Can CFOs adapt from a hierarchical mindset?

With expectations of them growing, finance leaders may feel the need for a more fitting approach to leadership.

To take a more enlightened approach, CFOs and others may want to rethink the role of hierarchy, changing how decisions are made across their organisations

Love. Empathy. Soul.

It’s unlikely that those three words have found their way into a CFO’s job description. Nor do they seem likely to characterise the typical CFOs’ interactions with investors, bankers, or boards of directors. Yet as finance leaders’ roles expand — requiring them to navigate overlapping changes in technology, society, and the economy — some may see the need for a more nuanced approach to leadership that will help them tap into employee initiative, innovation, and ingenuity.

CFOs’ priorities have expanded beyond their core responsibilities to considering the business as a whole, as detailed in The CFO Agenda. Faced with persistent disruption and mounting demands from a growing roster of stakeholders, many CFOs serve as leaders, co-leaders, or sponsors of company transformations. What once may have been regarded as a support role has broadened into a leadership position which combines strategic oversight with insight into operational execution.

But finance chiefs may find themselves running into obstacles — siloed decision-making or stifling bureaucracy, as they attempt to remake corporate processes or rethink operating practices. While some of these barriers may result from surface matters, such as personality clashes, in some cases CFOs may actually be coming up against more foundational, deep-seated issues. In their efforts to mobilise and empower those around them, CFOs may be colliding with the organisation’s paradigm of power. Such a model encompasses the practices, methods, and structures that shape decision-making and guide action.

Without knowing it, CFOs may be trying to force a “power through” approach in an organisation that has a legacy of operating via a “power over” paradigm. What’s the difference? The power over method consolidates power in the hands of a few, using authority to achieve control over people and their work. The power through method requires building a shared sense of purpose, empowering others and enabling ownership at all levels of an organisation.

This shift in the concept of leadership — which is less about possessing power than in giving it away — represents a comprehensive change in thinking, behaving, and organising. And it comprises the core thesis of a new book, Leading Through: Activating the Soul, Heart, and Mind of Leadership (Harvard Business School Press, 2024) [1]. The power over paradigm, the authors argue, is rooted in the late 19th century. As modern industrial corporations emerged, they deployed bureaucracy and hierarchy to control and manage every resource, including human resources.

Replacing a power over model with a power through dynamic involves much more than a decisive shift in mindset. To take a more enlightened approach, CFOs and others may want to rethink the role of hierarchy, changing how decisions are made across their organisations. And to get a clearer sense of what’s driving productivity, they will likely want to pay close attention to metrics like employee engagement. Ultimately, as they rethink their leadership styles, CFOs may want to find an organisation model that more effectively balances employee alignment and autonomy.

In a worldwide survey, just 23 per cent of workers report significant engagement at work, while 62 per cent report that the organisations they work for do little to develop them, do not value them, and give them little opportunity to use their talents [2]. A 2023 Deloitte report described organisations as “falling short” in prioritising human sustainability — defined as the degree to which the organisation creates value for people as human beings. In Deloitte’s 2024 Global Human Capital Trends survey, just 43 per cent of employees say their organisations have left them better off than when they started.

While executives acknowledge the importance of human sustainability, few are making meaningful progress.

The reason? It may be that many companies remain mired in a hierarchical, legacy mindset, focused on extracting value from people rather than giving them licence to create value. At some companies, tangled reporting structures can create bottlenecks, preventing employees from making timely decisions and taking actions at the team level.

Enable and empower

For CFOs, the need to uproot the command-and-control organisational structure often coincides with a time when doing more of the same work — or even doing it faster — isn’t sufficient to keep up with the pace and scale of a transforming business landscape. Macroeconomic factors, from geopolitical tremors to demographic shifts to technological advances like Generative AI, are forcing change at a rapid pace. The result: these dynamics are reshaping how companies operate and how they create value, altering organisational needs and heaping more expectations on CFOs and their teams.

In practical terms, that means CFOs need to support updated management structures across the organisation as they enable and empower their own finance teams, supporting them with the necessary resources required to bolster their capabilities, including the adoption of innovative technologies including AI to upskill their workforce. If CFOs ultimately need to modify or expand their own leadership capabilities, they have to begin by questioning their historical ways of working, evaluating how best to navigate through the complexity and ambiguity to meet the moment.

Editor’s note: This is part one of a two-article series. Next: Taking a modular approach to shaping the organisation around teams.

Erin Clark is managing director, retired, Human Capital; Mike Danitz is principal, Finance & Enterprise Performance, both Deloitte Consulting LLP.

[1] Leading Through: Activating the Soul, Heart, and Mind of Leadership (Harvard Business Review Press, 2024), coauthored by Kim B. Clark (former dean, Harvard Business School, Jonathan R. Clark (professor of management, University of Texas at San Antonio) and Erin E. Clark (managing director, retired, Human Capital, Deloitte Consulting LLP).

[2] “State of the Global Workplace,” Gallup, June 12, 2024.

As published by the Deloitte US Chief Financial Officer Program in the 13 February 2025 edition of The CFO Journal in WSJ.

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