Recently, a senior executive shared a concern with us about his leadership style during the pandemic: “I have always thought of myself as a good leader. For the first time in my career, I feel like I’m failing.”
His worry was less about making the big decisions needed in a crisis, and more about the ongoing engagement and “forward motion” of his team.
When in-person meetings transitioned to Zoom calls, he was struck by how much of leadership and team building relies on in-person interaction, whether it’s formal group sessions to drive a decision, or the hundreds of informal one-on-one interactions every week in the office. As our small firm went virtual, it’s something we noticed, too. Virtual interactions require a different structure and pace, and it takes more work to engage the full group.
And while no one enjoys an hours-long videoconference, more frequent, shorter calls can build momentum. Dedicating time to sharing personal updates builds the connections lost when we’re not physically together.
But despite the risks, one CEO shared that in a crisis like COVID-19, showing up in person matters: “You can’t always stay at home or in your office. As a leader you have to be out and talking to staff. I know it’s risky but that is really what it takes.
Being there to clearly articulate the go-forward plan.” We’d love to hear your insights about how you’re adapting your leadership approach to navigate this balance, keeping your teams engaged through this difficult and unfamiliar time.
Two board experts explain how in times of crisis or transformation, the CFO can serve as a rock in the boardroom, a critical arbiter of difficult decisions, and a scout for the future.
Critical business decisions cannot be made unless management teams and boards of directors are on the same page. Transparency, fair and balanced dialogue, and well-structured processes for gaining agreement on strategic plans—these dynamics must be present in every boardroom, in good times and, especially, in bad.
The CFO plays an important role in ensuring that they are.
In crises, such as the global spread of the novel coronavirus, the CFO is best-positioned to provide the most relevant and up-to-date facts and figures, which can help boards find clarity amid chaos. In corporate transformations, the pragmatic, data-focused finance leader is the only one who can prompt the board to actively consider all the short- and long-term consequences of proposed strategy decisions.
Barbara Kux and Rick Haythornthwaite, longtime board directors for multiple global organizations, shared these and other board-related insights with McKinsey senior partner Vivian Hunt in a conversation that spanned two occasions: a gathering of CFOs in London some months ago and, more recently, follow-up phone conversations about the COVID-19 pandemic.
These interviews, which have been condensed and edited here, explained the importance of finance leaders in serving both as scouts for the future and as trusted translators of critical market information.
Shaping the COVID-19 crisis response and recovery
Rick Haythornthwaite: The board’s most important functions in the wake of COVID-19 are threefold: one is making sure that employees are being treated decently and that the company is taking all the precautions it can. Second is obtaining an objective, insightful understanding of the business and trends. And third is anticipating and preparing for recovery. The key in all three areas is having high-quality data to inform the board’s decisions and to share with employees. Of course, getting data from a market in freefall is never easy. This is where you need CFOs to be absolutely on top of their game.
The board needs to know what is really happening to the top line, what short-term measures can be taken to preserve and boost cash, and all the actions you have to take during the early stage of such events to buy time. But the board must also have a handle on long-term issues.1 And now that we’re months into this crisis, people are starting to draw lessons from previous ones and bringing some historical data into board discussions. The CFO can use these data to construct hard-edge scenarios that prompt good conversations in the boardroom.
Barbara Kux: An important difference in the role of CFOs today, as compared with their role during the financial crisis in 2008, is that they need to simultaneously manage both short-term responsiveness and future recovery. The CFO must keep the ship floating through rough waters—safeguarding employees’ health, securing liquidity, monitoring cash flow and payment terms, ensuring the functioning of the supply chain, assessing effects on P&L and the balance sheet, reviewing customers’ and suppliers’ situations, and initiating cost-reduction programs. That is all very challenging indeed. But then the CFO must also serve as the ship’s scout—watching for key trends that are emerging or that have accelerated as a result of COVID-19, such as digitization and changes in consumer behavior.
The balance between opportunity and risk is being altered substantially for most companies. The CEO could be tempted to profit from immediate demands—“let’s make ventilators, let’s make disinfectants.” The CFO’s job, by contrast, is to point out the differences between quick-to-market options and long-term post-COVID-19 options. These post-COVID-19 options can be an important factor in motivating and engaging employees during these challenging times.
It is also important for the CFO to present the board with reports and pre-reads that paint the entire picture in an objective way, including potential scenarios for the future. That is the only way boards and senior management can take thoughtful and well-founded decisions—first for the recovery and then for a sustainable future for all stakeholders. The word “crisis” has two meanings, one being “danger” and the other being “chance.” Today’s CFO must consider both.
The word ‘crisis’ has two meanings, one being ‘danger’ and the other being ‘chance.’ Today’s CFO must consider both.
Shaping the general transformation agenda
Barbara Kux: Outside of crisis periods, studies by INSEAD and McKinsey show, boards spend more than two-thirds of their time on “housekeeping”—financial reporting, compliance, environment, health and safety issues, regulatory issues, and the like. Only about 20 percent is spent on strategy. It is very important for boards to get out of this “compliance cage,” as I call it, and really focus on sustainable value creation. I’m thinking of the board of a leading oil and gas company that did just that. It recognized the importance of sustainable business development early on. The company gained first-mover advantages by diversifying toward a green business, including investing in solar and battery technologies.
At the end of the day, the board is ultimately responsible for the strategy, and the CFO is best-positioned to support strategy discussions. The finance leader can serve as a neutral party among the members of the C-suite, synthesizing their transformation ideas, supplementing them with comprehensive quantitative and qualitative data, and then working with the CEO to bring it all back to the board. This is even more important today to respond to COVID-19–related challenges early on.
Rick Haythornthwaite: The biggest challenge for any CEO, CFO, or other senior leader is to institutionalize new ideas without sucking the life out of them. Each C-suite leader plays a different but important role in this regard. The CFO needs to give transformation initiatives structure and rigor, while the CEO is probably better suited to take on the motivational aspects—for instance, the context for change and definitions of success. The whole team creates the strategy map—the markets and products affected, changes in pricing, the execution plan. But the CFO needs to ensure that the financial and operational underpinnings are there. Even if they are not visible to every single part of the organization, the board can see them through the CFO.
‘Scouting for the future’
Barbara Kux: To serve as an effective scout, the CFO should establish nonfinancial KPIs, like net promoter and employee-engagement scores, that are critical for the future health and performance of the organization. CFOs should review the strategy process to see that risks and opportunities are being well-assessed. And they can raise the political antennae of the board—accessing global think tanks, for instance, to understand what’s going on in Washington, China, and other important regions or in the medical community. The CEO often is not the most long-term–focused person in the organization; we know this because our financial markets are still very much short-term oriented. The board has to be long-term oriented. The CFO, therefore, must maintain a good balance of both. That might mean introducing a lean-transformation program with a focus on short-term results while, at the same time, contributing to the definition and implementation of a sustainable strategy for the company to emerge strong from the COVID-19 pandemic.
Rick Haythornthwaite: Boards need CEOs who can handle multiple truths, who can be expansive in thinking, and who can live comfortably in the future and bring the company along for the ride. The CFO also needs to be a protagonist in the boardroom, but from a different base: you can’t move to the future until you are anchored in the present. The CFO provides that anchor. Having a balance between future and present, between CEO and CFO, is important. The board wants to feel that there is strategic momentum—but also that the company is not just heading off on a journey of delusion.
Daring to dissent
Barbara Kux: It is important for the CEO and CFO to get on well, but their relationship should not be too close. It is better for the CFO to be objective, even if that sometimes leads to constructive conflicts. At times the CEO defaults to presenting only the positive in the boardroom, which makes it harder for the CFO to play back a more objective story. But that is very much the role of CFOs. They need to raise those early warnings. As a board director, I feel better if the CFO sometimes states, “by the way, we are losing market share here.” It takes a great deal of self-assurance for the CFO to come into the boardroom and say something like that. An independent-minded CFO will always be transparent with the board. A good CEO will always strive to establish an open relationship with the CFO. It is important for the board to motivate this constructive behavior from both executives so it can truly understand what is going well or not so well.
An independent-minded CFO will always be transparent with the board. A good CEO will always strive to establish an open relationship with the CFO.
Leading constructive dialogues
Rick Haythornthwaite: The senior-management team should not be delivering full solutions to the board at the outset; there should be a period of questions and discussion. The boardroom should be the place for CFOs and boards to engage in the cut and thrust of examination and exploration, with thoughtful planning and framing of dialogues to ensure that decision making is of the highest possible quality.
I’ll give you an example. CFOs used to be able to put traditional capital cases in front of the board about things like investments in plant and equipment, and there was typically a well-grooved dialogue. The kinds of actions they are talking about have changed, though. Think about companies’ investments in platform technologies, which can involve large sums being paid for targets with very low EBITDA—the idea being that value will ultimately come from the combination of entities rather than from a singular target.
Boards may be unfamiliar with such investment cases, so rather than jumping into quick, instinctive type-one decisions forced by the imposition of inappropriate and probably unnecessary time constraints, they will need an education. The board must take time to understand what, in practice, the acquisition of a platform would look like—how it might be scaled under new ownership, how that scaling would affect the bottom line, any risks involved, and so on. This is fundamentally a type-two decision, requiring time and deliberation. The CFO has an important role to play in making sure that this process happens, that it plays out over several board sessions rather than being squeezed into one meeting, and that conversations are grounded in hard numbers.
In the wake of COVID-19, of course, these dialogues may need to happen virtually; the quality of the conversation will still be good, as people are becoming accustomed to virtual meetings.2 They are fine for certain pro-forma tasks, where the issues are well-understood and processes are well-established. But when you’re trying to bring in new voices and new ideas, that’s when you need to be together in the same room.
Growing into the role of change agent
Barbara Kux: The role of the CFO is so much more expansive than it was even five years ago, including additional responsibility for cyber and digital transformations and for IT initiatives. To get your arms around the role and grow in it, take a step back and look at the company objectively. “What other roles could I play in the company, and how does that overlap with what I am doing now?” “Which initiatives would make the most impact in the company, and how could I realize quick wins in those areas?” Maybe it’s a focus on digital or compliance or export control or political intelligence. The CFO’s professional response to COVID-19 crisis management could be a springboard for future development. Whatever it is, I would identify it and just start. Take any kind of training you can get; read as many business publications as you can. Train yourself in how to deal with activist investors. Step by step, your hat will become bigger.
Rick Haythornthwaite: Whether you are talking about COVID-19 or digital disruption or any other impact on the business, please remember that the board still wants to sleep at night, and when the details are lost, the board will be much less forgiving of CFOs than of CEOs. Don’t forget that part of it. Particularly in this challenging economic environment, it is very important. Chairs and boards? We like to sleep soundly at night.
I’ve been a nurse for almost 10 years, working mainly on a hospital’s cardiac floor.
One day I was assigned to a makeshift intensive care unit that had previously been an observation unit for highly stable patients waiting for test results. Many of the patients in this new Covid-19 unit were intubated, with ventilators breathing for them.
When I started the shift, a trained intensive care unit nurse was crying in the supply closet. She was overwhelmed and anxious, hadn’t worked on her familiar unit in weeks, and had been told that her next shift would be an overnight one — and she had no choice in the matter.
Many of us don’t have a choice. We are assigned to work in unfamiliar units, with patients who are outside our expertise, without any training. We’re lost.
Most shifts start with nurses crying. Most shifts end that way too.
“It’s out of our hands,” we hear from hospital administrators.
Nurses who typically work in outpatient clinics are being sent to inpatient floors and assigned to care for patients who are acutely ill. Many haven’t worked at the bedside in decades. The number of patients who have fallen in this unit has risen exponentially in the past two weeks due to lack of training of outpatient nurses.
I wonder if the patients know their nurses are overwhelmed, and that many of them are scared they’ll make a deadly mistake.
“Everyone is out of their comfort zone, just hang in there,” we’re told.
Doctors have been instructed not to enter patients’ rooms unless they must as a way to minimize their exposure to the virus that causes Covid-19 while nurses go from one room to the next, medicating, bathing, turning, and comforting their patients without changing their uncomfortable personal protective equipment, since supplies are limited. This work can take hours. It is not uncommon for nurses to go all day without drinking water or eating because that would mean removing our protective gear.
During one of my shifts, a doctor at my hospital posted several TikToks he made while sitting at the nurses’ station of a busy Covid-19 unit as nurses whispered words of encouragement to patients clinging to life supported by ventilators. Over our words and the hum of the ventilators, I wondered if our patients heard music coming from this doctor’s TikToks.
“We hear your concerns, but there’s nothing we can do,” doesn’t reassure or encourage us.
One day as I worked in the makeshift ICU, one of the hospital’s leaders went floor to floor making an important delivery. She approached our nursing station in her crisp professional attire and fresh disposition, and proudly delivered a supply of makeup-removing wipes. She told us to use the wipes to clean our faces before putting on our N95 masks so we could reuse the masks later, then moved on to the next nurses’ station without asking how our staff was doing or if we needed anything. I wonder if she had noticed the nurse crying in the supply closet.
“That’s above us, we don’t make those decisions,” is passing the buck at its worst.
Excuses from hospital administrators seem to have punctuated every shift for the past six weeks. The praise and applause from hospital leadership only go so far.
I can read in my co-workers’ faces and hear from the stories they tell that the biggest danger we face is not Covid-19. It’s the hospital’s administration.
Leadership is failing us, even as we stand firm in not failing our patients. We care for your loved ones, Covid-19 or not, monitor their vital signs, give them medications, rub lotion on their backs, help them to the bathroom, and brush their hair. We FaceTime their families from our personal phones so they can see their loved ones fighting to live. This is important care that nurses are proud to provide.
The narrative is simple. Nursing, and nurses, are not valued. It’s a shame, and maybe even a deadly shame, that hospital leaders don’t care about nurses like we care for our patients.
The prominent executive is pushing beyond a letter he released last week and is now seeking to rally his peers around solving what he sees as a public health crisis.
‘All of us have allowed this crisis to grow,’ he wrote in a letter published Thursday in The New York Times.
Healthcare CEOs should put pressure on politicians without resorting to ‘blatant partisanship,’ he said.
Northwell Health President and CEO Michael J. Dowling isn’t done pushing fellow leaders of healthcare provider organizations to take political action in the aftermath of deadly mass shootings.
Dowling addressed healthcare CEOs in a “call to action“ published online last week by the Great Neck, New York–based nonprofit health system. Now he’s published a full-page print version of that letter in Thursday’s national edition of The New York Times, while reaching out directly to peers who could join him in a to-be-determined collective action plan to curb gun violence.
“To me, it’s an obligation of people who are in leadership positions to take some action, speak out, and prepare their organizations to address this as a public health issue,” Dowling tells HealthLeaders.
Wading into such a politically charged topic is sure to give some healthcare CEOs pause. Even if they keep their advocacy within all legal and ethical bounds, they could face rising distrust from community members who oppose further restrictions on firearms. But leaders have a responsibility to thread that needle for the sake of community health, Dowling says.
“I do anticipate that there’ll be criticism about this, but then again, if you’re in a leadership role, criticism is what you’ve got to deal with,” he says.
Dowling argues that healthcare leaders have successfully spoken out about other public health crises, such as smoking and drug use. But they have largely failed to respond adequately as gun violence inflicts considerable harm—both physical and emotional—on the communities they serve, he says.
“It is easy to point fingers at members of Congress for their inaction, the vile rhetoric of some politicians who stoke the flames of hatred, the lax laws that provide far-too-easy access to firearms, or the NRA’s intractable opposition to common sense legislation,” Dowling wrote in the print version of his letter. “It is far more difficult to look in the mirror and see what we have or haven’t done. All of us have allowed this crisis to grow. Sadly, as a nation, we have become numb to the bloodshed.”
His letter proposes a four-part agenda for healthcare leaders to tackle together:
- Put pressure on elected officials who “fail to support sensible gun legislation.” He urged healthcare CEOs to increase their political activity but avoid “blatant partisanship.” The online version of his letter links to OpenSecrets.org‘s repository of information on campaign contributions from gun rights interest groups to politicians.
- Invest in mental health without stigmatizing. Most mass murderers aren’t “psychotic or delusional,” Dowling wrote. Rather, they’re usually just disgruntled people who let their anger erupt into violence, which is why firearms sales to people at risk of harming themselves or others should be prohibited, he wrote.
- Increase awareness and training. Individuals shouldn’t be allowed to buy or access certain types of firearms “that serve no other purpose than to inflict mass casualties,” he wrote. Healthcare leaders should support efforts to spot risk factors and better understand so-called “red flag” laws that empower officials to take guns away from people deemed to be a potential threat to themselves or others, he wrote.
- Support universal background checks. In the same way that doctors shouldn’t write prescriptions without knowing a patient’s medical history to ensure the drug will do no harm, gun sellers shouldn’t be allowed to complete a transaction without having a background check conducted on the buyer, Dowling wrote, adding that a majority of Americans support this idea.
The letter notes that the U.S. has nearly 40,000 firearms-related deaths each year and that several dozen people have died in mass shootings thus far in 2019, including 31 earlier this month in separate shootings in El Paso, Texas, and Dayton, Ohio.
The way for-profit companies think about their relationship with the communities in which they operate has been shifting for some time. The most recent evidence of that shift came earlier this week, when the influential Business Roundtable released a revised statement on the principles of corporate governance, responding to criticism over the so-called “primacy of shareholders.”
The 181 CEOs who signed onto the new statement said they would run their business not just for the good of their shareholders but also for the good of customers, employees, suppliers, and communities. There’s some similarity between that updated notion of corporate responsibility and the sort of advocacy work Dowling wants to see from his for-profit and nonprofit peers alike.
Every single organization has a social mission, and large organizations that have sway in a local community have a responsibility to the community’s health, Dowling says.
“A healthy community helps and creates a healthy organization,” he says.
One major factor that may be pushing more CEOs to take a public stance on politically sensitive issues—or at least giving them the cover to do so confidently—is the generational shift in the U.S. workforce. Although most Americans overall say CEOs shouldn’t speak out, younger workers overwhelmingly support such action, as Fortune‘s Alan Murray reported, citing the magazine’s own polling.
Dowling says he has received hundreds of letters, emails, and phone calls from members of Northwell Health’s 70,000-person workforce expressing support in light of his original letter published online last week.
“The feedback has been absolutely universal in support,” he says.
But Which Policies?
Even among healthcare professionals who agree it’s appropriate to speak out on politically charged topics, there’s sharp disagreement over which policies lawmakers should enact and whether those policies would infringe on the public’s Second Amendment rights.
The group Doctors for Responsible Gun Ownership (DRGO) rejects the premise of Dowling’s argument: “Firearms are not a public health issue,” the DRGO website states, arguing that responsible gun ownership has been shown to benefit the public health by preventing violent crime.
Dennis Petrocelli, MD, a psychiatrist in Virginia, wrote a DRGO article that called Virginia’s proposed red flag law “misguided” and perhaps “the single greatest threat to our constitutional freedoms ever introduced in the Commonwealth of Virginia.” His concern is that the government might be able to take guns away without any real evidence of a threat.
While gun rights advocates may see Dowling as merely their latest political foe, Dowling contends that he’s pushing for a cause that can peaceably coexist with the constitutional right to bear arms.
“You can have effective, reasonable legislative action around guns that still protects the essence of what many people believe to be the core of the Second Amendment,” Dowling says. “It’s not an either/or situation.”
Others Speaking Out
Dowling isn’t, of course, the only healthcare leader speaking out about gun violence.
On the same day last week that Northwell Health published Dowling’s online call to action, Ascension published a similar letter from President and CEO Joseph R. Impicciche, JD, MHA, who referred to gun violence in American society as a “burgeoning public health crisis.”
“Silence in the face of such tragedy and wrongdoing falls short of our mission to advocate for a compassionate and just society,” Impicciche wrote, citing the health system’s Catholic commitment to defend human dignity.
The American Medical Association (AMA) and American College of Emergency Physicians (ACEP) each issued statements this month calling for public policy changes in response to these recent shootings, continuing their long-running advocacy work on the topic.
American Hospital Association 2019 Chairman Brian Gragnolati, who is president and CEO of Atlantic Health System in Morristown, New Jersey, said in a statement this month that hospitals and health systems “play a role in the larger conversation and are determined to use our collective voice to prevent more senseless tragedies.”