Navigating the Digital Landscape: Tools and Technologies
As an emerging financial leader, it is important to know how to effectively leverage tools and technologies in the digital age. In doing so, you’ll be able to work more efficiently while also potentially decreasing the risk of user error.
Financial Management Software Essentials
These days, there are so many useful financial management software tools on the market that empower financial leaders to make sound decisions. From enterprise resource planning software (ERP) to financial planning and analysis software, these kinds of solutions can help planning, budgeting, and other key aspects of your company’s finances.
A few examples of popular financial management software solutions include:
- Cube
- Vena
- Workday Adaptive Planning
- Anaplan
Leveraging Big Data and AI for Financial Insights
Today’s financial leaders will also be expected to leverage big data and AI to reach financial insights. This is just one of many applications of artificial intelligence that we’re beginning to see affect the financial sector. More specifically, financial leaders will need to be able to use up-and-coming software tools and their own internal resources to better utilize data for decision making in the era of big data.
How to Implement Strategic Financial Planning in the Digital Age
There are many ways to implement strategic financial planning in the digital age that may be a little different at first glance. However, the most innovative and successful leaders are those who will be able to adapt to the growing digital landscape.
Aligning Financial Goals With Corporate Strategy
More importantly than ever, financial leaders will be tasked with making decisions that directly align with the financial goals and long-term mission of the business. This requires an in-depth understanding of the corporate strategy and its financial objectives, which is why strategic planning and alignment are so critical.
Scenario Planning and Risk Management
Scenario planning and risk management are also crucial in the digital age, especially from a financial leadership perspective. Today, financial leaders are being called upon more and more to carry out detailed scenario planning and risk management strategies to account for all potential outcomes and make better informed decisions.
Fostering a Culture of Innovation and Continuous Learning
We’ve already seen such a huge shift in ideas and thinking over the past few years alone; it’s impossible to say what the state of the industry will look like in another year or even five years down the road. The only constant that we can be sure of is change, which is why it’s so important for financial leaders (and aspiring financial leaders) to foster a culture of innovation and continuous learning in the workplace.
Encouraging Creativity Among Finance Teams
One challenge that many financial leaders will face at some point is that of motivating their finance teams to think creatively and come up with innovative ideas. By coming up with team-building exercises and other motivational practices, financial leaders can set a positive example while fostering a greater sense of creativity and ideation in the workplace.
Upskilling and Reskilling: Preparing for the Future
In addition to motivating your finance team, you’ll also need to be prepared for the future and whatever uncertainties it may bring. This means being ready to upskill and reskill as necessary. This applies not only to your own skills and competencies, but those of your finance team as well. Take advantage of opportunities for professional development and make sure your own team members have plenty of these opportunities at their disposal as well.
Leading Through Change: Adaptability and Crisis Management
In the digital age, adaptability and crisis management are more important than ever for effective financial leadership.
Strategies for Effective Change Management
Handling changes within an organization can be challenging, especially when there are many different leaders involved and decisions to be made. Fortunately, with some basic strategies for effective change management, financial leaders can help their organizations manage change more effectively.
Some tips for effective change management include planning carefully when change is set to occur, being transparent with team members, and providing plenty of training to help team members adjust to changes as needed.
Overcoming Challenges in Times of Uncertainty
In uncertain times, even the smallest of obstacles can be unnerving for financial leaders and their teams. The good news is that with some simple strategies in place, you can overcome these challenges with confidence.
Perhaps above all else, the best thing to keep in mind is that every challenge presents an opportunity for growth and learning. This, in addition to keeping your team members as involved as possible and taking advantage of technologies available to you, will help you overcome any obstacle in your way.
Enhancing Financial Leadership With Ethical Practices
Financial leaders have an inherent and serious responsibility to do their jobs ethically, which means building transparency and accountability into everything they do.
Importance of Transparency and Accountability
With plenty of transparency and accountability in your work, you’ll be able to build trust and rapport not just with your direct team members, but other stakeholders and decision-makers. Whenever you’re in doubt, it’s generally best to err on the side of being more transparent than anything else.
Building Trust Within and Outside the Organization
A sense of ethical decision-making, accountability, and transparency will help you build trust both inside and outside of your organization. The more trust and confidence you build in others, the more your career can soar and the bigger difference you can make.
The Role of Financial Leaders in Sustainability and Social Responsibility
Sustainability and social responsibility may not be the first things that come to mind when you think about financial leadership, but this is an area where things are evolving and changing. Today, financial leaders face an increasing demand to follow green finance practices in sustainability and social responsibility.
Integrating ESG (Environmental, Social, and Governance) Factors Into Financial Decisions
The next generation of financial leaders will be expected to integrate environmental, social, and governance factors into every decision they make. By integrating these considerations into major business decisions (such as investments), financial leaders can promote sustainable practices while maximizing their financial returns.
Contributing to Sustainable Business Models and Practices
In addition to considering ESG factors in financial decision-making, the next financial leaders will be held accountable for contributing to sustainable business models and practices. This includes making decisions that will minimize a company’s impact while maximizing investments in sustainable projects.
Build Upon Your Financial Leadership Skills at JWU
As you can see, developing your financial leadership skills in an increasingly digital world can be critical to your professional growth. By cultivating the right financial leadership skills and applying them to your own work, you can lead through change with confidence.
Looking to take your financial leadership abilities to the next level? It may be time to explore an online MBA in Finance through Johnson & Wales University. This program is designed to be completed by busy working professionals with a focus on financial management and leadership outcomes.
For more information about completing your degree online, complete the Request Info form, call 855-JWU-1881, or email [email protected].