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CFO – The Wearer of Many Hats

So much is expected of the corporate CEO.  He or she must be the conduit to external funding, banking connections, and venture capitalists. Yet there are incredible internal obligations as well.  Not only is the CFO responsible to the Finance Dept, they often are also responsible for overseeing the HR & OD departments.

So, what does it take?

As Chief Funding Officer the CFO must maintain outstanding relationships with the financial, banking and funding communities. This require a high degree of networking at a very senior level and an outstanding reputation. This is the three piece suit executive.

As Leader/Manager of the Finance Dept. the CFO must be the manager of his/her managers- and thus must have excellent observation and leadership skills.  S/he must also be an outstanding interviewer because the people working directly under him/her must be both competent and extremely trustworthy.  Since the CFO must be focused externally much of the time, s/he must rely on the next level of staff.

As head of the Human Resource and Organizational arm of the corporation, a whole new set of soft skills becomes mandatory.  Most of the staff in these departments are not measured by the quantity of their work, but how well they interact with others, train others, handle conflict, etc.  So, their leader must have these skills to. Evaluating and holding people accountable in these areas is quite different than managing payroll clerks, A/P and A/R experts, etc.

Often accountants become controller and controllers become CFOs.   Generally speaking the cognitive style of these people is precise and detailed. As they rise the corporate ladder, they perhaps more than many of their other colleagues need to stretch their style to include those who are theoretical and emotional in styles.  That requires a great commitment to doing well and learning new ways of interacting with others.

I have an enormous amount of respect for those CFOs who wear these many hats well.

Comments

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

I think in today's environment the accountant, turned controller, turned CFO will become less typical. In order to partner with the business which is the CFOs most important function you need a different skill set than that of an accountant.

Not saying an accountant can't make the transition, but it's something to be aware of if you as an accountant have the ambition of becoming a CFO.

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Anders - I certainly respect your opinion regarding accountants, turned controller, turned CFO becoming less typical. I understand that you are not saying that it cannot be done. But I am curious what it is about accountants, turned controllers, turned CFOs that seems likely to be diminishing? Would you care to elaborate?

I am seeking to be a CFO one day. Currently I am an accountant. I have always thought my next step would be controller. If that isn't the route to go, what is, in your opinion, the best route?

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Chris,

In order to be an effective CFO in today's economy you need to be able to partner with the business, be forward looking and help the CEO set the direction for the business. This involves very little of the skills that are typically associated with an accountant as they are usually transactionally minded and backward looking. They are also used to operating within a set structure of GAP/IFRS/SOX etc. and other general compliance frameworks.

Therefore as an accountant you need to seek out areas like FP&A, strategy or a regular business partnering function in order to get a more well rounded profile. If you can even go outside of finance and spend some time in operations or commercial you will increase your chances of making an impact as a CFO even more. A CFO should definitely know the basics of accounting and the area of the controller function in general however those are no longer (in my opinion of course) critical to being a successful CFO.

As with everything it depends on the company, the CEO and current business environment. Following Enron and during the height of the financial crisis the typical controller skills were most likely in high demand for companies seeking a new CFO. However none of this adds any value to the bottom line, but should be seen as necessary complexity in order to be allowed to do business.

I am sure there are still many companies looking to hire the controller as their CFO, but I wouldn't expect that the finance departments in those companies have a very important role to play in making the business successful.

Cindy Kraft
Title: CFO Coach
Company: Executive Essentials
(CFO Coach, Executive Essentials) |

I agree, Anders. I believe we are going to see less and less of the formerly typical career climb to the CFO seat and more and more of the atypical, which will become typical ... and precisely because of all the "hats" a CFO now wears.

It will still be possible to come from accountancy, Chris, but only a few accountants will really possess the strategic-thinking and desire to learn the broader skill sets that the CFO role now requires. You might be exactly the right person for a specific kind of company. That would require you to be branded and visible to "that" specific kind of company.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

Clearly the CFO has to partner with the financial and business communities. However, he or she also has other responsibilities. This includes managing the accounting department and often HR, OD and even Administration. Too many hats?

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Arlyne,

I my opinion the CFO should not be responsible for HR. Those are two very different areas and in general no synergies can be extracted. This would also take time away from the CFO to partner with the business. You could on the other hand see CFOs be responsible for IT, Procurement and Administration.

The CFO should like any other functional head not wear too many hats, but due to the rapid evolution of the role we are seeing these years, we see CFOs be responsible for many odd areas just because that was most convenient.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I see HR, IT and Administration working under the CFO or the COO (in alpha order). I can also see IT standing apart, but this would be the exception, not the rule.

The reasons for either are varied and depend on as much to culture as to industry and management style.

What I don't see, with the exception of a CTO/CIO is HR having a table in the "C" suite.

HR breaks into three major components, Payroll & Benefits (Accounting), HR Administrative (Admin) and Talent Acquisition/Strategy (advisory role to C Suite).

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Wayne,

Why wouldn't HR have a seat in the C suite? Especially in people heavy businesses.

The payroll part of HR should reside with Finance and shouldn't be a reason for having HR refer to the CFO.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

IMHO HR doesn't set policy, doesn't set pay grades nor set hiring criteria. They advise, research and present recommendations.

C Suite members on the other hand do set policy, etc. Thus HR could be segregated into 3 functional departments/divisions as stated before, with Talent Acquisition in the role of in-house consultants.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Wayne,

I guess we can agree to disagree and this discussion would probably be a separate topic all in all, but I think you put too little emphasis on what can and should be done in HR. Ultimately they might not decide on salary increases, promotions, hiring etc but as a support function their input is very valuable for a company.

Same goes for Finance btw.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

Chris - having been someone who has been promoted many times in my youth and who has had several different professions, I have no objection to accountant turned controller turned CFO. i believe though that different skills are required as you climb the corporate ladder.

i am reminded of a problem I helped solve for a fire department. The new Chief was resented by several of the commanders because he jumped a rank to be given the position. Many of his people believed that it was only because he was a minority that he was given this big promotion.

However, in my work with them (conflict resolution and team building) we talked about the different skills and tasks necessary to climb the ladder (pun intended here) and the resentful commanders came to realize that the man who had been promoted to chief earned the promotion by attending City Council meetings, speaking with the press, and being the public relations arm of the department. His outgoing personality, coupled with his intelligence and experience made him the right man for the job.

Many of the commanders commented that they didn't want to do these public activities - and so once they realized what the tasks and the skill set were they realized that they weren't right for the job, but the new Chief was. Conflict subsided.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

It's interesting how much of this discussion has focused on the role of HR in the executive suite. When I conducted my research with C level executives, most of them had little or no respect for their HR staff, considering them annoyances that had to be endured - rather than finding them creative and helpful.

I hope that prejudice from a few years ago has changed. I am hopeful that it has based on the conversation in this thread.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Not to pick on Wayne, but it seems like it hasn't however I am sure you would find many C level executives who would say the same thing about finance.

I am thinking about a Dodge commercial where they are trying to design a fancy new car and go through all the stages of doing that. Then there is this clip where it says "ask the finance guys" who replies "no you can't do that" to which the narrator replies "ignore the finance guys". So this is still the public image of finance.

I also posted a blog about the topic almost two years ago here on Proformative:

https://www.proformative.com/blogs/anders-liu-lindberg/2012/07/18/now-why-did-i-choose-finance-over-hr

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Not to pick on Anders :)

But..... Finance guys tend to have more rules than most of the other team members in the company (aside from DoL, OSHA and some other fed/state agencies).

But in the end, between GAAP, iFRS, SEC, fiduciary laws, etc; sometimes the answer is no - comes down to your interpretation of the "grey area".

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

There has been great dialogue on this subject. I am still reeling from the opinions that the future of the CFO office will not be in the traditional form that I had expected. But there again, each of you are more experienced than I am, and hold senior leader roles already. You know better than I do what is currently happening and what is trending.

I am glad to be part of the Proformative community of professionals so that I know what to be looking for in the future.

Thank you, Anders, for the recommendation of FP&A, strategy or a regular business partnering function, as well as the suggestion to spend time in operations.

Thank you also, Cindy, for the reminder about branding. I am certainly seeking to be a strategic business partner with the company I am working in currently.

ArLyne, thank you for the encouragement with the story of the fire chief.

Now to convince my employer I can be more than a person cranking out financial statements and tax related information.

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Chris - I see some points above that I agree with 100% and others that I do not. Regardless of the opinions including mine, you cannot escape the fact that after this market meltdown, there was a noticeable growth in CFO positions where the CPA was required, from small and medium-sized entities.

With respect to convincing your employer, I will share with you what I tell every analyst/accountant I manage. “Never pass a number without analysis.” Look to discuss variances and unexpected situations. But if there are none, simply state, “The attached information is following a consistent and expected trend and there are no detectable issues.” This simple action says, "I looked at the numbers."

The way you convince your employer is by your actions.

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I think the importance of the CFO as a value-add, strategic partner to the business cannot be overstated. Not to sound facetious, this is not because they are "visionaries" but because they make the time to meet with and discuss the business with the people who impact it directly.

A CFO does not make sure a showroom is clean, that the customer service team is helpful and knowledgeable, that a desirable product is developed and marketed intelligently, that product ships on time. The people embedded at all levels of an organization do that. (I'm of the opinion that as a society we overstate the importance of single individuals to an org and undervalue the little guy, but that is a different topic)

CFO's do act as advisers/enablers to the people who do the basic things that keep a company productive and profitable. They make sure that the health of the business can be measured and assessed. Good orgs understand this to be their function, and provide them with the resources to get it done.

A Controller's day job does not allow for a lot of the above. But if they are in an org where they can offload a lot of the details to other managers or staff they get to assist their CFO in this, and build an argument for CFO succession (I've seen it both happen and not happen).

I don't believe there is a short-cut, magic job that catapults you to the C-suite. Whether a CFO earned their stripes in FP&A, Client Finance, Corporate Finance, etc. at some point they had to break free from the detailed accounting work.

I appreciate everyone's thoughts on the topic, because like Chris, I have no intention to "peak" at Controller.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

I recently wrote an article about Leadership of CFOs - I think the bottom line answer is that the qualities that make a good leader catapult you to the top - and the qualities that helped you rise from accountant to controller to CFO may be quite different.

Think about cognitive styles - numbers people must be very detailed. CEOs do better when they are more global and generalized thinkers.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

ArLyne,
My point is exactly that the qualities needed to become a CFO is now different and resembles more the ones of a good leader than those of a good accountant. Having a numbers CFO just doesn't cut it anymore.

The CFO also needs to be able to dissect the numbers, but it's not the most important skill anymore.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

I agree Anders.

Diversity in background, the aforementioned leadership skills, "the ability to leap tall buildings in a single bound" is what is needed in today's C-Suite.

Technical abilities as you say are important, but too much high tech and not enough high touch yields very stunted growth.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

I just wrote an article (for another source) about needed Leadership traits in a CFO - and the person for whom I wrote it didn't think the way you do Mr. Liu-Lindberg.

I however, am delighted to read your comment because personally I think all upper level management should have strong leadership qualities.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Would be interesting to know what traits said person would be looking for in a CFO?

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

What I'm hearing a lot of, in what people think a CFO should have is direct sub-niche industry experience. That, they believe is all they need to just "do the numbers".

What a misguided viewpoint (except for some very small specialized industries). A person who has reached the C-Suite should be able in short order find out whatever is necessary and specific to a particular company/industry.

That person also brings their knowledge base from other industries and will re-examine "truths", find business cases that work and move the company forward; as opposed to keeping the status quo.

As many of us know, a company stuck in the status quo is a company in decline.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

I have not seen any comment regarding the company's life stage as it relates to the number AND TYPE of hats worn by the CFO. Generally, as companies mature and grow in size, the number of hats the CFO's wear diminishes. As companies grow, the CFO may have oversight responsibilities on the functions (other than finance) but he does not "wear the hat". Also, depending on the company's life stage, the CFO's "type of hat" (not just the number of hats) also changes. The CFO might wear his fundraising hat if the company is in start-up or growth mode. The CFO might wear his Policy and Structure hat when the company is in scale up mode. etc. etc.

ArLyne Diamond
Title: Owner - President
Company: Diamond Associates
LinkedIn Profile
(Owner - President, Diamond Associates) |

I agree that a CFO has less of a need to be industry specific than some other people in the organization. One of the mistakes recruiters make is to assume that industry specific is necessary when it is merely desirable. In my case, the consulting I do crosses all industries and all divisions within them.

Mr. Galfo, I loved your comments - you've added to the many hats I've suggested. It's true the CFO - and other members of the C team must be more "search light" focused than "laser beam" focused. In other words, more of a generalist than merely a specialist.

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

Couldn't agree more that the stage of development defines the role. The bigger a company gets, the more the hats are dispersed. There is an inherent risk share that occurs.

The CFO role at a small company has fewer supporting cast members, while at a larger company you will see a multitude of individuals supporting the finance function (Group/Regional Controllers, SVP Accounting Policy, Local Controllers, Local CFO's, Chief Risk Officer or SVP Audit that reports to the BOD and NOT the CFO etc).

David Buley
Title: Chief Financial Officer
Company: Association of Independent Schools of NS..
(Chief Financial Officer, Association of Independent Schools of NSW) |

This has been a fascinating discussion so I'll throw my 2 cents in. While I don't disagree with any of the comments made, it emphasises that an accountant's potential path to CFO could have many turns in it. It depends on the opportunities, risks and decisions etc along the way.

I think what most firms nowadays would look to a CFO withe a strategic mindset, operational awareness, and business acumen...to name just a few. It may be that budding CFOs need to supplement their current skills with leadership learning from Harvard, MIT Sloan, Wharton or the like and put their hand up for additional responsibilities before the extra learning will yield dividends. Experience is what counts nowadays - however you get it - either from your current role, past roles, or study.

The technical skills should be taken for granted but its been mentioned many times above that its the soft skills that are important to how CFOs manage their role. Presentation skills, influence & persuasion, and storytelling are key to getting colleagues, peers, customers and even the Board to 'buy in' to who you are and what you can do.

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