The traits of an effective CFO

CIMA President Amal Ratnayake, FCMA, CGMA, who is also CFO of the Official Community Corporation in Canada, and Sherin Cader, CFO of the financial services industry group and executive vice-president at John Keells Holdings Plc in Sri Lanka, discuss the skills and experience needed to become a trusted and effective CFO.

What you’ll learn from this episode:

  • How the scope of the CFO’s role has expanded.
  • What CFOs are doing to lead businesses through the coronavirus crisis.
  • Why CFOs need to communicate regularly with remote teams.
  • The importance of being an ethical leader to build loyalty and productivity.
  • The value of gaining experience in multiple businesses.

Play the episode below or read the edited transcript:

To comment on this podcast or to suggest an idea for another podcast, contact Oliver Rowe, an
FM magazine senior editor, at


Oliver Rowe: Welcome, Sherin. And welcome, Amal.

Sherin Cader: Thank you, Oliver.

Amal Ratnayake: Thank you for having us, Oliver.

Rowe: The role of the CFO is a critical one, as co-pilot with the CEO leading a business. Sherin, how has your role changed as the current health and economic crisis has unfolded? Has your role expanded?

Cader: Yes, Oliver. I think yes, tremendously. These are unprecedented and uncertain times. You need to manage and revise action plans almost on a daily basis, based on any new information that comes to light. Being a senior member of the team, you have to get involved in multiple aspects of the business. For example, when the crisis unfolded, as a CFO you had to think a few steps ahead and take a stand on the immediate outlook.

The immediate need was to support the business with restructuring and updating the business continuity plan, which we know as BCP, and risk management strategy. The BCP is generally set up to manage an outage or if the business premises were compromised or not accessible due to a fire, floods, or any other scenario and would be considered temporary. There is a typical business continuity plan team to kick off operation at a different location or locations until business resumes back to normal.

But this is different. BCP is more like how you navigate a longer-term crisis as business as usual. This entails ensuring safety of staff and operational mechanisms are in place with the right people at the right tasks to ensure the working protocols are in line with the government directives.

Within days, as a CFO I had to take the lead in setting up spend-control and cash-management initiatives across multiple businesses, we could call them cash war rooms, and also to adopt cross-learnings from one business unit to the other. So that’s one advantage of overlooking a sector, you can learn from multiple businesses.

Had to evaluate the resilience of the businesses, review every forecast immediate to short-term profitability immediate finance requirements, cash reserves and the business’s ability to continue providing services and also to keep the respective boards informed. Like I said earlier, it is managing a longer-term situation unlike a typical, short-term crisis.

Also unlike any other, more involvement was required in strategising operations, marketing, general administration and compliances. So yes, the demands were multiple and the roles were much more than what you would typically do. The demands are much more.

Rowe: And Amal, how in your view has the CFO role changed?

Ratnayake: If I were to take a step back, Oliver, and think about the CFO role, I would say that over the last decade or so the CFO role has got much broader. I was reading some McKinsey research the other day that said that the functional areas reporting into a CFO increased from about four and a half functional roles to about a little over six functional roles. And that means the CFOs are taking on more responsibility for non-financial areas. So for example in my particular case, I am responsible for human resources, legal, and admin over and above my finance responsibilities.

And if you think about the role of finance itself, the role of finance has also been getting broader. I mean, we’ve been embracing technology and we’ve been automating some of our activities. And in doing so, that has given us an opportunity to re-imagine our roles. And as we re-imagine our roles, our roles have become broader. So I think in many ways, the CFO’s role has changed.

And if you look specifically at the current pandemic, I can’t think of a better time when management accountants are more needed. We are trained to work with ambiguity and uncertainty. We can be the calming voice in the eye of the storm.

And we’re also trained to act quickly and in response to something like the pandemic, I think it’s important to act quickly. And I think it’s one of those situations where perfection is the enemy of progress. So we need to respond very quickly. And I think that’s part of our ethos. So as management accountants, I think this is a time when we are most in need for businesses to help them through this pandemic, but also on the other side of the pandemic to help grow our businesses to pre-COVID levels.

It’s a difficult situation and Sherin did a great job in explaining some of the challenges she’s going through in her own role. And I think CFOs across the world are having many, many different challenges, some of it quite similar to that, but some of it quite different.

Rowe: Thank you, Amal. People skills are key for CFOs, but also the technology skills. How do you see the CFO’s skillset changing? Sherin?

Cader: Amal actually touched on the need of changing skills. In my view, CFO skillset has been changing for quite some time now, driving strategic initiatives [and] looking at better and more efficient ways of performing finance functions [and] even non-finance processes. As part of process efficiency and optimising resources, most finance functions have automated now to the point even AI and bots are being used for repetitive functions like bank reconciliation and analytics, fraud detection in the business. So CFOs have taken the lead to drive some of these together with their IT counterparts. Unlike even just a few years ago, CFOs need to be extremely tech savvy to stay ahead of the curve. They need to be change agents with excellent change management and negotiation skills more so now than ever before.

Rowe: And Amal?

Ratnayake: Those are some really great insights, Sherin. I completely agree with you. I think change is a constant, and technology has been changing at quite a fast pace. And as management accountants, it’s absolutely essential that we embrace technology so that we leverage it to perform our roles with much greater efficiency. What that means is we need to keep up with technology. We need to reskill and upskill continuously so that we have the skills that are most needed by businesses, the skills that will help our organisation succeed, help our organisations grow.

So therefore, we need to have the skills, for example, of working with technology such as blockchain, artificial intelligence, robotic process automation, just to name a few. So I would suggest to you, Oliver, that technology skills are absolutely essential for us in this digital era.

However, as we embrace technology, it also gives us an opportunity to broaden our role. If you look at the typical finance function, we collect data, we analyse data, we draw insight from that data and then we make decisions. Automation impacts collection of analysis of data and I think as management accountants, I think we’re very happy with that because those were the tedious, mundane, routine tasks that we had to do, but we kind of never really enjoyed doing.

So by automating some of those activities, it gives us more opportunity to focus on drawing insights and making decisions, the value-added activities – the activities that we are really very trained for, well-trained for, and the activities that we really enjoy.

But to be able to draw the best insights that we can, it also means that we really need to understand our business model end to end. That means we need to work with all functions within an organisation, managers from different areas of the business to understand how every part of the business comes together to create value.

And so to work with people across the organisation, I think will require a different skillset. It requires human intelligence skills, skills such as emotional intelligence, empathy, listening skills, influencing skills, skills to inspire people, leadership skills, motivation skills.

So I would suggest to you that technology skills are absolutely essential for CFOs, but human intelligence skills is I think what differentiates between a good CFO and a great CFO. So I think for all of us that aspire to be a great CFO, human intelligence skills are absolutely vital.

Rowe: Thank you, Amal. As a result of the coronavirus, CFOs are now leading remote teams. Sherin, does that challenge also present opportunities?

Cader: Actually, it does. The opportunities I think are quite vast. The opportunity I see is that some of the tech tools that we encourage and were not embraced by staff are being used now. For example, use of videoconferencing, working on shared folders, automation of collections and payments. Not the typical automation of collection of payments, but there are certain things that typically had to be paper-based. So working with almost no paper — some of the key opportunities I see that’s unfolding here.

Also the way of working is changing, and people are getting comfortable with remote working, giving rise to adopting some of these on a long-term basis. Maybe how office space is designed in the future will change, more hot-seat concepts can be adopted. Scheduled work from home could help people balance work/life better, have better relationships with their family and friends.

I think typically [accountants] are almost like workaholics. I think this gives them an opportunity to kind of balance things a little bit more. I see businesses achieving cost efficiencies without even realising it. I mean, that’s almost like a CFO’s dream come true. However, like Amal mentioned, human interaction and face-to-face meetings are required to keep the teams motivated.

Another key opportunity I see is that remote working creates a need for transparency of the overall operation of workflow. Checks and balances may no longer be possible, creating more transparency the operation processes naturally create more efficiency and better control. So these are the new opportunities as CFOs that we see that are coming through this crisis environment.

Rowe: Amal, would you agree?

Ratnayake: Absolutely, Oliver. Sherin, those were some great insights, and I think those are some of the things that I had in my mind as well, so thank you for sharing those.

I was reading recently a PwC survey; it was a survey that focused on CFOs. One of the questions that was asked in the survey was there real or remote working. And 49% of the CFOs surveyed said that post the pandemic, they might consider their teams working from home first, remotely first, and working from the office second. I suspect if this survey was done pre-COVID-19, the results might have been somewhat different.

So I think one of the things that COVID-19 has done is it has tested some of our unconscious biases, and I think it has done that in many different ways, but particular to remote working. I think post the pandemic, Sherin is absolutely right, the way we might consider remote working would be very different to pre-COVID-19. I think we were always on a journey towards remote working, but I think this has accelerated that journey and I think we’re going to get there much sooner than we had previously thought.

But as we think about managing teams remotely, I think the skillsets that we need to manage things remotely could be a little different to managing someone who sits right next to you. And I think it needs us to be a lot more disciplined. We need to set clear goals. We need to empower our team members to take initiative, empower them to make decisions. And I think we’ve also got to think about communication and Sherin kind of spoke about that as well. When somebody works with you in a team and sitting next to you or sitting in the same area, it’s always easy to have conversations. You could have hallway conversations; you might be having water cooler conversations. You might be chatting over lunch. But when your team is working remotely, that’s a lot more difficult.

And I can’t overstate the importance of communication. So we really need to think about how we communicate and Sherin was referring to the importance of that face-to-face communication. And I think as remote working becomes more the norm, I think that will result in a lot more videoconferences and use of technology, et cetera.

In terms of opportunities, definitely one of the opportunities would be that as managers, we will become better managers. We will become more disciplined. It’s not like we couldn’t have done that if we had our team sitting right next to us. But I think managing a remote team forces us to be that disciplined, forces us to be clear with our goals, our expectations. It forces us to communicate on a regular basis, on a planned basis.

So I think it kind of ups the game for managers. In fact, I would suggest even that it makes a manager into a leader. So I think that would be one of the opportunities that I would suggest to you.

Rowe: Thank you. And it’s always been important that the CFO is seen and is an ethical leader. And as we face this current crisis, has the ethical dimension become more important? Sherin?

Cader: I think it does, Oliver. When businesses are challenged and stressed for cash, the ethical dimension becomes more critical. Even very minor things like paying your vendors on time kind of becomes a challenge. Businesses should not make this an opportunity to cut corners and look for shortcuts, for example not keeping up to contractual commitments, delaying payments, a few things that one must watch out for.

It is these difficult times when the margin of error gets tested and you need to rise above that. How you rise above will determine who and what kind of leader you are hoping people to look up to and built loyalty and productivity in the long run. It is very critical that one must keep aware of this.

Ratnayake: Sherin is absolutely right. You can never overstate the importance of ethics. I personally believe that leadership and ethics are so intertwined that you can’t really separate them. And that’s why the CIMA syllabus, as an example, is based on a foundation of ethics because as a good management accountant, ethics are so important. Even the CGMA Competency Framework is underpinned by ethics, integrity and professionalism.

Ethics, if you think about it, also has to take account of changing ways we do business, the ways in which work keeps changing with technology, et cetera. And we’ve got to think about how that impacts ethics.

And that’s why earlier this year, CIMA launched the updated code of ethics. And the updated code of ethics, kind of what was new about that was thinking about ethics in the digital era and the importance of ethics in this digital era, as well.

So I would suggest that ethics is absolutely essential and good leaders are good ethical leaders, I would say. I think if we kind of want to put that in today’s context, I think Sherin did a great job of explaining the importance of being an ethical leader during this current crisis, and during any crisis for that matter. And I think that’s absolutely true.

We live in a world where we’re used to instant gratification and we tend to think about what’s in it for us before we think about anyone else. And I think one thing this pandemic has done is helped us to reset our thinking. I think today we are curtailing our activities and thinking about others first. We are thinking about the vulnerable, and we curtailing our activities so that we safeguard other people. And I think that’s fantastic, and I’d like to think that, post-COVID-19, we will continue to put others before ourselves.

I think being a good leader also has some of those traits because I think as a good leader, sometimes you’ve got to put the needs of others ahead of our own needs. Think about our team members, think about our organisation, think about other stakeholders. I think Sherin spoke about, you know, having that good relationship with creditors, et cetera.

So we can’t only be thinking about ourselves. We have to think about the needs of others and very often ahead of our own needs.

Rowe: Thank you. And finally, what would be your top three pieces of advice for other finance leaders? Sherin?

Cader: Yes, Oliver. I can go on but since you said top three, OK. What I personally believe is that you must know your basics, be very competent in your technical knowledge. And it needs to be updated constantly. And if possible, you must try and build experiences in multiple businesses, if possible, because as each business provides a unique exposure to business challenges and that helps build problem-solving skills.

Number two, you need to understand what’s happening locally and globally to provide context and to contribute value to the business.

The third one, I would think that you need to be passionate in what you do, but never compromise on professional ethics.

So I would think these would be my top three.

Rowe: And Amal, what would be your top three?

Ratnayake: Well, those are some great insights, Sherin. Thank you.

So I would say that, you know, as a CFO you’re the trusted advisor to business and so I would say one of the traits that I think are really, really important is to be trusted. And trust doesn’t necessarily come easy. You’ve got to work to earn that trust. So I think one of the things I would suggest is always maintain your credibility and work to gain the trust of people around you. As a CFO, you’ve got lots of information at your fingertips and you can draw some great insights. But unless you have the trust of the people that you work with, some of those recommendations you make may not be acted upon. So it’s absolutely essential for you to be seen as a trusted advisor to business.

As a CFO, it’s also important to understand the business, and Sherin spoke about that as well. I would go on to say we as CFOs need to understand the business end to end. We need to understand how all the different parts of the organisation come together to add value. Because if we understand that, I think the insights we draw and the recommendations we make will be a lot more useful to an organisation.

I’d like to talk about talent as well, because I think it’s absolutely essential to identify right talent to recruit the right people, to empower them, to mentor them, to develop them and essentially to develop the next set of leaders and to hire people who are really good, and then empower them to take initiative and make decisions.

Rowe: Thank you, Amal. This has been a fascinating conversation. Thank you, Sherin, and thank you, Amal, for sharing your insights. Thank you.

Cader: Thank you, Oliver. Thank you, Amal.

Ratnayake: Thank you, Oliver, for having us. And Sherin, thank you for sharing those wonderful insights. It was great to have this conversation today. Thank you.