This week, I am delighted to share Communication Director’s piece by Kenny Murdoch, international Chief Financial Officer, on “What Drives Value.”
As you may recall from last week’s post where I discussed tangible steps that a communicator can take to stake out a stronger position of leadership. One of the steps was “get one or two board-level sponsors who aren’t your boss or your boss’s boss.”
Kenny Murdoch was one of those guys, a CFO who championed communication during my time at Maersk Oil in Copenhagen. Indeed, the article below started with some conversations between us, as I wasseeking support from my C-level friends for the effort to make a stronger case for business communication in the marketplace.
Thank you for an excellent piece, Kenny. And thank you for being willing to publish and share it, Communication Director.
The world of finance is focused heavily on results and numbers. But numbers alone aren’t enough: professional communications can help tell the full story. Based on observations made during his global career, one chief financial officer calls for closer ties between finance and business communication professionals.
By Kenny Murdoch
One of the great learnings in my career as chief financial officer has been about the value that professional business communicators can add to an organisation’s efforts to create value and deliver its financial targets.
I have to admit a strong inclination to believe in the importance of communication, and indeed of people, in driving organisational value. I actually had an early career interest in human resources before accepting the advice of a mentor to move into finance, and came to recognise that these two vital functions of the enterprise have become unnecessarily disconnected. Communication is often the bridge that connects the people side and the financial side, putting these activities into a more coherent context.
The world of finance in business is focused heavily on results and numbers. Cash flows, profits, losses, costs and valuations all add up to lots of digits on spreadsheets and screens. With such a quantitative tone to what business does, it’s easy to lose sight of what drives the numbers and how we can use all of the assets, especially our employees’ talents to help move them in the right direction.
I see the communication professionals I work with as playing crucial roles in three different ways:
- Supporting valuation
The role of a communication function in supporting and amplifying positive perceptions of what a company and its activities are worth cannot be overstated. It isn’t often said that valuation is essentially a price applied to the overall perception of something’s value, whether it’s a house or a company. It is critical that external stakeholders are engaged with the company’s strategy/vision, current results and underlying value proposition. Communication leaders and practitioners play an essential role in ensuring that a complete investor relations story can be given that enables a proper valuation of the company. Indeed, clear, transparent and professional communication can reduce uncertainty and thereby the perceived risk when investors, analysts and banks are reviewing a company.
- Accelerating alignment and innovation
Organisations are in a constant state of change, responding to market, technology and societal developments. Sometimes, required changes may be technical or granular. Other times they may need to be sweeping and dramatic. In all cases, internal stakeholders –employees at all levels need to understand what’s new, what’s changing, why things are changing and how the changes fit together. There is a strong link between high employee engagement and improved company returns and value. The employees are the front line to the customer and have to be fully engaged and aligned with the company strategy.
Too many organisations just leave the communications role to front-line managers, who, more often than not, are untrained for this kind of communicating and who frequently have their own interests to protect. Making modest investments in professional communication support can deliver huge benefits in framing the big picture and ensuring that leaders and top influencers understand what’s happening. By giving context to why the story is being adjusted on a regular basis and helping keep the whole business moving in a common direction, professional communication support for change initiatives can pay significant dividends, reduce friction, increase employee engagement, accelerate alignment and spread innovation.
- Thought partnership
Communication professionals often have unique perspectives into looking both at the big picture and at how to make change tangible to people. They also have a capacity for connecting individual numbers and activities with the pursuit and delivery of larger purposes and ambitions. I’ve found that the communicators I’ve worked with have helped me see the broader implications of decisions, and have given insights into how we can better engage people inside and outside the company who have a stake in our actions and success.
Working with communication professionals
During my time as a chief financial officer, I have been the executive lead with accountability to drive a company-wide transformation on the chief executive officer’s behalf. This was a multi-dimensional change initiative addressing the company’s key business processes along with its culture. It became clear to me that success would require a cohesive external story about how this would modernise the company, improve future results and deliver a coherent integration of all of the internal stories so that alignment was accelerated and conflict was minimised. Success of this project required a well-thought-out strategy, detailed planning, and an unwavering commitment from the leadership team not to sweep problems under the rug, but to address them and drive improvements openly and quickly. The communication function was deeply involved and essential in driving the process and cultural changes required.
Chief financial officers also have a major external facing role. The chief financial officer engages with a multitude of external stakeholders: shareholders, clients, government authorities, joint venture partners, banks and suppliers, to name a few. In my experience, it is essential that the communications professionals have a wide view of the needs of all the external stakeholders and support the leaders in crafting and telling the company story when engaging stakeholders externally. If communications are too internally focused, they will miss out on opportunities for creating major value for the company, opportunities which can emerge by getting stakeholders to see value for themselves in the company’s success.
Looking ahead, I see the chief financial officer role being that of an educated sponsor of communication and as an advocate who will testify to the benefits it can add – to drive required changes, to valuation, and to organisational coherence. And, in no small part, I see a large part of the value of the chief financial officer role coming from how a chief financial officer communicates with all stakeholders. The chief financial officer should play a central role in supporting their business communicators and in working together as partners in driving and expanding value creation for all stakeholders.
Kenny Murdoch is a global finance professional, with 27 years experience built in leading blue chip companies – Rolls Royce, Schlumberger and Maersk. His last role was as the chief financial officer for a global oilfield services company, Bumi Armada, that was publicly listed on the Malaysian StockExchange. A global executive, Kenny has lived and worked in eight countries.