Employee health and safety must be the foremost consideration of any business during the coronavirus pandemic. But one of the greatest challenges is understanding the needs and circumstances of employees who themselves are diverse in all of the traditional measures, but also are affected by widely varying life, work and family conditions, writes Lloyd W. Howell, Jr., in this opinion piece. He is chief financial officer and treasurer of Booz Allen Hamilton, a global technology and management consulting firm.
As an African American engineer and businessman, I’ve seen firsthand the impact of diversity on organizational and financial success, but in my current role as CFO of a Fortune 500 company, I’ve never been more convinced that diversity is essential for successful leadership in times of crisis. With the rapid spread of the COVID-19 virus, and the health uncertainties, sudden disruption and roiling financial markets that have come on its heels, businesses across the nation are struggling to make fast, hard decisions, often serving highly diverse customer bases, with no time to spare.
Beyond that, business requirements and operational modes are changing drastically in an instant, with standard decision processes cast aside and few models immediately available to quickly understand the financial and operational impacts of decisions. Who’s on tap to chart a new course, and their life and career experience, can be as important as the course itself.
According to The Wall Street Journal, the financial industry was the best performing sector in its study of the link between financial performance and diversity across S&P 500 companies. The Journal’s study determined that the 20 most diverse companies — dominated by banks and insurers — had an annual stock return of 10% over five years, compared to 4.2% for the 20 least diverse companies.
As a CFO overseeing a finance organization of 1,300, I find those financial sector results promising, but I think it’s essential we leave nothing on the table. In my own group, we’ve made progress on improving core measures of diversity, particularly in mid-levels and leadership, and we are committed to do more across the financial organization. First, we are focusing on having consciously unbiased discussions about potential rising stars and supporting them with promotion opportunities, mentorship, special projects and visibility with leadership to bring them higher into the organization. Ensuring that recruits see our diversity when they meet us is essential, too.
But here’s where we look to take the potential impact to the next level: We find an even greater impact on business performance comes from giving the same level of attention to finding and developing staff with diverse skillsets and training them on how to apply their unique professional expertise to higher level financial problems or business crises within our firm.
Within my department, we have staff trained in tax accounting, Sarbanes Oxley regulations, treasury functions, government accounting, compliance and other areas. But to raise this diversity of training from a slate of staff with functional skills to the level of influential strategic business partner requires development, mentoring, and fostering an environment of credentialization. An important part of diversity in a financial organization is supporting and encouraging diversity in credentials and certifications that provides a level of trust and confidence to the larger organization we serve.
We ask our financial staff to look at larger problems with a “CFO mentality,” meaning that every individual decision by staff at every level should be made as if they are sitting in my own chair, looking more broadly at impacts across our company and market. To get there, as an example, we train our professional staff to look beyond the mechanics of cash collections, to understand the end-to-end process and impacts, starting with client issues related to payment timing all the way to the impact on cash deployment and guidance to investors. With that context, their diverse core skillsets have greater influence and inclusion in corporate decision-making.
This charge, and the positive impact of diversity in all its iterations, is particularly powerful as we come together as a team to consider larger issues that directly impact financial performance. Take capital deployment strategy as an example area that would be reviewed through the lens of a crisis: In my group, a respected, credentialed treasury team looks at balance sheet capacity, tax experts review those considerations, accounting and reporting teams have a role, and the operational staff weighs in on issues of banking and payroll. In capital deployment, many decisions are of a highly judgmental nature — it’s never black and white; there are many options. To get to the right answer requires diversity in personal and life experience layered with diversity in deep professional expertise, along with the willingness to be inclusive of other ideas.
And already I see the value in the context of our more thoughtful responses to COVID-19, a crisis which reflects the increasingly complex, interconnected nature of business today. These types of crises won’t get any easier. Our employees, the communities we serve, and our shareholders expect us to use every possible tool to address them, most importantly the full scope of diversity of the very people in decision-making seats.
This content was originally published here.