How Can Finance Directors Improve Comms with Stakeholders?

Effective communication between finance directors and stakeholders is more crucial than ever. 

As the financial stewards of their organisations, finance directors must navigate myriad relationships, from board members and executives to investors and regulatory bodies, fostering trust, transparency and informed decision-making.

One of the primary responsibilities of finance directors is to provide stakeholders with accurate and timely financial information. This forms the foundation of effective communication and enables stakeholders to make informed decisions.

Ewout Steenbergen, Executive VP & Chief Financial Officer of Booking Holdings, says finance directors should keep stakeholders constantly informed while working towards their business’ desired outcomes.

"A critical responsibility for any finance leader is to effectively communicate business performance, growth trajectory and important milestones, to bring value back to the business,” says Steenbergen.

“But leaders can often solely focus on outcomes and not bring stakeholders along on the journey to get there. Building and maintaining stakeholder trust is an ongoing process that requires clear, transparent and consistent communication throughout a company’s growth journey.”

Streamlined reporting

Finance directors can focus on streamlining reporting processes to improve the timeliness of their communication and the accuracy of the data they share with stakeholders. Implementing efficient systems and technologies to gather, analyse and present financial data quickly and accurately is a way of doing this.

It's also crucial to tailor information to different stakeholders, recognising that they have varying levels of financial literacy and information needs. Customising reports and presentations accordingly ensures that each stakeholder group receives relevant and comprehensible information.

Moreover, finance directors should go beyond raw numbers by offering insights into trends, risks and opportunities. This helps stakeholders understand the implications of financial data and make more informed decisions. Maintaining a consistent reporting format and schedule is also essential to build trust among stakeholders.

Effective comms: Harness technology

Finance directors can harness technology to improve communication with stakeholders in the digital age. 

Implementing cloud-based collaboration tools allows for real-time sharing of documents, data, and insights, facilitating seamless communication between finance teams and stakeholders. 

Utilising data visualisation tools can make complex financial data more accessible through interactive dashboards and visual representations, helping stakeholders grasp key information quickly.

Effective comms: Secure communication

It's equally important to adopt secure communication channels to ensure that sensitive financial information is shared through encrypted platforms, maintaining confidentiality and compliance.

For remote or global stakeholders, video conferencing can provide a more personal touch and facilitate clearer communication compared to email or phone calls.

Effective comms: Listening is a skill

While technical expertise is crucial, finance directors must also cultivate strong interpersonal skills to communicate effectively with stakeholders. 

Active listening is a key skill, paying close attention to stakeholders' concerns and perspectives, demonstrating that their input is valued. 

Empathy is equally important - understanding the unique pressures and priorities of different stakeholders and tailoring communication approaches accordingly.

Clarity and conciseness in presenting complex financial information in jargon-free language is therefore essential, making it accessible to non-financial stakeholders. 

Nowadays, as the finance director role increasingly expands into other realms, it’s equally important to be able to explain information unrelated to finance in a coherent manner.

CFO communication checklist

Consistent communication

To maintain strong relationships with stakeholders, finance directors should establish consistent communication channels and feedback mechanisms. This can include setting up regular meetings or calls with key stakeholders to provide updates on financial performance and address any concerns.

Open-door policy

An open-door policy encourages stakeholders to reach out with questions or concerns at any time, fostering an environment of transparency and trust.

Surveys and feedback

Periodically gathering input from stakeholders on the effectiveness of financial communication and areas for improvement through surveys and feedback sessions can be invaluable.

Cross-functional 

Working closely with other departments, such as investor relations and corporate communications, ensures consistent messaging across all stakeholder groups.

Peter van Veen, ICAEW Director Corporate Governance and Stewardship, says: “Effectively communicating with stakeholders requires not only a joined-up approach, but also applying the same quality standards and reporting processes used to deliver financial information to deliver non-financial information.

“These changing stakeholder demands have changed the role of the CFO from a purely accounting and finance-related role to one encompassing a broad set of responsibilities, including sustainability reporting and other types of material reporting. This is transforming the role of the CFO into that of a ‘chief value officer.’”

Pressurising and stressful

The nature of dealing with different types of stakeholders simultaneously as a finance director can be pressurising and stressful.

“Companies have increasingly demanding stakeholders to manage,” says van Veen.

“From changing reporting requirements from regulators to customers and investors demanding full supply-chain transparency, to NGOs calling for increased reporting on challenging operational areas, businesses are under pressure to report more and better. Understanding who your stakeholders are, what they want, and how best to meet those demands can be a significant challenge.”

Maintaining transparency by providing honest and accurate information, even when it's unfavourable, builds trust and credibility in the long run.

Staying calm and composed, even in high-pressure situations, instils confidence in stakeholders and demonstrates professional leadership.

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