CFOs, at their core, are and have always been responsible for a company’s finances. Today, however, there’s a great deal more they need to understand and be capable of delivering.
“The expectation is that the CFO is a backstop for the CEO,” says Lenny Vairo, a partner at ON Partners. “Their expertise is needed to think like a CEO and help make strategic decisions. CFOs with strategic chops who can help steer the company are in high demand.”
Soft skills were once a perk for a role that had been equated to being the most senior finance executive. But now they’re a must-have trait.
“The ability to nurture and build relationships is critical for today’s CFOs,” says Larry Ormsby, a partner at ON Partners. “In businesses that are characterized by rapid growth, the seemingly perpetual onboarding of new employees and either Wall Street or Private Equity financing means relationships need to be established quickly so trust and cohesiveness can be formed.”
Smart Business spoke with Vairo and Ormsby about the skills and traits companies should consider in a CFO.
What are the critical characteristics found most often in successful CFOs?
Generally, the primary trait of any highly effective CFO is the ability to get things done. Time is an enemy, so incoming CFOs need to quickly make their mark on operations and, in some instances, sales.
CFOs must ensure the company has bench strength. Not having the personnel capable of dealing with the unexpected can be a significant setback. Building bench strength doesn’t necessarily involve hiring more people.
It means ensuring that those who are with the company are the most capable for their positions and external partners are well qualified and on demand. This also goes a long way in terms of succession planning.
There’s a lot of pressure today to do more with less, so execution is critical. An increasingly important trait, then, is the ability to leverage technology to improve efficiency. CEOs, especially as virtual workplaces proliferate, want a CFO that can connect employees and business processes through technology.
What commonly creates conflict between a CFO and the company for which he or she works?
Credibility is likely the most important trait of a CFO. When making a presentation, they must be able to handle tough questions, such as forecasts and assumptions. CFOs may feel confident in their numbers, but questions coming from different angles can cause them to fumble and lose the perception of credibility.
This is a skill that first-time CFOs need to master. They don’t need to have the answer to each question necessarily, but they need to be composed and capable of really understanding the relevancy of the question when responding.
Often internal politics and relationship struggles can undermine a CFO, especially if they’re not personable. Actively developing a healthy, trusting relationship with all members of the C-suite is critical to both the CFO’s and the company’s success.
What must CFOs get right when they join a company?
Certainly they need to be adept at execution, planning and repeatable processes, and need to be on their game when it comes to deliverables, leaving no room for surprises.
There’s also the first 90-days aspect — the ability to get people in the hallways talking about them in a positive way. While that’s not to diminish the skills of a CFO versus their ability to win a popularity contest, it must be recognized that a person’s perceived fit is essential to his or her ability to function in an executive role.
CFOs should quickly identify what they can bring to the table that was missing in the company before their hire. Maybe that’s fixing balance sheet or tax issues, or making better hires. Whatever it is, getting some early wins helps a lot.
The new bar for an effective CFO is high and each company needs something different from their CFO. Before making that hire, it’s important companies discuss exactly the critical, core traits needed for someone in that role. Don’t compromise. Otherwise, companies can expect to struggle trying to fit a square peg into a round hole. ●
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