A steady career progression brought you to the CFO seat. The path to the role included (and still includes) challenging, rewarding work in a highly technical, constantly shifting environment. You’re in the role because someone trusts that you can ably bear its responsibilities. You wouldn’t be there if you hadn’t already demonstrated you can make a valuable contribution to the organisation. But how can you build on those past successes? How can you maximise your contribution in the role going forward?
Understand and embrace the essence of the CFO role
Your typical day likely includes constant toggling from the strategic to the tactical; fielding a flurry of meetings, calls, emails, interruptions, and unwelcome surprises; preparing for that next board meeting or investor call; and much more. In the flow (and sometimes torrent) of those daily responsibilities, you may lose sight of why you are in the CFO role and why the organisation even needs a CFO.
Understanding and embracing the essence of your role as CFO provides a grounding, orienting context that keeps you on track and consistently providing maximal benefit in all that daily activity.
The essence of the role: combined stewardship and leadership, with responsibility for communication and protecting the organisation, and founded on the non-negotiable of character. (See the graphic, “The Essence of the CFO Role,” below.)
Here is a quick look at each aspect.
Steward leadership
The fundamental nature of the CFO role is steward leadership. Leadership is a given and generally well understood. But the concept of stewardship — equally essential to the role — is less well known.
A steward is one entrusted with something valuable that belongs to someone else; the steward is responsible for what has been entrusted and accountable to the one who did the entrusting. And, significantly, the entire dynamic is not primarily for the benefit of the steward. (See the sidebar, “Stewardship: What Does It Look Like?”)
Not much reflection is required to see that this is the case for you as the CFO: Many things have been entrusted to you (tangible, intangible, quantifiable, and otherwise), and your responsibility and accountability for all of them is not primarily for your own benefit.
Communication and protection
Next, the key responsibilities. Of course, a comprehensive list of your responsibilities would fill several pages. But they tend to group themselves into two categories: communication and protection.
The responsibility for communication relates primarily to financial information. You have numerous constituencies who rely on you and your finance function for high-quality information for their decision-making — and you fulfil this responsibility both by your oversight of the finance processes that produce information and also by serving as the organisation’s “Communicator in Chief of All Things Financial”.
The protection responsibility almost speaks for itself. Protecting assets, liquidity, credit ratings, data quality, the internal control environment, the organisation’s reputation with its capital sources — these aspects (and more) are the normal workings of a strong finance function. The protection activities aren’t as visible as the communication ones because they generally operate quietly and effectively in the background (and those outside finance seldom pay them much attention until a lapse occurs).
Character
And the vital foundation for the CFO role? Character. Imagine someone in the role who does not operate consistently from a foundation of integrity, ethics, and unimpeachable character. The last person an organisation needs as its finance steward-leader in chief is a highly competent scoundrel.
Practical ways to strengthen the CFO role
Take time to view your daily responsibilities through the perspective of the fundamental essence of the CFO role to reveal places where a shift in mindset, practices, or priorities would strengthen your contribution.
To do this, CFOs should:
Cultivate collaborative relationships
You are in the CFO seat because, among other reasons, you have a strong analytical facility with numbers and financial concepts. And we analytical, numbers types are not necessarily renowned for our people skills.
However, you do not fulfil your responsibilities in isolation. The quality of your professional relationships can strengthen or derail your contribution as CFO. First, your CEO, the board, and your executive team peers — and others — rely on you for information and insights. Also, your CEO and peers benefit from your engagement with them in strategy formulation and execution. Your interactions with them and other leaders across and outside the organisation can help you develop and maintain a robust business sense and attention to the interplay of operational activities and the external environment with “the numbers” you so carefully steward.
So, seek opportunities to collaborate with other leaders (and encourage your finance team to do the same with colleagues). Build relationships. Spend time talking with your peers about what is going on in their worlds and how you and your finance team can serve them, including with additional financial information and enhanced analytics.
Alert your peers and other leaders when you see anything unusual, alarming, or promising in the numbers as it relates to their areas; they may not have access to the same data or may overlook things you and your staff see. Look for places where you have built up bureaucratic, isolating, silo behaviours and policies in your finance function and begin to replace them with practices that enhance the free flow of information, assistance, and problemsolving across organisational boundaries.
Relationship building requires intention and effort. It generally won’t happen unless you invest thought, time, and energy into making it happen. Don’t wait for your peers to initiate. They may be so used to finance team members being rather distant and absorbed in the data that they don’t think to turn to us as valuable allies. Prove this stereotype wrong by taking steps to initiate and build fruitful collaboration.
Develop a high-performing finance team
You lead a finance team. Its contribution to the organisation’s success can either be minimal — just getting the basics done, and barely done at that — or significant. The team helps you handle many of the details of your communication and protection responsibilities. The stronger your team, the stronger your shared contribution.
This involves a people focus and skills that we finance leaders don’t necessarily default to. But we can choose where we focus, and we can choose to develop and strengthen skills, even the difficult soft skills related to leading people. Here are some suggestions:
- Focus on excellence with your staff, not perfection. You don’t expect your processes and systems to function flawlessly; you should have high, yet reasonable, expectations of your people as well.
- Foster an environment of robust, healthy accountability. Communicate clear expectations for your team, monitor their performance, and take appropriate action on any gaps between performance and expectations. Sometimes those are corrective actions (performance fell short of expectations); sometimes they are celebratory (performance exceeded expectations). Be consistent with both.
- Get the right people on your team and then focus on their individual and shared development.
- Be relentless and intentional about helping your people develop and grow (including exposing them to cross-functional collaboration opportunities, providing comprehensive cross-training and upskilling for all staff, and coaching those who are struggling).
- Invest time and energy into fostering teamwork.
- Make sure all of your team members are supporting each other and collaborating within the finance department. Form the team, and then insist on and foster teamwork. You’ll know this is working when you, your team, and, eventually, those outside the department notice that the team dynamics look like camaraderie; when your team spontaneously celebrates its successes, small and large; and when your team members display a shared commitment to not letting each other down.
Create more value
A strong finance team will fulfil its responsibilities to protect with relentless tenacity. And it will ensure that all the communication performed for external, compliance purposes is done carefully, correctly, and timely (financial reporting, tax reporting, and any regulatory reporting).
And the internal communication of financial information for decision-making provides you and the finance team with a high-value opportunity to make a significant contribution:
- Recurring and ad hoc management reporting for the board, CEO, your peers, and other leaders provide action-oriented insights about the organisation, its performance, and its operating environment.
- Financial analyses and business analytics from your financial planning and analysis team help internal decision-makers (including yourself) assess and understand problems and opportunities. Done well and consistently, this aspect of the responsibility to communicate adds great value to the organisation.
An opportunity-rich role
Your role as CFO is weighty. What you make of it determines the strength of your contribution in the role. You are a steward-leader with a significant portfolio of responsibilities. Lead and steward well. Your organisation will benefit greatly — and you’ll experience deep personal satisfaction when you do.
Stewardship: What does it look like?
Thinking through these questions can help you see what stewardship looks like in your role as CFO:
What has been entrusted to my care? What am I responsible for?
This certainly includes that long list of things you and your finance team protect. But what are they specifically? Some will be common to all CFOs, others more specialised based on the nature of your organisation. Some are tangible, some are intangible, some are quantifiable, and some are neither. And don’t overlook that people can be included with what is entrusted to you.
Thinking about how a non-CFO would answer the question can help. A bank teller or cashier, for example, has been entrusted with cash in a cash drawer, equipment, forms, and software; the customers’ confidential financial information; and the bank’s relationship with its customers.
Who entrusted these to me? Who am I accountable to for stewarding them well?
The CEO tops the list, along with the CEO’s boss — the board. But who else am I accountable to? Think broadly and comprehensively. And think through the implications of each of these accountability counterparty relationships.
What must I do to embrace and enhance my accountability with these counterparties?
You may get bogged down here, as we sometimes react suboptimally to being held accountable. But you are accountable. And you must embrace and fulfil that aspect of stewardship with grace, composure, and absolute transparency. Think about what that looks like with each party you are accountable to. What can you do to make the accountability practices stronger and more transparent?
What must I do to be appropriately responsible for what has been entrusted to me?
This doesn’t require much elaboration. Be specific and comprehensive. Identify gaps that require immediate attention.
What can I do to foster, strengthen, and not damage the trust of those I’m accountable to, those who have entrusted significant responsibilities to me?
Trust is embedded in the stewardship dynamic. Someone has entrusted something valuable to you. Your actions can either foster or damage trust. Ask yourself: What specific fostering patterns do I need to develop? What habits do I have that are damaging trust, and how should I replace them with healthy habits? Perspectives from a trusted professional peer can be helpful here.
A thorough, introspective review of your stewardship that asks these questions will likely generate several practical insights for next steps towards strengthening your contribution.
Eric R. Alexander, CPA, is a US-based consultant and former banking sector CFO. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
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Articles
“Many Hats: How CFOs Are Implementing a Cross-functional Lens”, FM magazine, 20 May 2024
“CFO Roles Broaden As the Path to CEO Narrows”, FM magazine, 18 March 2024