For a middle size company ($10 – $50 million in revenues), the CEO’s role is to continue to be a visionary and a finder of new ideas. For this to happen, the CEO needs to delegate some of the day-to-day and strategic initiatives to the CFO.
In essence, the CFO needs to become the owner’s right-hand person. This unique relationship requires the CFO to have at least the following leadership qualities.
The CFO should be able to spend 10% of his/her time understanding the past and 90% of the time molding the future. In my career, I worked for a company that spent seven days closing the books; then, I worked for a company that spent 90 days to do the same. The more time closing the books, kept me from focusing on the future.
As a CFO, more time directing the team, leading future growth, and giving guidance on the next steps, the more successful the CFO will be as a leader. In other words, the CFO needs to be the CFC (Chief Financial Communicator), he/she needs to have the ability to communicate financial information in a clear and focused way to the entire organization to promote change.
In many cases, the CFO acts as a change leader selling and implementing new ideas, new technology, a new way of doing business, or a process change. These are just some of the examples that CFOs are responsible for implementing and managing.
To achieve economies of scale or productivity gains, the CFO needs to have the passion and the leadership qualities to implement change throughout the organization.
One of the most critical roles for a CFO is to balance short-term goals without sacrificing the long-term vision. One example could be managing day-to-day revenue goals at the same time as moving the organization towards an exist such as IPO or a sale.
A way to accomplish this is through well thought out Key Performance Indicators (KPI) that include short and long term indicators.
Depending on the industry, there is a risk in everything the company does, operational risk, financial risk, political risk, product liability, compliance, security, and more.
The CFO is ultimately responsible for assessing the pertinent risks and having a plan to mitigate those possible issues. Risk management should be part of any business plan that the CFO provides the owner.
In summary, these are the essential leadership qualities that CEOs should look for when hiring a right-hand person. Accounting and tax functions are no longer the main focus of the CFO. The CFO needs to be able to take information, analyze it, formulate the strategy, and with the help of others, lead the company to execute its initiatives. Now that you know what you are looking for; is it the right time to hire or outsource a CFO?
Text box item sample content