Have you mastered your job? Are you an expert in your subject matter? Do you work independently, show initiative, and take charge of projects?
If so, you're on your way to becoming an effective leader, according to Dave Ulrich, Norm Smallwood, and Kate Sweetman, who outline the "core rules" of leadership in their recent book, The Leadership Code. But perhaps only halfway: there are four stages of leadership development, the authors say, and the questions above define stage two. (You passed stage one long ago, when you were still learning your role in the company and depended on others for mentorship and guidance.)
At stage three, "you've learned to work across boundaries, so whatever effect you have is multiplied," says Sweetman. By this point, an executive is not only performing his (or her) job well, but also expanding his role by mentoring and influencing other staffers or taking on new duties. (Some ace executive assistants can also be stage-three leaders, notes Sweetman, thanks to their tremendous networking abilities and influence throughout the company.)
Finally, at stage four — a level of leadership that top CFOs must reach — "the multiplier effect becomes exponential," says Sweetman. The leader shifts his focus to represent the company to outsiders — analysts, investors, the media, vendors, and customers. The stage-four leader also helps determine the direction of the business as part of the upper echelon of decision-makers at the company.
But Sweetman contends that many finance executives, even CFOs, advance no further than stage two. Career stages, she says, have nothing to do with rank or hierarchy and everything to do with how an individual matures in a role and contributes to the organization. Thus, a stage-two finance chief may be a technical expert who has committed every missive from the Financial Accounting Standards Board to memory, but not a fully developed leader.
While many people can happily spend their entire careers at stage two, finance executives who want to move up the ladder need to broaden the scope of their jobs, says Sweetman. Finance chiefs at small companies who hope to move to larger ones also benefit from developing their leadership capabilities — particularly if they want to land a job at a public company, where CFOs can spend as much as a third of their time interacting with outside stakeholders such as analysts and large institutional investors.
"What differentiates some of the most successful people is an ability to expand their job description," comments Sydney Finkelstein, a management professor at Dartmouth College's Tuck School of Business. "There is a type of person who is not only able to execute his job but who also redefines it and makes it into something others haven't thought of before. Those are the people who end up being the strongest leaders."
Don't Do It Yourself
How can you take your leadership abilities to the next level? First, try to assess your current position on the leadership ladder. Start keeping a diary of daily activities, so you can see where you really spend most of your time. A day full of data analysis, for example, would indicate that a finance chief who thinks he is focused on teaching junior staffers is still doing most of the work himself.
Indeed, "most people tend to rate themselves higher than they actually are," says Sweetman. That's why although self-assessment is a critical first step, feedback from colleagues and superiors can provide a more complete picture. Finkelstein says executive coaches can also play a key role for executives looking to assess their leadership abilities. "An adviser from the outside who has no baggage, if he's any good, is not going to be afraid to tell you the hard facts that others might not tell you," he says.
Once you know where you stand, you should enlist the help of your boss and colleagues, letting them know that you are trying to broaden your leadership abilities and need their help. "A classic mistake by a stage-two person is if someone else can't do a job, he will just take it back," says Sweetman. "Instead, he should really be letting go and showing someone else how to do it." A supportive colleague or boss can point out when you slide into such recidivist behavior.
Sometimes, being an expert in a particular field can typecast you in a stage-two role. For example, you might find yourself being swamped with complex revenue-recognition analyses to perform, thus getting few opportunities to work on cross-departmental projects. "You need to broaden your range, find out what people are doing in other departments, and let go of some things so that you can take on new things," says Sweetman. Such a simple act as leaving the office for lunch with colleagues can help an expert break out of a routine and begin networking.
A Matter of Trust
This shift in mind-set — letting go of the very habits that have helped drive a successful career — can prove challenging, but it is critical to becoming a more effective leader. "You hear so much about how important it is to find your strengths, but at some point, you need to walk away from certain strengths and develop new ones," says Sweetman. "It is a huge identity shift."
Moving from stage two to stage three involves shedding some day-to-day duties and working across departmental boundaries, teaching colleagues and co-workers, and looking to make a mark on the company as a whole rather than just doing the best possible job on the task at hand.
Progression to stage four involves yet another change in perspective, this time to look even more broadly at the business and how it fits into the competitive landscape. To reach this point, a CFO must rely heavily on his supporting cast, as there simply is not enough time in the day to both close the books and meet with outside stakeholders. "You're putting the technical stuff behind you, and putting your faith in those who are handing you the balance sheet, trusting that they've got it right," says Sweetman.
"At some point in any job, you can't do it all yourself," says Finkelstein. "But in order to delegate, you have to have tremendous confidence in the people around you. And that means spending the time to develop those people." Thus, one of the most reliable differentiators between a merely good leader and a great one is the ability to develop strong teams, where debate is welcomed and junior staffers can have opportunities to exercise their own leadership skills.
Such a passing of the baton requires a leap of faith, to be sure, especially in today's precarious economy. "The pressures are even greater than normal to focus on the bottom line, and not even next quarter but the end of the week," acknowledges Sweetman. "But the business is going to continue beyond the end of the week. A leader is thinking about that long-term future."
Kate O'Sullivan is a senior writer at CFO.
But Enough about You
Finance executives can use the career-stages model to assess talent companywide.
Building on the work of former Harvard Business School professors Gene Dalton and Paul Thompson, the career-stages model of leadership development outlined in the book TheLeadership Code can be used to evaluate talent needs throughout an organization. Even a quick exercise in which managers assess the leadership potential of their teams can provide a telling picture of strengths and weaknesses, says Kate Sweetman, co-author of the book and a consultant at The RBL Group, which employs the model. "It can be shocking to people when they realize intellectually what they need and then look at what they've got," she says.
Among other things, the model enables managers to:
• determine the company's distribution of talent
• determine how many people the company needs at each stage to reach its goals (few businesses require many stage-four leaders; ones and twos will typically be in greater demand)
• have discussions with employees about the overall structure of their careers
• change the company's recruiting strategy as required — K.O'S.