Think and speak like a CFO to influence decisions

Nonfinancial execs don’t always understand the language of finance and often don’t trust what they don’t understand. Think back, if you can recall, to your first accounting course in college. If you were like most of us, it was a new and somewhat foreign language. How did they know that the balance sheet really had all the company’s assets on it? Or that the liabilities were real and supportable? How could you completely trust the numbers on the sample reports you saw when you hadn’t personally developed them? If you were a marketing major or an engineering student, I’m guessing you would have had even less trust because you would have had less understanding of the process. Well, most business executives today didn’t get an accounting or finance degree, and that’s especially true for most CEOs and board members (although the trend is moving a bit in our favour in recent years).

Over the years, when I gave talks on financial topics to management groups, some of the reactions of audience members showed they clearly didn’t grasp much of what they were hearing, perhaps because something in their minds said, “This is a foreign language. Don’t listen and it will go away.”

So it’s not surprising that attempts to communicate with our nonfinancial peers and bosses has proved challenging. And yet we want to be heard because:

• Our message is important;
• We want to make a meaningful contribution to the success of our company; and
• We want to achieve career success beyond where we are now, perhaps including being the CEO mentoring a young CFO at some point down the road.

What do we need to learn about communication of financial information that will help us in all those areas?

Here’s an example that you might relate to:

I was engaged a few years ago to coach Mark, a young vice-president of finance, into a full-fledged CFO. After a couple of interviews with Mark, I learned he was a strong asset to the chief executive, but not as a key financial executive as much as a superb analyst and implementer. Even though he had a controller and accounting staff, he was still understaffed because he personally did many of the things his staff should have been doing — if the right people had been there. A true CFO was badly needed at that point, as the CEO had become painfully aware.

We began a programme of learning, workflow reassignment, staff restructure, goal setting, and strategic thinking — and, of equal importance, efforts to change the company’s operations-oriented culture to accept that their VP finance was really a CFO and should be recognised as such. Two years later Mark was promoted to CFO and became a member of the company’s advisory board. Today the company’s first strategic plan, shepherded by the CFO, is nearly complete.

What did my experience tell me that might help you to earn the trust of your CEO? Here are a few tips.

1. Listen carefully to grasp the CEO’s real concerns and issues

First, I’ve learned that CEOs don’t necessarily respond to your concerns, however valid they may be to you. They respond — and properly so — to their concerns. So you need to know what those are in order to frame financial insights that will be seen as relevant to those concerns. That means asking questions to fully understand the CEO’s issues and decision-making process, and getting the message across that you truly understand them. And because your CEO may not always speak your language, that means listening carefully so you understand those issues from the CEO’s perspective. Trust me, that’s not always easy. It’s especially difficult if the CEO has some concerns about your understanding of the CEO’s concerns going in. If you fear that is the case, or you know it is, try to bring up that issue early on, and assure the CEO that you truly want to understand. It’s important that you are saying it because you mean it and not just because that’s what the CEO wants to hear. A good CEO can tell the difference.

2. Keep it simple but relevant to the nonfinancial person who will have to act on it

When you give counsel to a CEO who isn’t a financial person by background, avoiding technical financial terminology is important to ensure they get it and to try to save them from having to ask you to explain terms and processes that are not essential to the decision-making process. And please don’t misunderstand, this is not about only telling them what you feel they “need to know”. They should know everything that is relevant to the decision at hand, and how much information they need is their call, not yours, if they are going to listen and support your ideas. Rather, the information needs to be conveyed in language they understand so they feel comfortable saying, “That makes sense. We should do it that way”. While most CEOs understand certain technical terms, such as EBITDA, phrases like ASC Topic 606 or IFRS 15 are better replaced with words like “the new revenue recognition rules”. It’s more words — but much more effective to get comprehension and keep the focus on what you’re saying.

3. Continually learn so others can learn from you and trust that you’re current

To quote a very old phrase, it’s a brand-new world out there, and the financial options that will effectively impact management decisions have more variations than ever before — new financial products, new technology, risk management options, government regulations, global economic challenges, and more. All this requires that the financial executive keep constantly learning and growing in awareness of the nuances of all the financial tools available to a business today. A simple thing like building a budget once involved the use of a very sophisticated tool called Microsoft Excel, while today that is the most basic of tools available for the same purpose. You need to know what is most appropriate for your company, today and tomorrow. No matter how much schooling you had earlier in your career, there are always new ideas and new tools being discussed at industry conferences, CFO professional association meetings, and even night courses at the nearest university. That kind of approach to learning will not only make you more valuable to your company, but it will also make your value more obvious to your nonfinancial peers and, most importantly, to your CEO.

Closing thoughts

Financial considerations impact virtually every significant management decision in business. This has always been true, but never more than today. Each member of the senior management team brings a specific expertise to the table, and CEOs weigh each contribution and each contributor through their own lens. You are needed in the strategic deliberations of your company, and it’s essential that the CEO and the entire management team recognise the importance of your contribution to those deliberations. I hope these ideas will help you bring more success to your company — and the next one, too.

— Gene Siciliano is a former CFO, COO, controller, and treasurer with over 30 years of experience in private practice, consulting, and corporate management. He is based in the US. To comment on this article or to suggest an idea for another article, contact Alexis See Tho, an FM magazine associate editor, at Alexis.SeeTho@aicpa-cima.com.