The culture-first CFO: How to face down uncertainty in a downturn

October 13, 2022

By Shani Ishigaki


When you’re the CFO at a small or midsize company, it’s easy to de-prioritise organisational culture or leave it up to people teams. But remaining high-level on culture could be a costly mistake, particularly in the midst of uncertainty and recession fears.

With zero time to lose, Weel’s Co-founder and CEO Daniel Kniaz sat down with our CFO Damon Hauenstein to discuss ways finance leaders can provide important financial and emotional security to their teams in an economic downturn.

Though their takeaways may not surprise you, they’re a reminder that the CFO role has come a long way from number crunching and budget sign-offs — and culture is now mission-critical.

So if culture can’t wait, how can CFOs start to lead top-down change to create bottom-line prosperity?

Lead on culture, not just numbers

Layoffs, closures, reduced labour demands. Business owners, CFOs and employees don’t need to look far to find media flooded with ominous economic news.

We may not know how these challenges will impact our businesses, but we do know that productivity and profitability all depend on one thing: a resilient organisational culture.

According to McKinsey, companies with strong cultures achieve up to 3x higher returns to shareholders than those without.

The hard part? You can’t directly measure the impact of behaviours, mindsets, rituals and experiences.

The good news? Hauenstein says you’ll see positive changes reflected in other numbers. Finance leaders who help champion the right culture are able to unlock greater value from their employees and turbocharge performance.

“Employees are our most important asset at Weel. So we really over-index on initiatives that make our team happy, motivated and aligned to our mission. Because there’s a genuine belief that we get outsized returns for the investment we make in that talent function across the business,” Hauenstein says.

It can be tempting to trim investment in employee benefits and wellbeing initiatives as relief from painful short-term conditions like these. But CFOs who keep culture at the forefront of their decisions will be better prepared for the worst of times and the best of times.

Prepare teams for the challenges ahead

Whatever financial conditions lie ahead, the narrative CFOs drive internally should never mislead people with false hope. Glossing over information or sending mixed signals can quickly lead to insecurities: a sure-enough way to erode trust and company confidence.

“One critical thing is probably just to be clear with the team on the position of the business. People lose trust if they think things are great, and actually, things are less great than they understand,” Hauenstein says.

The answer? Thoughtful, broadly communicated messaging.

“At Weel, we make it a point to constantly share our revenue growth, runway and other key metrics. I’m often quite surprised when new employees will come up to me and say, ‘Hey, I love hearing this. We’ve never heard this elsewhere.’ And I think it’s really important because it helps build psychological safety,” says Kniaz.

If you’re presenting numbers, roadmaps, plans, challenges and opportunities to the CEO, extend those insights to the wider team.

Earn employee trust and build leadership credibility

Now let’s talk about the news every employee dreads, that no leader wants to deliver: layoffs.

Aside from the obvious impact on departing employees, there’s a risk those left behind will develop feelings of distrust towards leadership or lose confidence in your business.

Stockholm University research found that after a layoff, companies saw a 41% decline in job satisfaction, a 36% decline in organisational commitment and a 20% decline in job performance among remaining employees.

Unfortunately, it’s a stress test some CFOs will face, but you can take steps to adapt, bounce back and even strengthen your culture.

“We’ve been fortunate enough to enjoy a period of disciplined growth at Weel. But we’ve had customers and finance leaders in our community tell us that if you have to do it, do it quickly and compassionately. And then, reposition the business and make it clear to everyone that you’ve now got a sustainable business model and cost base in place to succeed in the market. Make it clear your employees are part of the future of the organisation,” Hauenstein says.

CFOs can lead the charge by helping their businesses invest more heavily in ongoing change management. Again, radical candour is key to rebuilding trust. But don’t just share directional ideas for the future. Actively demonstrate how you’re making progress towards your goals.

Look beyond traditional methods of cost cutting

Another common tripwire? Simply playing the “no card” on team budgets. Instead, CFOs should architect a culture of ownership where each and every employee is accountable for spending.

“Everyone should be trying to achieve the same outcome for the company,” Hauenstein says. “For example, you might have two or three company-level objectives that cascade down to two or three team-level and individual objectives,” Hauenstein says.

“When everyone has a better appreciation of what the business is trying to achieve, it encourages them to think about their own function and the ways they can reduce costs or even just recommend more efficient ways of doing things.”

But how does a culture of ownership work in practical terms? 

First, consider the old way of doing things, where employees either ask for permission to use the company credit card (or forgiveness for doing the wrong thing):

  1. Lack of trust and control. Weel’s recent State of Employee Spending and Trust report found that 30% of SME owners don’t trust their employees with a corporate credit card or expense allowances. Cracking down on out-of-policy spending only gets harder as the business grows.
  2. Manual processes can’t scale. CFOs have trouble keeping up with employee-initiated spending at scale, which increases admin and slows down decision making.
  3. Lack of cash flow visibility. Old, drawn-out reimbursement models can quickly catch CFOs out. Plus, letting employees carry the financial burden isn’t fair or sustainable.

Create a healthy spending and savings culture

The better approach to recession-proofing your budget? Encouraging growth with healthy guardrails.

Instead of purely thinking about how you’re going to control out-of-policy spending, help your teams understand why they should treat company dollars with care.

That doesn’t mean relying on their goodwill. Finance is ultimately responsible for monitoring expenses and ensuring teams stick to their budgets. But spending all your time in the weeds — on every transaction — doesn’t always prevent irresponsible spending from happening in the first place. Proper systems to implement guardrails do.

“There’s no way the CFO can be across every decision and every dollar that goes out the door. It’s just not scalable. We want to set the team up to make some of those decisions themselves and help identify where there may be cost savings that allow us to achieve our goals,” Hauenstein says.

Good habits and guardrails help businesses endure

Putting your company in a good financial position isn't always about making difficult trade-offs. With modern spend management solutions like Weel, CFOs can nurture a strong culture of responsibility that keeps cost-reduction and spending on the right track.

azul expressive wave