Stage 10: Recovery Leadership

Stage 10: Recovery Leadership


Leadership is critical to a financial recovery. A leader articulates a vision of what will be achieved through financial recovery. In addition, a leader demonstrates and embodies the behaviors and attitudes that are necessary to regain financial sustainability. He or she engages stakeholders in the recovery process and enables them to make meaningful contributions. A leader also makes tough decisions and keeps the recovery process on track and moving forward. 

On this part of the Web site, you can learn about the essentials of leadership in the financial recovery process. The site is intended to provide a checklist of key leadership tasks and behaviors during recovery. You can access the following topics:

  • Who is the leader? This section discusses who fills the role of leader during the recovery.
  • General leadership behaviors for recovery. The common traits of effective recovery leaders are discussed here.
  • Leadership credibility. During financial recovery, followers asked to take on difficult challenges will require credible leaders.
  • Recovery leader and elected officials. This section describes how the recovery leader can work successfully with elected officials.
  • Communication. Communication is a vital task for the recovery leader at all stages of the recovery process.
  • Leadership tasks in the three phases of recovery. Different tasks are required of the leader in the Bridge, Reform, and Transform Phases.


Who is the leader?

The leader of the recovery process must catalyze the organization into action. Therefore, the primary leader must be sufficiently highly placed in the organization to influence others to change. Ideally, the organization’s CEO will be the primary leader (i.e., a city or county manager, a school superintendent, or a mayor).

People will naturally look to the finance officer for leadership as well. Consequently, the finance officer should be prepared to exercise leadership to help build the case for action, to get other people behind the recovery effort, and ultimately to lead the organization to financial resiliency.

Leadership is Everyone’s Job

Ideally, leadership should come from people across the organization. Champions of the recovery process can be created by engaging those with a positive disposition towards the recovery process. For example, include those people on work teams that are charged with diagnosing the causes of financial distress or developing financial strategies.

Widespread leadership will result in a faster recovery and better institutionalization of the improvements made. It will also help take finance out of a policing role good financial management practices will take root because many people want them to, not because of the threat of sanction from the finance department.

At a minimum, there should be a central recovery team that is comprised of senior management. This team can work together to complete the leadership tasks described on this site.


Leadership Behaviors

There is no single best style of leadership for a recovery process, but effective leaders of financial recovery do have some commonalities. Below is a checklist of important leadership qualities and behaviors for recovery. Remember that leadership is a skill, so if your team is missing a trait it can be learned.

  • Credibility
  • Emotional intelligence
  • Collaborative
  • Action-orientation
  • Detail-orientation
  • Vision
  • Enthusiasm about public service
  • Fairness and respect
  • Honesty and forthrightness
  • Skepticism
  • Courage


Leadership Credibility

Leaders should be mindful of how their words and actions impact credibility. Credibility is essential during financial recovery. As leadership guru Jim Kouzes puts it, “When you have to act quickly and decisively under adverse circumstances, and at the same time maintain the highest levels of follower commitment, you need lots of credit stored up with your constituents.” Here is a checklist for creating credible leadership.

  • Articulate a vision
  • Be consistent in words and behaviors
  • Be flexible in solutions
  • Be honest
  • Give the personal touch
  • Demonstrate expertise
  • Trust and encourage followers



Communication is a vital task for the recovery leader at all stages of the recovery process. Use the following communication checklist, especially in the beginning of the recovery process:

  1. Be direct, honest, accessible, and forthright and be respectful in the process. If the leader is perceived as autocratic or unwilling to listen, he or she will lose credibility. If you want to influence people, be willing to be influenced.
  2. Acknowledge the concerns of employees and the public. This is essential so that stakeholders believe the recovery plan addresses the important issues. 
  3. Don’t make unrealistic commitments. Be realistic, but still be willing to take some risks.
  4. Find and convert key influencers to your cause. The amount of influence someone has may not always correspond with their position on the organizational chart. Hearing from key influencers will encourage others to make difficult choices and take difficult actions.
  5. Repeat, repeat, repeat. It may take a few times before a message sinks in.
  • Communications plan
  • Media relations


Recovery Leaders and Elected Officials

The popular image of a private-sector turnaround leader is one of a dashing, high-powered, highly visible executive. Such a person would run into trouble in most local governments because, as democratic institutions, local governments have a less centralized power structure. In a financial recovery, it is possible to have a behind the scenes leadership style - however, it is better and often necessary to have a hands-on and visible style. Below is a checklist for how the leader can be visible and hands-on while working cooperatively with elected officials. 

  • Make a personal commitment to work with and protect elected officials
  • Alter politics
  • Show that it is not all pain
  • Develop and adopt financial policies
  • Dont play the blame game
  • Engage elected officials in the solution
  • Help elected officials deliver key messages
  • Create roles for elected officials in the recovery process
  • No surprises


Leadership Tasks in the Three Phases of Recovery



Recognizing that financial distress exists and convincing a critical mass of stakeholders of the same is crucial. Briding involves getting through the immediate crisis and creating breathing room to make more sustainable reforms.

  •  Initiate the Recovery Process
  • Get a Handle on the Situation
  • Build a Recovery Team
  • Build Support for Recovery
  • Deal with Dissent



Stabilization of finances isn’t enough. The organization needs a vision to become financially sustainable and create value for the public. Leadership in the reform stage involves creating a strategic vision for the organization and putting in place the structures to realize it. A checklist of key tasks is below:

  • Help the organization articulate its strategic vision
  • Further involve staff in change process
  • Ensure accountability
  • Focused training
  • Communicate
  • Align rewards and incentives with recovery objectives
  • Simplify and clarify organizational structure



The Transform Stage is where the organization goes beyond where it was when it started financial decline. The goal is not to become merely financially sustainable, but to become financially resilient: adaptable to changing conditions and able to recover readily from setbacks. Resiliency is characterized by a number of good financial management practices; however, changing the organization’s culture is the primary leadership task for becoming resilient. A checklist of key leadership tasks for the Transform Stage is below:

  • Assess culture and change readiness
  • Determine new values and announce them
  • Identify behaviors needed to realize the new culture
  • Measure and create incentives for the new behaviors
  • Engage employees
  • Find ways to deal with resistant employees

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