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3 pillars of human leadership CFOs need in an era of finance AI

The rapid progress of AI tools in the finance function in recent times has made it more critical than ever for CFOs and finance leaders to demonstrate three core pillars of human leadership: adaptivity, empathy and authenticity, according to Gartner, Inc.

“As AI becomes ever more capable and can carry out more work in the finance function, inevitably the question arises about whether AI replaces human employees,” said Dennis Gannon, vice president analyst in the Gartner Finance practice. “The picture that’s actually emerging as organisations put advanced digital technology into action is a lot more nuanced and difficult than a binary of whether a job stays or doesn’t.”

Speaking during the opening keynote at the Gartner CFO & Finance Executive Conference in National Harbor this week, Gannon went on to describe “the emergence of a human-machine learning loop” in which humans and machines are each doing what they’re best at and interacting with each other. 

“Technology is providing tripwires and early trigger warnings, providing simple recommendations and refining data, while humans are interpreting data, identifying problems and goals, and taking on more complex decisions,” said Gannon. “When it works well, the human and the machine complement each other and make each other better.” 

The biggest obstacle to things working well, however, is employees checking out of the process because of fatigue with near-constant change, and fears about being replaced by technology, stoking a widespread lack of faith in leadership.

“The expanding scope of what technology is now able to do for us has fundamentally changed what employees need from their leaders,” said Gannon. “Finance leaders need to access human leadership skills to guide not just their own teams but the broader enterprise in this environment.”

Human leaders drive employee intentions to stay with their current employer up by 12 percentage points over the average leader and drive improvements in employee wellbeing and engagement by 30 and 37 percentage points, respectively.

Three key pillars

The three key pillars of human leadership that CFOs and finance leaders must develop include adaptivity, empathy, and authenticity.

1. Adaptivity
Employees now demand a more personalised and flexible work experience. Since the Covid-19 pandemic and the significant shift to remote working and hybrid models, most finance employees have much more control over when and where they work.

“Adaptivity is not just when and where you work, however, it’s who you work with, it’s the extent to which you can control the volume of work, and what you work on,” said Gannon. “Of the three pillars, this is the area where finance leadership has performed best, and where their hand is really being forced by the labor market.”

2. Empathy
Gartner defines empathetic leadership as moving beyond the articulation of kindness into taking the time to cultivate a deliberate understanding of the motivations and experiences of someone else while leaving their own biases behind.  

“Empathetic leadership is especially important for CFOs, whose direct reports are feeling burnt out at a rate higher than any other function. It will become even more important as an increasing proportion of the workforce is made up of Gen Z employees, who set an even higher bar for the sort of emotionally intelligent leadership they expect in the workplace,” said Gannon.

3. Authenticity
This means more than just sharing personal details about oneself. It requires leaders willing to be personally vulnerable in front of their bosses, teams, and peers.

“Over 50% of finance employees tell us they feel afraid to take a calculated risk because they think it will blow back on them,” said Gannon. “Being personally vulnerable as a leader means being authentic about what you are feeling to show employees they can also put themselves out there without feeling like they will be punished by the system for doing so.”

Instilling financial discipline

CFO priorities tend to focus on things such as “more scrutiny, better data, more accountability.” While these things are intended to drive better financial discipline, they also can be alienating to the broader business because finance can be seen to stifle innovation and create burdens for other departments.

“When done right, the mission of driving financial discipline is the same as the mission of being a human leader,” said Gannon. “Putting people at the centre of the job makes you not just a more effective manager of people - but a more effective CFO. It improves your ability to make tough economic tradeoffs and protect financial outcomes for the whole enterprise.” 

Embrace AI as an organisational role, not just a technical skill

Elsewhere at the conference, Gartner analysts discussed the new AI-focused roles and skill sets finance leaders will need to incorporate into their teams, the importance of keeping people in the loop when using AI-based solutions, and other AI best practices.

“We’re seeing a profound shift in how finance teams work based on the accelerating use of AI to help them handle the increased complexity of their daily activities and become more productive,” said Mark D. McDonald, senior director analyst in the Gartner Finance Practice. “Just like any disruptive technology throughout history, AI will inevitably displace and replace some roles and skills, but new roles, skills, and opportunities will also emerge.

“Leading finance teams will learn to position AI-driven tools and solutions as co-workers that help them do their jobs better. Using AI as a co-worker instead of a replacement also ensures that finance leaders avoid delegating responsibility to machines that should be owned by a person.”

In the future, Gartner analysts expect finance and accounting teams to look more like software development organisations, and finance leaders should begin introducing aspects of this paradigm shift into their teams. Three roles will play an integral role in finance teams in the future:

  1. Citizen Data Scientists - These are current finance and accounting staff that will learn basic data science skills to help them automate tasks and make better decisions. Citizen data scientists will not have the expertise to build complex solutions beyond their immediate work scope. They will need help creating professional-grade solutions.
  2. Center of Excellence – These are roles new to an organisation and are comprised of technical professionals who can build and maintain technically-solid AI solutions. These include professional data scientists, software engineers, data engineers, statisticians, and other non-traditional finance roles. A centre of excellence often starts with a single professional data scientist and grows with demand.
  3. Company Leadership - Building teams of the future requires leaders to balance the challenges of introducing new skills and processes while making sure that the organization continues to support daily business operations.

The human-machine learning loop

By taking advantage of the complementary strengths of people and AI technology, finance teams can build a collaborative partnership in a human-machine learning loop where each relies on the other. This loop establishes a new working pattern that taps into AI’s power without removing people from the equation.

“The loop formalises what each is responsible for so that leaders don’t over-rely on machines or delegate human responsibilities to machines. The loop ensures human feedback and judgement remains front and centre,” said McDonald.

“Leverage AI for what it does best - automating manual tasks,” advised McDonald. “Be cautious about allowing machines to take actions based on their own advice. By leveraging the strengths of both people and their new machine counterparts, organisations can reach new levels of productivity and value without big risks.”

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