Leadership is the capacity to translate vision into reality. CFOs need to own the role of Chief Trusted Advisor from break room to boardroom. CFOs need to play the role of Chief Future Officer in defining the vision, and creating the reality, for what their companies are, need to become, and how to deliver long term shareholder value. No easy task even on paper, and the reality is that most CFOs face the inherent barrier as being viewed as being the Chief “No” Officer at their companies.
I have seen much “fluff” written, reviewed
Before I get to how to lead across specific departmental lines I need to outline the inherent barriers to success that CFOs often face in owning this opportunity:
Themselves
- Not listening effectively
- Not investing in knowing & valuing our colleagues
- Failing to embrace change
- Avoiding instead of engaging and leveraging difficult customers
- Not valuing colleagues who cause friction
- Failing to be a “good follower” as well as an effective leader
- Not understanding the impact of our actions
- Failing to realize that Perception can easily become Reality without Proper Management
- Avoiding people who challenge them
Colleagues
- Apathetic co-workers
- Those resistant to change
- Those with personalities that clash with yours
- Mr. and/or Mrs. “No”, who always ask “why” instead of “why not”
Process
- No mechanisms to facilitate continuous improvement
Company Culture
- There is none
- People work in Silos (no collaboration)
- Friction is viewed as bad
- Failure in any respect is not an option and not valued
Technology
- Inhibits visibility
- Inhibits growth by dictating business practices
- Inhibits innovation
In regards to how CFOs can effectively collaborate with sales, the following content offers what I believe to the highlights of a Proformative
- Educate Sales Leaders about the Laws of the Sales Funnel
- Collaborate with Sales in Forecasting the Stages of the Sales Funnel
- Help them measure and monitor the health of the Sales Funnel
- First by Stage
- Next By Deal
- Most companies only forecast late in the Sales Funnel- Stages (5-6)
- Incentive Compensation Programs
In taking a deeper dive into how CFOs can collaborate in terms of designing and managing effective incentive compensation programs, I want to share content offered by Xactly in the Proformative webinar, “The Science of Incentive Compensation Programs: The DNA of What Works”, which featured Erik W. Charles, Principal Incentives Strategist, Xactly.
There are 4 main pillars that define the anatomy of a world-class incentive compensation process: strategic planning and design, calculation and accuracy, control and
Strategic Planning and Design
- A common mistake is made when sales quotas are set and are not backed up by data, whether that data be the past performance of sales reps or market intelligence concerning the number and size of deals closed in the relevant addressable market(s).
Calculations & Accuracy
- Companies should use a solution that was specifically designed for incentive compensation plan calculations.
Control & Risk Management
- E-mail can be your enemy on several fronts, especially when you go begging for information needed from plan participants, those involved in managing calculations, and those involved in approving and making compensation plan related payments.
Analytics, Reporting and Communication
- Speak early and speak often. Companies need to get relevant information to their sales representatives and senior management in real-time if possible. Sales representatives like to know where they stand in real-time.
CFOs continue to identify acquiring and retaining the right talent to be a top, if not the top challenge, they face in delivering on each facet of their ever growing list of responsibilities. In regards to how CFOs can effectively collaborate with HR I looked to two resources. The first of which is a Proformative webinar, “Human Capital Optimization: Getting from Theory to Practice” , that features Jeff Higgins, CEO, Human Capital Management Institute. The following offers my interpretation of the great advice and insights offered by Jeff Higgins:
- Think of the Workforce more as a Strategic Asset than a Cost
- People that view something as a cost have a mindset is to minimize it. The mindset needs to be to right-size it and focus more on increasing output rather than minimizing inputs to reach an existing level of output.
- People need to look at productivity in terms of a portfolio of dimension encompassing profit, quality, efficiency and customer satisfaction.
- Know the Workforce “KPIs” that Drive Your Business
- Human Capital ROI Ratio (i.e. Revenue based return on workforce)
- Return on Human Capital Investment (i.e. Profit based return on workforce)
- Total Cost of Workforce (i.e. Total all in cost of all employees + contingent labor)
- Use a Business Case for Data Driven Workforce Decisions
- Compelling Questions
- Ask the Right Questions
- Objective Measures and Facts
- Historical Data, Key Metric Indicators, Segmented Data
- Powerful Visuals Charts
- Chart(s) that Show Insight (i.e. Story) and Drive Action
- Use Qualitative Story Telling
- “Two of our Top 3 Salespeople came from other industries”
- Link to Business Impact (ROI/Cost/Profit)
- The Cost Savings is a range of $1.0 to $3.0M
- An Example
- #1. Question) What is our Quality of Hire? Are we hiring better talent?
- #2. + #3. Clear data with trend and impactful chart
- #4. Written comments with ‘critical insights’ + ‘predictions’
- #5. Clear financial impact and ROI
- Compelling Questions
My second vein in which CFOs can collaborate with HR is how to lead and manage a multi-generational workforce. The webinar “Leading & Engaging a Multi-Generational Workforce: Success through the Ages”, featuring Rebecca Heyman, Directior, Zuman and Sarah Thompson, Executive Coach, Lead by Design, was my resource to offer insights and actionable advice on this front:
- Understand what motivates Millennials, Generation Y, Generation X, Baby Boomers, and Traditionalists
- Financial Rewards
- Career Advancement
- Doing Projects they Love
- Great Leadership/Inspiration
- Flexible Working Hours
- Develop the right mixture of the following strategies that best fits the demographics of your workforce
- A Blended Leadership Approach
- Leadership is about motivating and engaging your entire workforce. Therefore, leveraging a blended approach to leading across your multi-generational workforce works best.
- Intrapreneurship
- Employees are allowed to behave like entrepreneurs while working within a large organization.
- Integrate risk-taking and innovation approaches, as well as the reward and motivational techniques, which are more traditionally thought of as being the pillars of entrepreneurship.
- Employees are allowed to behave like entrepreneurs while working within a large organization.
Professional Development Opportunities- Facilitate the professional development of each employee and offer possibilities that are tailored to each generation within your workforce
- Career Progression
- Provide paths for advancement and communicate how and why people move up the corporate ladder at your company
- Team Building
- Educate each generation in your workforce about what makes all the other generations within your workforce tick, and how to “speak” in ways that impact their motivations and actions.
- A Blended Leadership Approach
- Leverage current and emerging trends in technology and policies that fuel effective collaboration
- Social Tools
- Telecommuting
- eLearning
- Cloud Based Applications
Turning to procurement, which we all like to call supply chain management (SCM), sharing and helping colleagues leverage 5 best practices, courtesy of Deb Stanton, Executive Managing Director, CAPS Research, can improve costs, internal controls and risk exposures across the enterprise:
- A question to always ask: Was Supply Chain Management involved in a meaningful spend decision?
- Well-defined Supplier Programs
- Supplier Performance Management
- Supplier Risk Management
- Supplier Development/Innovation
- Benchmark Costs across Industries
- Expand Metrics Beyond Cost Savings
- Managed Spend %
- Contract Compliance
- Cost Savings Funding Reinvestment
- Supplier Performance & Innovation
- Supplier Diversity and Sustainability
- Drive Effectiveness through Technology Solutions
In terms of best practices in collaborating with marketing I turn to my own experience as a
- Aligning Marketing Initiatives with Company Goals
- Defining the ROI to each and every marketing program
- Brand Awareness
- A Webinar or Seminar Registration
- A
Whitepaper Download - The Initial Engagement of a New Potential Customer
- Moving a Prospect Down the Sales Funnel
- Closing a Deal
- Defining which Marketing Metrics Matter & Why
- Defining and Understanding Addressable Markets
- Understanding the Behaviors of Potential and Current Customers
Bringing it back from how to collaborate with specific functional areas to what fuels effective leadership, I offer my pillars of effective leadership, I offer my pillars of effective leadership:
- People
- Your Most Valuable Assets
- Internal and Consultants
- Process
- In order to effectively manage and scale you need well-defined and efficient processes
- Communication
- You need to be able to earn “buy-in” for any investments of time or money by communicating the “what’s in it for me” effectively, and with passion.
- Alignment
- Aligning departmental and professional development objectives with company goals
- Technology
- Key for efficiency & fuels success, but NOT magic
Leading effectively across the enterprise as a CFO is more of an art than a science. This blog offers CFOs specific avenues of collaboration to pursue with Sales, Marketing, Procurement (Supply Chain), HR, in addition to the pillars of being an effective leader, and effective leadership. The evolution of the CFO means that he or she must earn and own the role of Chief Future Officer, and the time is now.
If you want to learn more about how to own the role of Chief Future Officer as the CFO I encourage you to attend Proformative’s CFO Dimensions Conference: The CFO as Chief Future Officer.