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A good CFO must be keenly attuned to the past, own the present and constantly prepare for the future.

Accounting | CPA Canada Blog

Five secrets to success for the modern CFO

A look at those that get promoted to the highest ranks, the challenges they face today, and what keeps them there

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Being CFO is the ultimate Jack-and-Jill-of-all-trades job. A good CFO must be keenly attuned to the past (analyzing and reporting on financial operations), own the present (overseeing decisions on how to spend money and keep capital structures intact) and constantly prepare for the future (weighing risks of various actions or inactions).

In some people’s eyes, the CFO role has almost become too expansive. “It’s become a job that may be too big for any one individual to do well, given all the responsibilities and the incredible contrast between the day-to-day tactical controllership functions, and the very long-term, strategic, executive functions,” says Tony Klimas, global finance performance improvement advisory leader for EY, in a 2016 report EY published titled The DNA of a CFO. “It’s now more important than ever for the CFO to not just worry about their role, but also the team that they surround themselves with.”

While hiring the right people and knowing how to delegate is a big determinant of success, there are other factors that play into a CFO’s fate. Here are five secrets to becoming a stellar financial leader:

1. Accept that your opinion matters—and learn to give impactful counsel.

Yes, it’s still about the numbers: as a CFO, you must have strong technical skills and know when to bring in others to supplement the skills you lack. But most importantly, the modern CFO provides strategic leadership and communicates strategic goals. Numbers reveal trends, risks and opportunities—and a CFO must define the metrics that an organization uses to track success. A financial leader who can focus an organization’s efforts on a few key business drivers—and interpret performance through that lens—is arguably that organization’s most valuable employee.

2. Get off the reporting hamster wheel and seek meaning instead.

Preparing good, accurate and compliant statements that are in line with expectations is critical, of course. But don’t forget to see the forest for the trees. In a 2015 VoiceAmerica podcast, Nick Castellina, research director for the Aberdeen Group’s business planning and execution practice, explains how highly successful CFOs are now part data scientist, part analytics guru. And from an organizational standpoint, “meaning” can be a big motivator, especially among millennial employees: “How do you take and critically analyze information?” asks Castellina. “This is what gets the younger generation excited about what finance can do.”

3. Think outside traditional boundaries and build new alliances.

No longer representing just one department, recently promoted CFOs face a variety of risks—internal and external—and must make choices that have implications beyond the bottom line. According to William Fuessler, IBM’s global finance risk and fraud leader for global business services, the modern CFO is increasingly tasked with finding top-line solutions—helping to grow the business, and not just run it efficiently. “We are seeing a new alliance developing between the CFO and the chief marketing officer,” says Fuessler in the VoiceAmerica podcast. “Companies strive, more and more, to grow the top line. What are the new profit pools?” In this world, a CFO is doing more predictive work, more modelling, to get the required growth.

4. Focus on stakeholder management, not just shareholder relations.

According to that 2016 report by EY, the four big disruptors facing CFOs are digital; data; risk and uncertainty; in addition to stakeholder scrutiny and regulation. Much has been written about the digital and data challenges ahead, but less discussed is the final category—which is top of mind among the CFOs surveyed. Fully 71 per cent of CFOs said they will increasingly be responsible for the ethics of decision-making in support of their organization’s purpose, while 50 per cent of finance leaders said they would need to improve their stakeholder management skills. “The activist investor agenda has very much changed the role of the CFO in the last three to five years,” says Deborah Gibbins, CFO of Mary Kay Inc., in the report. “CFOs now spend a lot more time defending, or getting ready to defend themselves, in the event an active shareholder takes a stake in their company or agitates that way.”

5. Never stop asking questions in search of the truth.

One of the hallmarks of finance types is a natural inquisitiveness: to question everything and assume nothing, no matter how hidebound the tradition. The problem is, the higher up a financial leader goes in an organization, the more subject they become to office politics and corporate conventions. Don’t succumb to the status quo, says Twitter CFO Anthony Noto. “Great leaders of organizations run after problems, make their footprint bigger than their foot, and always strive to find the truth,” he told Business Insider. “Because you have to get to the truth to be excellent.”