We were in a meeting with a CEO where he was describing the role of his Controller, who essentially serves as the CFO of his company. The CEO described that this person reported on the Key Performance Indicators (KPI’s) of the company. We asked, “Does she tell you what they should be?”
The CEO paused, gave it a moment of thought, then started writing notes frantically as our conversation continued because, like in a lot of organizations, that wasn’t the role his CFO was fulfilling, but it was the role he needed fulfilled.
The Role of the CFO: From Reporter to Strategist
Traditionally the CFO has been seen as the person who makes meaning from past performance. The translator of charts and graphs, who can help make sense of the past tense. This is what happened. This is still an essential skillset, but today’s CFO has to also be able to answer the obvious followup question – so what? What happens next from that data? How does it meaningfully guide the future of the company?
This disconnect from what the CFO is known to do and what they should also be doing can be caused when leadership isn’t used to thinking of the CFO as a strategic partner – even when that strategic partner is what they need most. They’ve always done things a certain way, asking the CFO to do certain things, and so both parties get familiar, if not comfortable, with that standard. Again, these traditional skills are essential for the CFO. Today those skills must be augmented with thinking and frameworks that guide growth, strategy, and direction for the future of the company. A great CFO won’t be burdened by this is the way we’ve always done it because they’ll come in and look for ways to constructively create change.
A Culture of Complements and Collaboration
To be sure, there can be resistance to this kind of forward thinking, especially if the CEO or other leadership is uncomfortable with change. This is why communication is key – the CFO and CEO have to understand and agree with what needs to be done, why, and who should be involved. Fast growing companies can especially struggle with this, when for instance the same leadership team of 3 people has seen the company go from 5 to 50 people over a few years. What was “easier” – communication, decision-making, reporting and overall financials – with five employees is much more complex with 50, but the culture of decision making might not keep up with the growth the company has experienced. A company like that might not have valued a strategic financial thinker when they only had five employees – but they’ll suffer without that role filled as they grow.
The Role of the CFO in Creating Impact
The strategic CFO can act as a relief valve to the CEO and leadership team because they’re uniquely equipped to deliver insight and foresight on what company financials mean in the present and how those insights can create future growth for a company. The CEO can assume (or in some cases, resume) the role of visionary, confident in the support they’re getting from a CFO who delivers the guidance they need for clarity in that vision.
When is the right time to reconsider the Role of the CFO?
For CEOs and leaders, it’s important to consider the pain points they’re facing in real time and what they’re missing, from a financial operations perspective, that could alleviate some of that pain. This could simply be lack of confidence in reporting, or in understanding what some reports mean. It could be in-the-moment issues like cash flow or profitability. For some CEOs it’s a sense of frustration and overwhelm that they’re spread too thin or doing too much. These are all symptoms of larger issues that can usually be addressed and overcome, often quickly, in the hands of the right CFO.