What Makes for a Good CFO?

print November , 2019

Prepared for Smith & Howard by Philip K. Curtis

When it comes to Chief Financial Officers, or CFOs as they are commonly called, there is no lack of research material. Google Search alone contains 381 million entries. The Internet is replete with lists of favorable attributes for this important position, so this author will be in good company spelling out his own variation on the theme. Our executive search firm is not unfamiliar with the concept as we have conducted more than 40 CFO assignments over the years for clients ranging from Burger King to Dun & Bradstreet. Each engagement was different, but all stood the test of time. There are no absolutes. No silver bullets. Still, as we see in this piece, by calling on the observations of several real life CFOs, there are some commonalities.

In our experience, and in the experience of those who have served in the position, here is our offering of the ten most important attributes of a good CFO, not necessarily in this order:

1. Integrity. The CFO, after all, is the person that most closely deals with the finances of the company, the heart blood of the entity. If the numbers do not add up, the very credibility, and perhaps survival, of the organization is at stake. As Marvin Banks, the former CFO of Gables Residential, a privately-owned Real Estate Investment Trust with more than $100 million in revenue, says: “A good CFO must be candid, trustworthy and engender respect.” Likewise, his counterpart Ron Domanico, CFO of The Brink’s Company, #687 on the Fortune 1000 list, believes that a good CFO must have “uncompromised integrity, as he is the one that keeps the leadership team out of jail!”

2. Communications. The days of a CFO quietly keeping the books in a back office are long gone. A good CFO must be an effective communicator. Mike Gaburo, CEO of Brightwell, a financial tech company, feels the success of his new CFO is due in large measure to his being “the face of the company and comfortable in dealing with outside stakeholders.” Oliver Bell, CFO of Springbot, an eCommerce Marketing Company, feels the same way, insisting that a good CFO “must be able to talk to the Board and present at an executive level.” Marvin Banks too points out the importance of a good CFO “being able to communicate effectively and genuinely at all levels.”

3. Big Picture. There is a qualitative dimension to a good CFO that is just as important as the quantitative one. The CFO no longer strictly presides over the numbers. For example, John Hegman, the retired Vice President for Business and Finance at Agnes Scott College, determined early on that the higher education setting was a “different world” and called for the person in charge of finances to “possess much more in depth than just accounting.” To be successful in that fluid environment, one “has to take a look at taking the green eyeshades off and becoming the operations person for the entire campus.” Marvin Banks refers to this critical element as “broadness of perspective.” Similarly, Oliver Bell avers that “in the startup world, a good CFO needs to wear more hats than the traditional model.”

4. One Path Does Not Serve All. The days of the monolithic CFO being promoted up the ladder from the audit and controller side of the company are no longer the only avenue to the top. The good CFO may come from a number of backgrounds: operations, marketing, strategic planning. Mark Scherer, the former CFO of The Philly Franchising Company, puts it this way: “CFOs are not created equally.” Oliver Bell concurs, saying that “there is a whole gamut of CFOs out there that require different attributes.” And John Hegman too speaks to his job “encompassing a variety of things.”

5. People Person. Again, as a counterpart to the usual technical skills, the good CFO must understand the importance of people in the organization. The role is not limited to spitting out accurate balance sheets and income statements. Ron Domanico puts it this way: “The good CFO attracts, develops and retains talent … and puts people first.” Mark Scherer agrees, saying that “in addition to being, by definition, a financially focused individual, a good CFO is also a manager of people.” Marvin Banks boils this trait down to being a collaborative leader “willing to accept criticism and the ideas of others.”

6. Out of the Box Thinking. While Generally Acceptable Accounting Principles (GAAP) still govern the actions of a good CFO, there are clearly times for more creative practices. Oliver Bell thinks this particularly true in a privately held, early stage company that calls out for “a little magic” when the venture capitalists are crying for a “home run.” John Hegman, while “running a small city” in his role at Agnes Scott, believes “you have to open up the blinders.” In a nutshell, declares Marvin Banks: “The good CFO must have relative and correlative perspectives – absolutes have a place, but relative metrics dominate.”

7. In Step with the CEO. While a good CFO will retain an element of independence and professional detachment when it comes to the accounting side, he must be aligned with his boss. As Oliver Bell puts it: “A good CFO is the right hand person for the CEO and must retain a close relationship with the Board.” Ed. Note: This can also go a long way to enhancing a CFO’s job security! Similarly, Ron Domanico feels that a good CFO must “be a strategic partner to the CEO – collaborative and a team builder.” In short, a good CFO, as well as fulfilling his important financial responsibilities, must be on the same page as the leader of the company.

8. Substance vs. Window Dressing. A good CFO must know how to get to the crux of the matter and deliver the goods. The product must be as good as the sale. Marvin Banks refers to this as “substance versus just being technical/literal.” Ron Domanico also picks up this refrain. While recognizing the importance of technical expertise, he believes the good CFO must also “understand and drive value creation, letting facts drive decision making.” Perhaps this is simply a different version of the days when a CFO was buttoned up behind his desk with a quill pen grinding through the numbers – now the good CFO has to look behind and beyond the spreadsheets to be certain the full and accurate story is being heard.

9. Making Things Happen. A good CFO is an active and integral part of the leadership team of the company. Action must trump passivity. Creative reign over conservative. Perhaps Marvin Banks puts it best when he says: “A good CFO must make things happen, not waiting for them to happen.” Likewise, Ron Domanico contends that a good CFO “must be action oriented with a sense of urgency striving for continuous improvement.” In concert, Oliver Bell believes the good CFO “needs a healthy mix of realism and growth mindset” and must not “get stuck” in hidebound ways of doing things.

10. Vision. While this trait is normally the purview of the CEO, it is no less important for the good CFO. Marvin Banks ranks this attribute high on his list, as do many observers. If you can’t see what is coming around the corner, you are liable to get hit head on. The “vision thing” is best illustrated by what one of Ted Turner’s senior executives described as his most important attribute: “Ted had the ability to look past the horizon and see things others could not see.” The good CFO will possess some measure of this same foresight if he or she is to properly serve their constituents.

Are there other traits of good CFOs that may merit equal consideration in this panoply of winning characteristics? Certainly … how about character, confidence, credibility, competence and curiosity for starters? The secrets to recognizing, becoming and hiring a good CFO are as numerous as potential CFOs themselves.

In the final analysis, perhaps the best way to describe what makes a good CFO is this compelling definition of leadership by Dwight D. Eisenhower: “Leadership consists of nothing but taking responsibility for everything that goes wrong and giving your subordinates credit for everything that goes well.”

Philip K. Curtis is a Partner with the executive search firm of Olmstead, Lynch & Curtis, LLC and a graduate of Dartmouth College, Harvard Law School and Harvard Business School.

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