HAND on heart, do you consider yourself a ‘bean counter’? I suspect few CFOs would; one or two might bristle with indignation. And I can understand their reaction because it’s a pejorative term to many of us. There is little doubt about the ability of the phrase to stick as a label. So what’s gone wrong? Why aren’t CFOs regarded as either fully rounded members or credible leaders in the boardroom?
I decided to find the answers to this question in my former guise as CFO for a listed company. I discovered that you can learn a lot by watching and listening.
To be a leader, it is not enough to be competent. The leadership qualities that CFOs need to display require them to extend themselves beyond this into commercial knowledge, judgement and an ability to challenge constructively and adopt a collaborative style. For example, one CEO that I observed had understood the importance of listening, communicating with clarity and contributing strategically to board discussions. His style was impressive so I decided to adopt these traits although it required a change in mind-set and a step outside my comfort zone.
But in doing so, I learned to embrace accountability and trust my instincts. I also observed how another CEO allied tact and respect with a questioning mind. He combined this with an understanding of the relationships between revenue, profit and cash. But when it comes to presence, we’re talking about a combination of style and behaviours: the way you present yourself, the ability to connect, and the respect you command. In this era of executive hoodies and jeans, a smart appearance still seems to equate to a smart mind.
As a trainer, I’m asked by CFOs: ‘how can I become strategic?’, ‘how can I become influential in the boardroom?’ and ‘how can I demonstrate commercial acumen?’ Sometimes, the answers aren’t difficult to find. One delegate I coached lacked confidence in his ability to achieve the leadership role he craved, but he failed to appreciate what was expected of him. A chat with his CEO was needed to put him right. But it’s not always that simple. I am privileged to have worked closely with high-profile CEOs and CFOs, and have identified their vital ingredients for sound leadership. I’ve short-listed my favourites:
• Personal presence and influence: aware of the need to up their game, these CFOs practice techniques to become influential and understand the decision preferences of fellow directors
• Board engagement: they connect with their non-financial directors and link this with a deep understanding of the business model
• Emerging risks: they are on the look-out for blind spots and opportunities and take great interest in contingency planning
• Talent management: hiring and/or retaining skilled individuals is a key focus, and these CFOs know who they can rely on to delegate with confidence, freeing up time for strategic matters.
I have also gained valuable insights into challenges facing CFOs, irrespective of sector or location. Again, there are some obvious priorities:
• Strategy: CFOs are beginning to connect the different layers of strategy and can be unsure as to how to engage in the entire strategic process. More worryingly, many have never actually developed a fit-for-purpose financial strategy.
• Management reporting: CFOs now have to present more intelligent information to their boards and benchmark these reports against the competition and strategic aspirations. Surprisingly, rolling forecasts are not widely used – it is a vital discipline in uncertain times.
• Corporate governance: many CFOs are keen to understand what this entails and how it affects their role. They want to embed sound processes but also need to appreciate governance.
So while the majority of CFOs are certainly up for the challenges and opportunities, they also acknowledge the need to shift up a gear if they want to be regarded as fully fledged leaders. ?
Raj Gandhi is an IoD course leader for ‘The Role of the Finance Director’ and founder and chief executive of GGV London. Prior to GGV, he was chief financial officer of London Capital Group, global treasury audit manager & business analyst for Royal Dutch Shell, and treasurer of Empire Stores Group
James Gregory appointed following promotion of incumbent CFO
Jeremy Fletcher, interim finance director and change-management consultant, currently at Global Shared Services, gives his views on the year ahead
Digital media company RhythmOne has poached PageScience’s chief financial officer as its next CFO
A new financial director has been announced at agricultural foods specialist NWF Group