CEOs: This is what you should look for in your CFO
When you’re kept up at night mulling over critical decisions for your company, who are you looking to for trustworthy insights? Business leaders seek counterparts who will complement their own talent and leadership styles to further the goals of the company. Perhaps you’re in the active hiring stage for a new CFO, or maybe you’re already working with your CFO and you want to know if they’re up to par with industry standards. Although CEOs may have different priorities for characteristics they look for in a CFO, there are certain elements that are must-haves for any CFO, regardless of industry or business.
This article covers the essentials for what CEOs should expect from their financial leaders. We pulled our insights from a survey of 130 Amplēo clients on technical skills and characteristics they value the most in their CFO.
Technical Skill #1— Maintaining the financial accuracy that keeps the business running
The number one priority for a CFO is to provide accurate, reliable, and timely financial statements. Always. This most fundamental responsibility provides the groundwork for the integrity of business decisions. This also happens to be number one on our survey for technical qualities CEOs value most in their CFO. If a CFO isn’t delivering on this fundamental task, and if he or she fails to hold the team accountable to do so, credibility is gone.
You may know how it feels when a CFO doesn’t fulfill these basic duties—it’s discouraging and leaves a very real impact on the business. In a global survey of 1000+ C-suite executives, Blackline shares that approximately 70% of business leaders and finance professionals have made at least one business decision from unreliable financials. With this sobering statistic, it’s no surprise that CEOs must maintain a careful approach to selecting and partnering with their CFO.
The second most important technical quality from our survey is the ability to create a solid cash flow forecast. Business owners often underestimate the enabling power of having clear insight into their cash flow. Too many CEOs are unwittingly hamstrung when they receive only the limited views that come from information within the income statement. A CFO who understands their responsibility to provide insight into cash flow and who communicates its importance to company leadership is one who demonstrates the strategic thinking that makes all the difference in building a successful business.
Technical Skill #2— Strategy: the ability to interpret and provide insights
One of your focus areas is to meet your goals for business growth. So, how is your CFO going to help you with these efforts? Once CFOs competently execute on maintaining financial accuracy, they should shift to more strategic initiatives.
A 2017 McKinsay article states, “Eighteen percent of CFOs say that, in the past year, they have created the most value for their companies through their traditional finance work. But others are most likely to cite strategic leadership (22 percent) as the area where they’ve created the most value.” Once financial integrity is established, the next logical duty of a CFO would be to aid you in the scaling and expansion of the business.
A CFO’s role in this area is critical, as they have the power to combine accurate data with robust insights. Beyond short-term responsibilities, a CFO should be forward-thinking and should readily consider long-term consequences of today’s decisions. Considering the current economic environment, a CFO’s role is developing in that they are expected to take on more of a proactive leadership role while addressing the challenge of keeping the financials accurate and insightful during volatile times.
So, you have some awesome data. Your finance team is working like cogs in perfect synch…. Now what? How do you know if you have a strategic CFO? One indicator is if they ask questions around the trajectory of the company, current constraints, and concerns that you might have. Another indicator is if he or she brings different strategies to the table, analyzes them with you and visualizes potential impacts on the business.
Key character traits
Technical skills and strategic abilities are vital—however, many business owners forget to take into account what character traits they value in their CFOs.
The chart above represents the results of our 130 CEO clients on what characteristic traits they value (based on a forced ranking). The top result is honesty, followed by attention to detail and strategic thinking.
We all know our fair share of anecdotes about dishonesty in the workplace. Ethics and honesty both fall into the category of answering the questions, “Can I trust you? Can I rely on you to act as the stabilizer of my business?” A CFO with a brilliant mind can work wonders—but will all of that go down the drain when you find out that he or she is being dishonest? Integrity in leadership sets the tone for behavior in the rest of the organization. A CFO’s reputation of honesty cascades down into the rest of the team.
2. Strategic thinking and attention to detail
Whether coming up with new automation for streamlining financial processes or examining data from a different perspective, a strategically minded CFO makes a world of difference. A strategic CFO has the vision to identify external and internal disruptors in the market down the road. Attention to detail and presence of mind go hand-in-hand with strategic thinking. The ability to observe certain trends in data or in the marketplace—combined with proper team management—can foster an internal environment of accountability. A detail-oriented CFO takes what they know about the current strategy, evaluates the components, and translates them to operational priorities for the business.
You’re entitled to your preferences on what to look for in a CFO. However, make sure that your CFO meets the essentials. The CFO acts as a navigator in turbulent waters, and serves as an anchor, providing data-backed recommendations for the business. In either selecting a CFO or working with your current CFO, keep an eye out for these qualities. Having a CFO that meets these can bolster your confidence and build a sure foundation of information from which to propel your business into profitable and healthy growth.