Who’s On The Team?
Recently, I was having a conversation with a colleague about hiring a Chief Financial Officer (CFO). We were discussing the attributes of such a hire. After my usual statement that what was critical was to hire a person who shared the corporate values, I added that they needed to be a strategic thinker.
I managed not to blurt out what I was thinking. Which was, “Are you crazy?” Instead, I told my colleague that I found his comment interesting and wondered how he came to his position.
Controller or CFO?
The response was quite interesting. My colleague asserted that financial folks only look at historical results and do not think about the future. They record what has happened rather than thinking about the future. Business strategy isn’t on their radar.
Perhaps that is true of a Sr. Accountant level and below. A competent Controller is looking at future cash-flow and projecting shortfall. They will recommend strategies to managers to avert running out of cash. A skilled Controller can undoubtedly be a partner in determining the health of the business. Depending on the size of the company, they may also play a key role in developing business plans.
And then there is the position of CFO. The great CFOs are genuinely visionary executives.
Funding The Vision
The CFOs I know (those who have earned and deserve that title) depend on their Controller and the accounting team to take care of the nuts and bolts of the accounts receivable, accounts payable, and accurate reporting. The CFO does none of that work. Instead, she or he is concerned with the strategy of funding the business. They develop banking relationships, secure adequate lines of credit, and are a critical team player when it comes to funding and achieving the company’s vision and mission.
Enabler Not Obstructionist
I can usually tell whether a CFO is functioning at a high level by how well versed they are about the operations of the other business functions outside of the finance department. When a C-Suite colleague discusses a new project or initiative, the strategic CFO will respond with a statement along the lines of, “Let me see how we might be able to fund that.” They are not the naysayers of the organization. They are team players who have a can-do attitude. And, like many C-Suite executives, they contribute to the strategy as well as the tactical goals of the organization.
I believe that a high-functioning CFO can step into almost any C-Suite role and do a very credible job. They may always look at things through a “finance filter,” but they will understand how that function fits into the overall picture of the corporation. There are no business functions that do not affect finances in one way or another. Therefore, a CFO that genuinely understands the corporate finances will understand how the Sales, Engineering, Human Resources, Marketing, Operations, and Legal departments fit into the picture.
If you are running an organization that is large enough to require the services of a Chief Financial Officer (either full time or fractional), then that CFO needs to be able to significantly add to the strategic plans of the company. If your CFO is an obstructionist (no, we can’t afford to do that), or cannot understand the other functions of your organization, then you either do not really need a CFO or you have the wrong person in the position.