How can CFOs rebrand themselves as innovation allies?

Written by: By Ankur Agrawal, Matt Banholzer, Eric Kutcher, and Scott Schwaitzberg

Source: https://tinyurl.com/yyjeyyw8

They can take five actions to improve objective-setting, performance measurement, and cultural factors associated with successful innovation projects.

CFOs continue to have an innovation problem—or, rather, teams in their organizations think they do. Research shows that many business unit leaders view the CFO and the finance team as obstacles, not allies, to the innovation process.

That perception isn’t the reality, of course—but it’s easy to see why it exists.

Boards, CEOs, and others on the senior-management team rely on the CFO to be an independent arbiter and guardian against overoptimism—or conservatism—in annual planning and budgeting discussions and in performance management meetings. During these conversations, CFOs must help the rest of the senior-management team assess proposals from business unit leaders. CFOs must also quantify the potential value from those proposals while accounting for the inevitable financial and strategic uncertainties associated with new products or services or with process or systems changes.

To become true collaborators and allies for innovation—not just seen as authority figures holding the purse strings—CFOs need to change their colleagues’ (and in some cases their own) perceptions of their role in innovation. In our experience, a CFO can take five actions to flip the script: formally build innovation goals into the company’s plans for growth, discover and validate untested assumptions about an innovation project, speed up the standard budgeting process, establish metrics specific to innovation projects, and upskill finance teams and empower them to help lead changes in the company’s culture.

Making changes in these areas will take time and a commitment to developing an innovation mindset. But CFOs who make the effort may end up working more effectively with project teams and advancing corporate innovation in a way that dovetails with the company’s overall strategic aspirations and promotes growth and resilience.

How the CFO can better support innovation

At base, the innovation process is about allocating resources toward initiatives that create value for a company and, ideally, change an industry. To innovate successfully, companies must identify the most promising projects and set clear goals for realizing them, regularly measure progress in reaching those goals, and change hearts and minds—internally and externally. The CFO can promote success by focusing on the following five steps associated with objective-setting, metrics, and culture change.


The innovation process is about allocating resources toward initiatives that create value for a company and, ideally, change an industry.

1. Build innovation goals into the company’s plans for growth

The first step for a CFO looking to serve as an innovation ally is to formally build innovation goals into the company’s plans for growth. Where and how does the company expect to find growth, and what role should innovation play in securing it? With input from the CEO and other members of the senior-management team, the CFO can help answer those questions and devise objectives that compel teams to move beyond the status quo and explore new ideas, not just incremental process improvements. At one global insurance company, for instance, business unit leaders felt that they could hit their performance targets by tweaking existing operations rather than exploring larger initiatives. In effect, they felt they didn’t need to innovate to meet the company’s growth goals. Despite interventions from the top team, innovation languished for years.

To counter that thinking, the CFO could have established a “green box”—an effort to quantify how much growth in revenue or earnings a company’s innovations must provide in a given time frame. With this information in hand, the CFO and other senior leaders could have established new innovation-centered objectives for the business units—objectives focused on closing the gap between their current performance and capabilities and the company’s overarching growth aspirations. In this way, the CFO and the rest of the top team would also have communicated the fact that innovation was a priority for the finance function and the company as a whole.

2. Discover and validate untested assumptions about an innovation project

The CFO must acknowledge that standard planning and budgeting processes may not be suited to innovation. In most companies, business unit leaders present preapproved business cases to the CFO, and the two sides engage in back-and-forth about whether the proposal merits investment. In all likelihood, many of the assumptions underpinning the idea have already been tested—indeed, they are implicitly embedded in the company’s current business models. The decision to set a certain price for a product, for instance, often results from tested assumptions about, say, the customers’ willingness to pay for other products the company has launched or the perceived value from those products.

Innovation ideas, by contrast, are often built atop what may be untested assumptions. For instance, it’s very possible that the targeted customers won’t be willing to spend a significant amount of money on an unfamiliar product or a product with a different level of functionality. What, then, is the right approach to pricing?

The CFO and other leaders will need to discover and validate the untested assumptions associated with innovative ideas. The finance leader could start by asking business unit leaders how big an opportunity must be to justify moving forward. What are the most important assumptions we need to test? How can the finance function help business unit leaders get the data they need to prove the case and turn a good idea into a better one? To gain greater clarity about straightforward assumptions, CFOs may ask business unit leaders for literature scans, surveys, or other forms of research to bolster confidence in an investment decision. To gain greater clarity about trickier assumptions, they may ask for real-world information, such as data on experiments with minimally viable products, mock products, beta launches, or early partnerships.

For the CFO and finance team, the focus here should not be on costs but rather on creating a mechanism to explore the most promising ideas. They should, for instance, avoid using a hurdle rate that might
encourage teams to engineer their numbers. Instead, they should surface and challenge the business unit leaders’ assumptions and use them as the basis for important finance discussions.

3. Speed up the standard budget process

There is often a lag between budget and innovation cycles. A business unit might get approval for funding a project only to find, nine months into the annual budget cycle, that changes in technology or the market mean that more or different resources are needed. Innovation happens day to day and month to month—not once a year.

To be an innovation ally, the CFO must work with the rest of the senior-management team and the business units to change the pace and intensity of (and the dialogue around) resource decisions. For instance, the top leaders can institute monthly and quarterly reviews—or even more frequent discussions—as a catalyst for adjusting resources. Some businesses have even instituted stage-gate discussions for investments in new products, services, and other innovations. A business unit may receive a minimum spending base that covers costs associated with a product’s first iteration. Additional funding would be contingent on increases in, say, demand or delivery rates. The business unit would have to meet predetermined thresholds set jointly by it and the finance team.

This stage-gate approach can help clarify expectations, enable the business unit to change course if needed, and ensure that resources are allocated continually rather than cyclically. It can also help strengthen a company’s innovation pipeline: many innovations fail, so it is important for CFOs to take stock of projects frequently—and to help shift resources to the most promising initiatives and end unsuccessful ones.

4. Establish metrics specific to innovation projects

A big source of tension between CFOs and business unit leaders is how to report and measure the performance of new initiatives. In proposing them, business unit leaders often build multiyear revenue projections too precise for the context. In other words, they don’t account for the inevitable changes, in business drivers and assumptions, that occur when new products are launched. In the first year, customers may flock to a shiny new product—which would imply success—but what happens when demand drops off or attention shifts to a fast-following product?

To get past this disconnect, CFOs and business units can jointly establish metrics specific to innovation projects. These would include traditional business metrics, like the internal rate of return (IRR), net present value (NPV), and ROI. But they could also incorporate nontraditional metrics, such as customer loyalty or environmental, social, and governance (ESG) scores and the ranges of performance appropriate for certain types of projects or portfolios of projects. In addition, the CFO and the finance team can identify and use metrics that quantify the biggest sources of uncertainty from an innovation, the pace and efficiency of the innovation team’s learning process, and the opportunity timeline, among other factors.

Equally important, CFOs and business unit leaders must engage in an ongoing dialogue about how innovation projects are faring rather than conduct only periodic reviews or focus only on struggling projects. As noted earlier, it’s important to understand when and how to cut the cord on underperforming innovation projects—but it’s just as critical to understand when and how to scale up the successes.

5. Upskill and empower the finance team

In our experience, members of the finance team who have spent time in business units tend to understand the uncertainties of and become better advocates for innovation. For this reason, the CFO may want to facilitate employee rotations that can give members of the finance team greater exposure to the business units and the day-to-day decisions facing their leaders and innovation teams. In this way, members of the finance team can build important relationships and better understand the assumptions underpinning innovation projects. The rotation program can also be an important professional-development tool for the company. At a large consumer company, such a rotation was the stepping-stone for a financial-planning and analysis (FP&A) analyst who participated in and then led an innovation project that eventually turned into a new product line with a multimillion-dollar P&L.

Most important, the CFO should empower members of the finance team so that they receive ideas in the early stages. The CFO can have only a limited impact with a set of already polished financial plans. The potential for successful innovation is far greater if the CFO receives draft plans with the assumptions clearly articulated—and that won’t happen by accident.

CFOs need to make it safe to innovate. The CFO can help to maintain a nonjudgmental tone in innovation-related conversations. Rather than flatly asking business unit leaders, “How did you come up with this number?,” the CFO can reframe the question as a point of appreciative inquiry: “I see this assumes we can convert 10 percent of customers. I wonder how we might be able to validate the take rate?”

CFOs need to make innovation fun. One company used a competition-style format to source new ideas. The CFO asked teams to come to the leadership with product, service, or process ideas and make the case for funding. The company gave bonuses and recognition to teams that made submissions. That created excitement, which encouraged people who may have hesitated to push ideas through the application process to do so in hopes of getting selected to present them to the C-suite.

CFOs need to make innovation easy. Another company has built lots of reversible decisions—or “two-way doors”—into the innovation process, so that it is easier for teams to test and learn from new initiatives. These two-way doors can mean fewer sunk costs for innovation teams, faster go or no-go decisions, and, ideally, faster times to market.

The long-standing perception of CFOs as obstacles to innovation is stale—and mostly incorrect. CFOs who perpetuate the old mindsets and processes associated with innovation initiatives may put their organizations’ long-term health and viability at risk. But those who work to become innovation allies stand to boost value creation substantially and to improve both the company culture and the bottom line.

Starting up as CFO

Source: https://tinyurl.com/yc74pxu2

There are a few critical tasks that all finance chiefs must tackle in their first hundred days.

In recent years, CFOs have assumed increasingly complex, strategic roles focused on driving the creation of value across the entire business. Growing shareholder expectations and activism, more intense M&A, mounting regulatory scrutiny over corporate conduct and compliance, and evolving expectations for the finance function have put CFOs in the middle of many corporate decisions—and made them more directly accountable for the performance of companies.

Not only is the job more complicated, but a lot of CFOs are new at it—turnover in 2006 for Fortune 500 companies was estimated at 13 percent.1 Compounding the pressures, companies are also more likely to reach outside the organization to recruit new CFOs, who may therefore have to learn a new industry as well as a new role.

To show how it is changing—and how to work through the evolving expectations—we surveyed 164 CFOs of many different tenures2 and interviewed 20 of them. From these sources, as well as our years of experience working with experienced CFOs, we have distilled lessons that shed light on what it takes to succeed. We emphasize the initial transition period: the first three to six months.

Early priorities

Newly appointed CFOs are invariably interested, often anxiously, in making their mark. Where they should focus varies from company to company. In some, enterprise-wide strategic and transformational initiatives (such as value-based management, corporate-center strategy, or portfolio optimization) require considerable CFO involvement. In others, day-to-day business needs can be more demanding and time sensitive—especially in the Sarbanes–Oxley environment—creating significant distractions unless they are carefully managed. When CFOs inherit an organization under stress, they may have no choice but to lead a turnaround, which requires large amounts of time to cut costs and reassure investors.

Yet some activities should make almost every CFO’s short list of priorities. Getting them defined in a company-specific way is a critical step in balancing efforts to achieve technical excellence in the finance function with strategic initiatives to create value.

Conduct a value creation audit

The most critical activity during a CFO’s first hundred days, according to more than 55 percent of our survey respondents, is understanding what drives their company’s business. These drivers include the way a company makes money, its margin advantage, its returns on invested capital (ROIC), and the reasons for them. At the same time, the CFO must also consider potential ways to improve these drivers, such as sources of growth, operational improvements, and changes in the business model, as well as and how much the company might gain from all of them. To develop that understanding, several CFOs we interviewed conducted a strategy and value audit soon after assuming the position. They evaluated their companies from an investor’s perspective to understand how the capital markets would value the relative impact of revenue versus higher margins or capital efficiency and assessed whether efforts to adjust prices, cut costs, and the like would create value, and if so how much.


Although this kind of effort would clearly be a priority for external hires, it can also be useful for internal ones. As a CFO promoted internally at one high-tech company explained, “When I was the CFO of a business unit, I never worried about corporate taxation. I never thought about portfolio-level risk exposure in terms of products and geographies. When I became corporate CFO, I had to learn about business drivers that are less important to individual business unit performance.”

The choice of information sources for getting up to speed on business drivers can vary. As CFOs conducted their value audit, they typically started by mastering existing information, usually by meeting with business unit heads, who not only shared the specifics of product lines or markets but are also important because they use the finance function’s services. Indeed, a majority of CFOs in our survey, and particularly those in private companies, wished that they had spent even more time with this group (Exhibit 1). Such meetings allow CFOs to start building relationships with these key stakeholders of the finance function and to understand their needs. Other CFOs look for external perspectives on their companies and on the marketplace by talking to customers, investors, or professional service providers. The CFO at one pharma company reported spending his first month on the job “riding around with a sales rep and meeting up with our key customers. It’s amazing how much I actually learned from these discussions. This was information that no one inside the company could have told me.”

Exhibit 1

Lead the leaders

Experienced CFOs not only understand and try to drive the CEO’s agenda, but also know they must help to shape it. CFOs often begin aligning themselves with the CEO and board members well before taking office. During the recruiting process, most CFOs we interviewed received very explicit guidance from them about the issues they considered important, as well as where the CFO would have to assume a leadership role. Similarly, nearly four-fifths of the CFOs in our survey reported that the CEO explained what was expected from them—particularly that they serve as active members of the senior-management team, contribute to the company’s performance, and make the finance organization efficient (Exhibit 2). When one new CFO asked the CEO what he expected at the one-year mark, the response was, “When you’re able to finish my sentences, you’ll know you’re on the right track.”

Exhibit 2

Building that kind of alignment is a challenge for CFOs, who must have a certain ultimate independence as the voice of the shareholder. That means they must immediately begin to shape the CEO’s agenda around their own focus on value creation. Among the CFOs we interviewed, those who had conducted a value audit could immediately pitch their insights to the CEO and the board—thus gaining credibility and starting to shape the dialogue. In some cases, facts that surfaced during the process enabled CFOs to challenge business unit orthodoxies. What’s more, the CFO is in a unique position to put numbers against a company’s strategic options in a way that lends a sharp edge to decision making. The CFO at a high-tech company, for example, created a plan that identified several key issues for the long-term health of the business, including how large enterprises could use its product more efficiently. This CFO then prodded sales and service to develop a new strategy and team to drive the product’s adoption.

To play these roles, a CFO must establish trust with the board and the CEO, avoiding any appearance of conflict with them while challenging their decisions and the company’s direction if necessary. Maintaining the right balance is an art, not a science. As the CFO at a leading software company told us, “It’s important to be always aligned with the CEO and also to be able to factually call the balls and strikes as you see them. When you cannot balance the two, you need to find a new role.”

Strengthen the core

To gain the time for agenda-shaping priorities, CFOs must have a well-functioning finance function behind them; otherwise, they won’t have the credibility and hard data to make the difficult arguments. Many new CFOs find that disparate IT systems, highly manual processes, an unskilled finance staff, or unwieldy organizational structures hamper their ability to do anything beyond closing the quarter on time. In order to strengthen the core team, during the first hundred days about three-quarters of the new CFOs we surveyed initiated (or developed a plan to initiate) fundamental changes in the function’s core activities (Exhibit 3).

Several of our CFOs launched a rigorous look at the finance organization and operations they had just taken over, and many experienced CFOs said they wished they had done so. In these reviews, the CFOs assessed the reporting structure, evaluated the fit and capabilities of the finance executives they had inherited, validated the finance organization’s cost benchmarks, and identified any gaps in the effectiveness or efficiency of key systems, processes, and reports. The results of such a review can help CFOs gauge how much energy they will need to invest in the finance organization during their initial 6 to 12 months in office—and to fix any problems they find.


Transitions offer a rare opportunity: the organization is usually open to change. More than half of our respondents made at least moderate alterations in the core finance team early in their tenure. As one CFO of a global software company put it, “If there is a burning platform, then you need to find it and tackle it. If you know you will need to make people changes, make them as fast as you can. Waiting only gets you into more trouble.”

Manage performance actively

CFOs can play a critical role in enhancing the performance dialogue of the corporate center, the business units, and corporate functions. They have a number of tools at their disposal, including dashboards, performance targets, enhanced planning processes, the corporate review calendar, and even their own relationships with the leaders of business units and functions.

Among the CFOs we interviewed, some use these tools, as well as facts and insights derived from the CFO’s unique access to information about the business, to challenge other executives. A number of interviewees take a different approach, however, exploiting what they call the “rhythm of the business” by using the corporate-planning calendar to shape the performance dialogue through discussions, their own agendas, and metrics. Still other CFOs, we have observed, exert influence through their personal credibility at performance reviews.


While no consensus emerged from our discussions, the more experienced CFOs stressed the importance of learning about a company’s current performance dialogues early on, understanding where its performance must be improved, and developing a long-term strategy to influence efforts to do so. Such a strategy might use the CFO’s ability to engage with other senior executives, as well as changed systems and processes that could spur performance and create accountability.

First steps

Given the magnitude of what CFOs may be required to do, it is no surprise that the first 100 to 200 days can be taxing. Yet those who have passed through this transition suggest several useful tactics. Some would be applicable to any major corporate leadership role but are nevertheless highly relevant for new CFOs—in particular, those who come from functional roles.

Get a mentor

Although a majority of the CFOs we interviewed said that their early days on the job were satisfactory, the transition wasn’t without specific challenges. A common complaint we hear is about the lack of mentors—an issue that also came up in our recent survey results, which showed that 32 percent of the responding CFOs didn’t have one. Forty-six percent of the respondents said that the CEO had mentored them, but the relationship appeared to be quite different from the traditional mentorship model, because many CFOs felt uncomfortable telling the boss everything about the challenges they faced. As one CFO put it during an interview, “being a CFO is probably one of the loneliest jobs out there.” Many of the CFOs we spoke with mentioned the value of having one or two mentors outside the company to serve as a sounding board. We also know CFOs who have joined high-value roundtables and other such forums to build networks and share ideas.

Listen first . . . then act

Given the declining average tenure in office of corporate leaders, and the high turnover among CFOs in particular, finance executives often feel pressure to make their mark sooner rather than later. This pressure creates a potentially unhealthy bias toward acting with incomplete—or, worse, inaccurate—information. While we believe strongly that CFOs should be aggressive and action oriented, they must use their energy and enthusiasm effectively. As one CFO reflected in hindsight, “I would have spent even more time listening and less time doing. People do anticipate change from a new CFO, but they also respect you more if you take the time to listen and learn and get it right when you act.”

Make a few themes your priority—consistently

Supplement your day-to-day activities with no more than three to four major change initiatives and focus on them consistently. To make change happen, you will have to repeat your message over and over—internally, to the finance staff, and externally, to other stakeholders. Communicate your changes by stressing broad themes that, over time, could encompass newly identified issues and actions. One element of your agenda, for example, might be the broad theme of improving the efficiency of financial operations rather than just the narrow one of offshoring.

Invest time up front to gain credibility

Gaining credibility early on is a common challenge—particularly, according to our survey, for a CFO hired from outside a company. In some cases, it’s sufficient to invest enough time to know the numbers cold, as well as the company’s products, markets, and plans. In other cases, gaining credibility may force you to adjust your mind-set fundamentally.

The CFOs we interviewed told us that it’s hard to win support and respect from other corporate officers without making a conscious effort to think like a CFO. Clearly, one with the mentality of a lead controller, focused on compliance and control, isn’t likely to make the kind of risky but thoughtful decisions needed to help a company grow. Challenging a business plan and a strategy isn’t always about reducing investments and squeezing incremental margins. The CFO has an opportunity to apply a finance lens to management’s approach and to ensure that a company thoroughly examines all possible ways of accelerating and maximizing the capture of value.

As an increasing number of executives become new CFOs, their ability to gain an understanding of where value is created and to develop a strategy for influencing both executives and ongoing performance management will shape their future legacies. While day-to-day operations can quickly absorb the time of any new CFO, continued focus on these issues and the underlying quality of the finance operation defines world class CFOs.

CFOs Must Embrace a Culture of Equality

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Diversity among finance leaders is lacking: Only four of the Fortune 100 companies in the U.S. have an Asian, African American, or Black CFO.

The numbers don’t look so good: Only 11 of the Fortune 100 companies in the U.S. have an African American, Black, Asian, Asian American, Hispanic, or Latinx CEO. Just seven have a woman at the helm. (Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States.)

Diversity among finance leaders is similarly lacking: Only four of the Fortune 100 companies in the U.S. have an Asian, African American, or Black CFO, while 11 have a female CFO. There are no Hispanic Americans or Latinx representatives in the group at all. Representation of these groups is drastically lower than the broader U.S. population, and it reflects less progress made for CFOs than we see for Fortune 100 CEOs.

And the Forbes Global 100 list isn’t nearly as diverse as the real world. Sixty-three of those companies’ CFOs are Caucasian, and just 12 are female.

                                                                   Tiffany Brown

Whether it’s flat-out prejudice or unconscious bias at work, people generally expect stability and competence from a white male finance professional, and so that is who they put in charge of their organization’s money. But the finance function is rapidly transforming. CFOs are now the CEO’s right hand — and are expected to be the chief growth officer. They’re not counting beans; they’re heading up digital transformations and finding new value streams. These changes open up the possibilities of who can be a CFO, and who can be perceived as congruent with this evolved role.

Especially now that demand for social justice reform from employees, consumers, and society-at-large is stronger than ever, it’s time to create a culture of equality in the finance function. Not only to get the numbers balanced on paper but to survive and thrive as an organization. While the classic CFO might seem like a solid bet, only a steady stream of new perspectives, ideas, and connections will propel companies safely through disruption and into an increasingly unpredictable business environment.Diversity Drives Growth

It’s clear that inclusion and diversity (I&D) is a value creator for shareholders: Companies with high diversity (on measures of age, ability, ethnicity, gender, gender identity or expression, religion, or sexual orientation, and whether or not they have diversity programs in place) have stronger profit margins and share gains. The 20 most diverse firms according to this Wall Street Journal ranking have an average operating profit margin of 12%, compared with 8% for the lowest-ranking companies.

Why might inclusion and diversity drive success in the finance function in particular? The CFO has to pull insights out of data in order to make decisions about where to take the business. Facility with math and statistics is important, of course, but a deep understanding of the market and the consumer is also needed to contextualize and extrapolate from the numbers.

Aneel Delawalla

If a finance team is made up of people with different beliefs, backgrounds, and knowledge bases, they will come to more interesting and relevant conclusions — and develop smarter strategies — than they would if they were of the same mindset as every competitor looking at similar facts and figures.

Diverse talent is critical because no company is selling to one type of individual anymore. Customers expect I&D from companies and will spend their money accordingly: Recent I&D research conducted by Accenture’s retail industry practice found that 41% of shoppers have shifted at least 10% of their business away from a retailer that does not reflect their I&D values. Each business has to get much closer to its customers by aligning with their principles, focusing on their experiences, and showing humanity. Decisions can no longer be based solely on ROI. The Nuts and Bolts

CFOs typically arrive at their position after moving up methodically within the organization. That limits the selection pool, but because companies can point to things like the diverse makeup of their board, or of management in less male-dominated fields like human resources, they can “get away” with a homogenous finance leadership team.

When it comes to gender at least, the pipeline is improving: The percentage of women in MBA programs in the U.S. has risen from 32% in 2011 to 39% in 2019. But a variety of factors seem to keep women from rising to the highest echelons in finance: They are not given high-profile assignments as often and sometimes see their ambitions derailed by family and childcare responsibilities.

Women of color, of course, face racism on top of sexism. A 2018 study found that only 13% of African American and Black female Harvard Business School graduates over the past 40 years had reached the senior-most executive ranks (whereas 40% of non-African American and Black Harvard MBA degree holders were in the executive suite).

Finance will have to take proactive measures to truly win the “war for talent.” Setting targets — and declaring them loudly and clearly — is a great way to hold people accountable and see results. Our company serves as a case in point: Accenture has a female CEO, CFO, CHRO, CMO, and CIO right now. That’s because we’ve made “getting to equal” a priority, underscored by public pronouncements, for the entire company.

Leaders who express a goal to diversify and who communicate the “why” behind their initiatives will go a long way toward creating an inclusive atmosphere — one that is good for all types of employees. Accenture research on workplace cultures of equality has shown that bold leadership is key to building an environment where everyone can be their authentic, whole selves, and thrive. Given their recently elevated roles within organizations, CFOs have a special opportunity to be those bold leaders.

We’ve noticed that a typical source of hesitancy around efforts to diversify is a false belief that it’s a zero-sum game. But companies don’t have to fire a white man for every Black woman they hire. They don’t have to lose the benefits of a 20-year veteran’s perspective; they can simply layer in other, equally valuable perspectives. Diversifying should be additive.

Raising those diversity numbers — and making your culture more inclusive — takes work. Here are 10 ways to build a finance function that is ready for the future.

Ten Recommendations

• You get what you measure. Set quantitative and qualitative inclusion and diversity targets now and begin to measure them. Tie them to leadership compensation and promotion eligibility.
• Leverage data and technology. For example, use AI to analyze promotion, compensation, and termination analysis to detect discrimination or unconscious bias.
• Build the talent pipeline. Start partnering with high schools and colleges to encourage interest in finance; recruit heavily (and flexibly) when filling junior-level positions.
• Tweak the trajectory. Let talent move across functions, or even set up rotational programs to help all employees gain skills and experience.
• Let them stretch. Give younger talent higher-profile and more challenging assignments as a show of faith as well as an opportunity to grow.
• Give feedback. The most common refrain we hear from our fellow professionals of color is that they are not getting the feedback they need to improve and advance in their organizations. Managers must take the time to offer constructive criticism, or they’ll risk losing top talent.
• Expand the team. Don’t think in terms of a zero-sum game where a diverse hire replaces a non-diverse hire. Instead, think about how to create a broader circle of voices.
• Expect — and embrace — dissension. Diversity brings more disagreement, which can make some people uncomfortable. But it’s ultimately healthy since it is a rich source of innovation. If everyone on your team is nodding along, you can bet an opportunity is getting overlooked.
• Build personal relationships at work. Both conflict and feedback are more easily navigated among people who know and respect each other. Leaders should make an effort to build bonds with high-potential employees. Just as being diverse on paper isn’t enough to reap the benefits of various perspectives, being a sponsor in name only isn’t enough to advance worthy candidates to the top of the finance function.
• Encourage soft networking. Informal internal events can connect talent with higher-ups who can act as connectors and perhaps even mentors and sponsors.

The bottom line? The next billion dollars of revenue or the next decade of growth for your organization is going to come from a team that can question longstanding beliefs about who should run finance and how finance should be run.

Tiffany Brown and Aneel Delawalla are Accenture strategy managing directors in the CFO & enterprise value practice.

CFOs: FP&A and accounting must speak the same language

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Author:  Robert Freedman@RobertFreedman

Source: https://tinyurl.com/yxp5q2mx

Poor coordination between backward-looking and forward-looking finance functions eats up time and resources better spent elsewhere.
If accounting and FP&A teams don't work in concert, they will waste valuable time each month trying to reconcile numbers, finance leaders said in a CFO Live virtual conference this week.

Inconsistencies between the two teams typically start with where they focus their attention, said Nayab Siddiqi, CFO and head of strategy at travel technology company REZY360.

Accounting teams, which are responsible for controls, compliance and reporting — traditionally backwards-looking functions — tend to focus on the balance sheet, while financial planning and analysis (FP&A) teams, which are responsible for forward-looking budgeting and forecasts, tend to focus on the P&L. FP&A teams typically account for a transaction one way — as an investment, for example — while the accounting team accounts for it as an expense.


"Once FP&A classifies something in their forecast in a certain way, and the accounting team doesn't know the nature of that transaction, they might classify that [as something different on] the balance sheet," Siddiqi said. "So, when they're comparing these, they won't find those numbers on the P&L, even though the transaction has already happened. Now, it takes a lot of time to find out where the transaction has been reported."

Process organization is the key to team communication, but, ultimately, coordination falls to the CFO, said Mirek Purpura, head of finance for Central Europe and Israel at Baxter International.

Purpura resolved a coordination problem by having the FP&A team look at the books while the accounting team was still in the process of closing them, rather than waiting until they closed.

"If an issue is spotted, it's a two-way street," Purpura said. "They can inform accounting if something happened correctly or not, and accounting can course-correct immediately. It's the role of CFO to enforce that kind of behavior between the two."

Siddiqi created a position between the two teams to ensure FP&A didn't spring any surprises on accounting after the books were closed, and vice versa.

"That person's responsibility is to keep coordination between the two functions by picking up the phone, calling them, and telling them what was going on in each of their functions," he said. "So, when reporting time comes, there are no [unanswered] questions."

Coordination is less of an issue in small organizations, because the two teams typically sit side by side and can stay in constant communication. It's more of an issue in big organizations, particularly ones operating in multiple countries, which might have hundreds of people on each team scattered across the globe, Siddiqi said.

Focus on drivers

Another way to keep teams working together is to train them to look at numbers in terms of business drivers. FP&A specialists tend to be better-equipped to do this, because translating business activity into financial terms is their job. But accounting staff can benefit from it as well.

"If they don't understand the levers moving the business, it can be difficult for them to connect these to financial transactions," Siddiqi said. "If that's not connected, anything they create won't be accurate, or close to accurate."

Purpura uses drivers to help speed his budgeting and forecasting. Previously, his FP&A team used more of a zero-based budgeting process, essentially starting the budget from scratch each cycle, but now, he uses historical numbers from accounting to create a baseline, freeing up FP&A staff to look only at drivers to determine which line items need changing.

"For something like travel and expenses, we automatically set a baseline for the teams going forward," he said. "That way, we're not focusing on the minutiae of details of things that are relatively consistent year-over-year. We've even started looking at baselining sales projections, based on historical information, especially in countries where they’re historically consistent, or based on leading indicator KPIs we can rely on. So FP&A can focus on the one-offs."

Siddiqi's FP&A team also uses drivers in their budgeting and forecasting. "Previously, we did roll-forward forecasting but now ... we look at different drivers, how they operate, and look at the different levers. How do they impact our numbers on the revenue or the cost side? And we translate them into their impact on our numbers."

For both teams, by improving coordination and collaboration on drivers, staff can focus more on higher value analytical work, and devote less time to reconciling differences in approach.

How Can a CFO Help in a Time of Crisis?

Source: https://tinyurl.com/y7228mum

Written by: Bill Palmer,

The current economic uncertainty has many businesses closely evaluating their current and future staffing needs. While some positions are being cut, especially in the hospitality and travel sectors, many businesses are strategically hiring financial professionals into executive leadership positions during the downturn.

Companies that previously had tasked their CEOs with handling finance functions are now hiring dedicated CFOs (or outsourcing CFO roles to reputable third parties) to ensure they will be able to weather the new economic storm. With ambiguity over how long businesses will need to keep their offices and storefronts closed paired with unpredictability in the stock market, business owners and CEOs are feeling increased pressure to make critical strategic financial decisions for the health of their organizations.

An experienced CFO can provide multi-scenario modeling to aid in tactical decision-making, offer an unbiased financial perspective, act as a confidential sounding board for the CEO, and handle negotiations with essential parties to benefit the overall organization.

Modeling & Planning

Unlike accounting, which is fundamentally about the past, finance is focused on planning for the future.

Seasoned CFOs can use current financial indicators and their previous experience to model and plan for the various scenarios that a business may face in the coming months and years. These plans can inform critical decision-making related to spending cuts, rightsizing the labor force, and timing planned business investments. CFOs can forecast the short and long-term impacts of these decisions to better position the company in response to economic shocks.

With new federal and state business relief packages being rolled out, new employee protections being passed, and additional financing options being offered by payment processors and vendors, an experienced CFO can help navigate the myriad options available to aid businesses in this difficult time.

In this way, a CFO not only mitigates the effect of a downturn of a business proactively but can also help right the ship when the company is struggling in a sea of a difficult financial conditions. 

 
Perspective

A consulting CFO is a neutral, independent voice in the room. Experienced CFOs typically follow the facts without pushing a personal agenda or engaging in office politics anyways, but consulting CFOs are even more likely to provide an unbiased perspective. Business owners and executive leadership teams can be reassured that a CFO consultant is acting in the best interest of the company and its stakeholders (owners, employees, and investors) rather than for job protection or other personal agendas.

Outsourcing the CFO role also provides an experienced and confidential sounding board for the CEO, which is especially important in family-owned businesses. While all business owners and CEOs feel some measure of emotional isolation, family businesses exacerbate this situation by adding personal relationship dynamics into the mix. Business leaders at family-owned companies may find themselves needing to balance family relationships and business success, especially in times of crisis. In this scenario, a CFO can provide the confidential conversational space that a CEO needs to make difficult decisions and prioritize the health of the business. Additionally, a consulting CFO can even act as a scapegoat for unpopular but necessary decisions, allowing the CEO to preserve existing internal relationships.

Third Party Negotiations

Because of their experience a CFO can also add credibility to the perceived quality of management and build bridges with capital providers to gain acceptance of forecast projections and strategic plans. The result is a company with less perceived risk and a higher perceived value, which is crucial in establishing mutually beneficial financial solutions while working with external parties.

A consulting CFO has credibility with lenders and personal relationships with banks to facilitate negotiations with these key players. The scope of a CFO’s experience will also aid in negotiating with third parties like landlords, vendors, and customers through difficult times when financing and payment options may need to be changed.

Good Controller/Bad Controller

Source: https://tinyurl.com/r6r3af6

Written by: Adam C. Spiegel and Jeff Epstein

The “goldilocks” controller has the right mix of skills and interests for your current challenges with the ability to scale the company.Back in 2012, Ben Horowitz published an article titled “Good Product Manager/ Bad Product Manager.” We borrowed from his format as we assessed a key role in a fast-growing company’s finance organization: the controller. (See our previous column, Good CFO/Bad CFO.) Special thanks to Aman Kothari, Darko Socanski, and the Bessemer Venture Partners CFO Advisory Board for their contributions.

Finding the right corporate controller for the scale and stage of growth for your organization is critical. If your company is a small, fast-growing organization, a “big company” controller may be unable or unwilling to roll up their sleeves to lean in and help address your most important issues. If your organization is more mature, an outstanding, hands-on small company controller may have difficulty developing a strong team and thinking and acting strategically.

The “goldilocks” controller has the right mix of skills and interests for your current challenges with the ability to scale the company in the short-to-medium term. As an organization scales it isn’t unusual for the controller to either be upgraded or for a chief accounting officer to be hired over them to help bridge gaps.

Whether you need a more nimble, hands-on controller or a big-picture, strategic controller, here are some common characteristics to consider in the selection and evaluation process.

A good controller can build and lead a strong accounting team. He or she hires the right people for the role and for the team and company culture. A bad controller is challenged on this front — he or she mis-hires and winds up doing all of the work themselves, then complains about it to everyone who will listen.

A good controller organizes for success. He or she designs their organization in a way that optimally supports the business now and that can be flexible to meet changing short-to-medium term needs. A bad controller hires bodies to “get the job done” and doesn’t have time to think about what comes next.

A good controller uses their innate understanding of each team member’s aspirations and limitations to get the best out of them. A bad controller can’t tell the difference between good talent and bad talent. He or she is afraid to upgrade the team because of the additional work they’ll need to do during the transition period.

A good controller sets clear expectations with the team and follows up. He or she sets goals for themselves and their team focused on continual process improvement. He or she asks lots of open-ended questions and learns from the answers. A bad controller does things the way the last controller did them without ever asking why. Bad controllers have no need to ask questions as they already know all of the answers.

At a smaller company, a good controller enjoys being hands-on and is happy with that as an ongoing part of their job, comfortably working both as a preparer and a reviewer. A bad controller in this size company resents having to do the detail work themselves and doesn’t bother to review the work of subordinates.

A good controller is quick to spread the credit and slow to spread the blame. He or she takes pride in the team’s successes and owns their failures. The same mistake doesn’t happen again because it becomes a teaching moment and a lesson is learned. A bad controller takes credit for others’ successes and blames others when things go wrong. There is no teaching and the same mistakes happen over and over again.A good controller “owns it.” He or she is willing to do whatever it takes to get the job done and will work shoulder to shoulder with the team during those long close or pre-audit nights. The bad controller punches out after their 8 hours regardless of what is going on in the office, leaving the team behind to fend for themselves.

A good controller is super service-oriented and ensures that the finance team delivers outstanding service to its customers (the rest of the enterprise). A bad controller doesn’t believe that finance has any customers and ignores the needs of the other departments.

A good controller communicates well, both within finance and to the broader organization, knowing that he or she is part of a collective team that only succeeds together. A bad controller works in a silo and doesn’t encourage collaboration.

A good controller understands processes, systems, and their underlying data and will work closely with engineering and IT partners to get the best out of their technology tools. A bad controller doesn’t implement systems projects because he or she can’t find the time. Bad controllers hold up the migration from QuickBooks because they like the flexibility to be able to go back to edit closed periods.

A good controller creates accurate financial statements on a predictable schedule and has a plan to improve upon their timeliness and comprehensiveness. He or she understands that getting to a faster monthly close means that the team will have more time each month for process improvement, making the next monthly close even better. In a larger private company, the good controller has a plan to reduce monthly close to a public company timeframe while also maintaining the sanity of the team. The bad controller uses the entire month (or more) to close the books, leaving no time for process improvement and leaving the team perpetually in a state of exhaustion and stress.

A good controller inherently understands and is fluent in the majority of the operational and technical accounting concepts relevant to the business. At a smaller company, the controller might not have the same depth of technical accounting knowledge but he or she will still be fluent in the key concepts so as to know when to ask additional questions or flag issues. The bad controller assumes that the auditors will figure out all of the technical accounting issues in the audit so he or she minimizes their effort expended on investigating them.

A good controller builds a strong and constructive working relationship with the audit partner and is unafraid to engage in honest and open dialog around critical internal issues. Good controllers communicate often and share the common goal of “getting things right” and avoiding surprises. The bad controller dreads every conversation with the audit partner out of fear that his or her incompetence will be exposed.

A good controller is ethically and morally grounded and is unafraid to challenge and engage with others at all levels of the organization in discussions about ethical issues. A bad controller lives in fear for their job and thus will hide from challenging issues.

A good controller projects gravitas and can partner well with executives and others across the organization. A bad controller is uncomfortable when interacting with others and it shows.

A good controller seeks out mentorship and guidance and is focused on self-improvement. A bad controller just “does their job” as he or she doesn’t have the bandwidth to do any more.

Adam Spiegel served as CFO for a series of public and private high growth technology companies including RPX and Glassdoor. Previously he spent over a decade as an investment banker for the Credit Suisse First Boston Technology Group and Prudential Securities, completing transactions valued at over $8 billion. He now mentors CFOs and advises other executives of high growth technology companies.

Jeff Epstein is an operating partner at Bessemer Venture Partners and a lecturer at Stanford University. He specializes in marketplaces and business-to-business software companies. He serves on the boards of directors and audit committees of Kaiser Permanente, Twilio, Shutterstock, and several private companies.

You've set the budget and it's Q1. Now what?

Source: https://tinyurl.com/uyemfp3

Written by: Jason Lin

Credit: Fotolia

Monthly forecasting exercises offer CFOs 12 chances to perfect their plan. Here's how to get the most out of them.

The following is a contributed article from Jason Lin​, CFO of Centage Corporation. Opinions expressed are author's own.

It's a new year and a new decade: the perfect time to update the plan you’ve spent months discussing and creating. No one knows better than you do that the minute the first set of results come in, your plan is out of date and needs revisions.

Only now, it’s not just a matter of updating projects. You also have to have an eye on the strategic insight you're expected to bring to the decision-making table. According to a CFO sentiment study by Insperity, 75% of CFOs say their roles are increasingly strategic to the business, especially when it comes to driving operations, including marketing, sales, HR and risk management. This means all eyes are on you to provide concise insight and advice as to how the company can meet its business goals.​

How do you meet your company's expectations for 2020? I recommend five strategies:

Update your reporting tools

It’s no surprise that CFOs have outgrown the traditional internal reporting tools long relied upon, including spreadsheets and PowerPoint decks. Business managers need to see accurate and up-to-date data in relevant dashboards, so they can drill down to identify the root causes of variances and uncover surprises. Reports that rely on last month’s data are stale, a snapshot of what occurred in the recent past. Only real-time data allows your business managers to assess what is happening now and respond to trends as they occur.

Cloud-based tools are useful here, as they proactively retrieve data from multiple sources and provide a robust way for users to get the story behind the data. If your business is spread out geographically, this type of cloud-based reporting solution can ensure all stakeholders are looking at the same data, giving your enterprise a single source of truth.
Meet regularly with your controller

The controller is very close to your company’s expense minutiae, and can provide insight into what’s happening on the field week by week. It's a good idea to meet with your controller regularly to understand how money is being spent so you can update your plan accordingly. Once, our controller pointed out that our actual bonus and commission payouts were very different from our forecast projection. Digging in deeper and correcting it created a significant impact.

It’s also a good idea for your controller to meet with other business executives, such as your chief marketing officer and VPs of sales and operations. Our controller hosts biweekly meetings with our VP of marketing to ensure our marketing funnel is on track to meet our goals throughout the year.

A department once removed a vendor expense in our forecast, but the auto-renewal had already occurred in a previous period. Our controller caught that mistake, too. Cross-functional meetings are a good way for the entire finance team to learn the business and become better strategic partners thereto.

Put KPI tracking on autopilot

One of the toughest challenges we face as CFOs is identifying the right internal KPIs to track to assess ongoing performance. Drivers will be unique to the company and sector. For example, because we’re a software company, we track opportunity creation to monitor our new business performance, as well as customer onboarding (i.e., time to value) as usage, which is a leading indicator to retention rates.
Your list of drivers may be long, which means you’ll need to identify the ones that will have the most impact on your plan and develop KPIs that enable you to track them easily and frequently. You'll need a tight grasp on leading indicators in Q1; your board will begin asking in February whether the company is likely to meet quarterly goals.

Complicating matters further, according to a Gartner survey, nearly seven in ten financial planning and analysis (FP&A) leaders say the volume of nonstandard, manual processes is a top problem for 2020. Fortunately, there are FP&A tools that allow you to customize reports and track data pulled from other business systems, such as your general ledger (GL), customer relationship management (CRM), or enterprise resource planning (ERP) system. By pulling up-to-date data directly into your plan, you’ll be in a position to detect problems early and report them to management and the board.

Focus on automation and efficiency

The 2019 CFO sentiment study makes clear that operational excellence is the top mandate for CFOs in the coming decade. Are your manufacturing facilities operating at maximum potential? Are there inefficiencies in your supply chain, and if so, what’s the best way to reduce them? Which market sectors should sales focus on to enhance profits and long-term viability?

According to a Gartner survey of FP&A priorities in 2020, 74% of CFOs say that they have insufficient forward-looking information in their management reports, and another 52% view annual budgets as disconnected from long-term plans. Clearly, operational excellence isn’t achievable until these gaps are bridged.

How to bridge them? In general, business intelligence tools are becoming more widespread and sophisticated. These tools act as data warehouses, pulling in data from various systems, including CRM, payroll, ERP and GL. All data is normalized so it can be layered, offering nuanced views of your business and all of its moving parts. These tools are also fully automated, eliminating the time-consuming and error-prone process of entering data.

For instance, let’s say you enter data on the cost and terms for a new office your company has rented. These tools can input that expense according to your company’s unique business structure (e.g., allocate that expense to the appropriate division), and automatically update all outputs, such as your P&L, balance sheet and cash flow statement.

Measure, revise and measure again

Be prepared to revise your plan with each new set of results that come in, and plan on asking many what-ifs and doing scenario planning exercises. My best advice: ditch the spreadsheet and adopt a tool that will automate your most critical workflows and what-if testing.

This change will allow you to test multiple scenarios and plan for each outcome. For instance, your business plan might call for hiring ten new sales reps, which the board hopes will increase revenue by, say, 20%. What is the impact of missing those hiring plans? Knowing how this will affect your financial statements ahead of time will allow the executive team to respond as quickly as possible. As a CFO once said to me, his monthly forecasting exercises offers him 12 chances to perfect his plan.

A consultancy CFO's No. 1 KPI

Source: https://tinyurl.com/re53uhe

Credit: MaxPixel

According to Halloran Consulting's Tania Zieja, there is one KPI that is vital for finance, accounting and HR.

Tania Zieja, CFO of Halloran Consulting Group, has a lot on her plate. Bolstered by over 20 years of accounting experience, Zieja manages the HR, accounting and finance departments of the Boston-based consultancy. Among her several operational duties on a day-to-day basis, she manages one integral role with an especially deft hand: knowing how to support company growth with new software system integration. 

Zieja spoke with CFO Dive Thursday about her keys to success as CFO, the best way to measure success, and how her intel on which systems to upgrade has evolved from her time at IBM to her time at Halloran. 

Prime KPI: billable utilization

Among all the data Halloran compiles through its software programs, Zieja tracks one KPI most intently: billable utilization. 

"Any billable time our consultants put on a timesheet goes through [cloud accounting software] Sage Intacct, onto a client invoice, and becomes revenue for the company," she explained. "It’s a healthy metric that shows we’re doing resource allocation correctly, and that we’re hiring at the right speed." 

Zieja said that at consulting firms specifically, resources are mostly shared, "so it’s really important to have your finger on the pulse with what’s going on with your resources, because they cost a lot, and if they’re sitting on the bench, they cost even more."

Billable utilization is Zieja’s main metric, and she and her team share it freely with the board. 

"We’re very transparent with those numbers across the company," she said. "Which is not meant to shame anyone if they’re not meeting targets. It’s truly meant to start conversations, to make sure everyone’s sharing the workload, no one’s suffering in silence, and to ensure we’re on top of hiring."

Understanding yield and billable utilization, Zieja says, is key for any financial team working with contractors, and consultants especially.

Tracking time spend

An upward trend of time spent on things such as budgeting or forecasting, year over year, shows Zieja that, because of Halloran’s growth, and the data they’re looking for, workers spend more time on a particular task. 

"Is there a better use of my team’s time? Is there a program that can replicate what they’re doing rather so they don’t have to crunch numbers on Excel?" These questions, she said, are the key drivers for her next implementations. 

"I tend to spend a lot of time looking at the forecast and budgets, and reconfiguring them if need be," she said. "I also read a lot of slide decks.

"My theory is: if you can create a template of the data, and you can click a button and fill it in from the data source, then you’re not spending time downloading, uploading, and manipulating trends and graphs. Put in the time upfront and reap the rewards later," Zieja said.

Upgrading while expanding

As the company's need for resources and headcount expanded, so did the systems necessary to support them. "While we were implementing our new system, we were still growing and adding to our headcount," she recalled.

"Our people are our product. Their salaries are our main expenditures. If we start spending a ton on systems, software, and other operational expenses that go into running a consulting firm, we kind of strangle ourselves a little bit with our growth, because we need to have that capital available for their salaries, and generating their revenue."

Financial planning & analysis (FP&A) helps support that, Zieja said, but "it’s a bit of a circular argument ...Who’s more important? I don’t think anyone," she said, but the relationship between consultant salaries and FP&A implementation costs are "very symbiotic."

Compared to Zieja’s former employer IBM, Zieja assumes they’d "have to provide the majority of their staff with a user license, and that’s where the costs can go up exponentially with these systems."

In any upgrading effort, Zieja stressed the importance of deciding which systems need changing and which are best left alone. To do that, she asks her teams to report on their trend sheets where they’re spending their time. 

Programming rules for small vs. large companies

Zieja​ noted there are differences between upgrading a system for a big, established company like IBM, where she worked as a revenue accountant, and for a smaller, fast-growing company like Halloran. 

"When I came to Halloran, it was really in need of some serious upgrades," Zieja said. "Expenses were being entered in manually, and I just knew that the way we were doing things would not allow us to grow and expand at the pace we truly wanted to."

One of the first systems Zieja eliminated was Paychex, which she replaced with Paylocity. The switch enabled her to work on the front end with onboarding, benefit administration, and payroll, she said. 

Her second endeavor, in 2017, was moving from QuickBooks and Netsuite’s cloud-based OpenAir to Sage Intacct, all the while keeping Salesforce, which integrated well with Sage. 

The thoughtful switches have alleviated several pain points, Zieja said. She points out that the need to keep FP&A spend relatively low in consulting can be tricky.

Tackling integration woes

One common system upgrade snag, regardless of company size or spend: integration. Does it ever make sense to change a system, even if it would potentially create integration problems?

"Integration is definitely key," she said. "I’ve gone through an integration that broke often. The problem with that is that you could have a system that might be very helpful, but if you can’t rely on the data, and get the data out, or you have to reconcile it to prove the data integrity is still there, it kind of defeats the purpose." 

Zieja cites a real-life example from her time at Halloran. When the company used Netsuite OpenAir for timesheets, expenses, and product reporting, they took the data and pushed it to QuickBooks in an effort to expedite their financial reporting process. The two systems spoke to each other well enough, Zieja recalls, but there would often be some type of missing link, such as one system needing an upgrade while the other needed new code.

"That can really be a time-suck," Zieja said. "I find that when you can’t trust your data or its source, you’re really putting yourself in a bad position. And if your management team can’t trust the data because the system integration broke, they won’t trust it in the future. And that’s not a good cycle to get into."

82% of workers want financial updates from CFOs

Source: https://tinyurl.com/te383h4

Writter: Jane Thier@thier_jane

Credit: Secretaria de Economia, Mexico

Dive Brief:

• 82% of workers want updates on their company’s financial performance, a survey released Tuesday from Robert Half Management Resources found. 53% of workers said they’d be "very interested" in hearing about their company’s financial performance, regardless of how good or bad the news is.

• The same survey found 88% of CFOs say their firm follows through on this request, sharing financial information with at least some staff. More than half of organizations provide financial data to all employees. The study also found large companies with 1,000 or more employees to be the most financially transparent.

• According to the study, 87% of CFOs at private organizations said quarterly and annual information is made available to "at least select employees." This figure is 31% higher than it was in a similar survey conducted in 2016.

Dive Insight:

"Providing insights on how the business is doing can drive stronger engagement, morale and problem solving across the organization," Jason Flanders, executive director of Robert Half Management Resources, told CFO Dive in an email. "When staff feel engaged in the company’s success, morale and retention can rise as well."

It can also help ease uncertainties about business performance, Flanders said. "If employees don’t get the news from you, they’ll get it from somewhere else, like the rumor mill, or speculate on their own."

But why is it important for CFOs to maintain this open line of communication that could otherwise be expressed via quarterly reports?

"CFOs that maintain this open line of communication send an underlying message that they trust their employees. Trust can lead to loyalty," Flanders said. "In the competitive hiring environment, open and honest companies will have an edge up on landing top talent."

Flanders says ultimately, companies that don’t talk with staff about organizational performance, career paths and how individual roles help the business risk losing top performers to businesses who are transparent.

Flanders outlined some tips on how CFOs can maintain an open line of communication on financials with their employees:

• Hold in-person meetings where possible — e.g., company town halls, department meetings, one-on-one meetings — to foster a better discussion and more interaction.

• Pick one or two key themes to share with staff. For example, what were the key contributors to revenue growth over the last quarter? Where do expenses need to be trimmed? What are the focus points for the management team over the next quarter? How are larger economic issues impacting the company?

• Tie your points back to the team’s roles. Show staff how their daily work fits into the big picture and drives the company’s overall success.

• Solicit the team’s support.

• Update the team on what ideas are implemented and how much is saved.

• Recognize and reward great feedback.

Secrets Of The Startup CFO: How To Be A High-Growth Company’s First Finance Leader

Source: https://tinyurl.com/urhm4hp

Written by:  Jeff ThomsonSenior Contributor CFO Network - I write about CFO insights.

PlayVS, a platform for high school students competing in e-sports, was launched in January 2018 and Gabi Loeb has been CFO since January 2019. That makes him this startup’s first ever CFO, and in this interview, I ask Loeb crucial questions about the challenges of being an inaugural finance leader, from having to “wear many hats” in operations and human resources to ensuring continuous cash flow through skillful investor relations.

PlayVS CFO Gabi LoebPLAYVS

Jeff Thomson: The CFO of a startup typically covers more ground than the finance executive of a larger enterprise. Often the CFO is also the Chief Operating Officer (COO), in practice if not name. What are the challenges a finance professional faces when they must also manage the operations of a complex organization – especially one that is growing as widely and rapidly as PlayVS – and work closely as a conduit between the CEO and the rest of the organization?

Gabi Loeb: I think the biggest challenge for a CFO coming into a Chief “Everything Else” Officer role is the ability to wear different hats while maintaining the same overall focus on the company’s goals and mission. Generally, the CEO needs to focus on product, go-to-market, fundraising/investor relations and talent acquisition. I consider it my job as CFO to support those efforts in any way necessary and to help make the best decisions possible along the way. As such, the “conduit” between the CEO and the rest of the organization changes depending on the hat worn. I’ve found that the most effective way to manage this is to be clear about what hat I’m wearing in each situation and being true to that role. If we have clarity about overall company goals, then all the conversations and decisions I make with my finance, accounting, HR, legal or facilities’ hats on should all lead us closer to those goals.

Thomson: Does this divert from the traditional skills and training of a finance professional and require a new outlook? Loeb: It does divert from traditional finance training and skills, which I think has been incredibly beneficial to me for two reasons. First, for me to be effective outside the “traditional” role, it means needing to manage, collaborate and learn from amazing talent in key functional areas outside my areas of expertise. Second, understanding multiple perspectives on key issues has ultimately made me far more strategic, decisive and flexible – all of which are critical skills for leaders in a startup environment.

Thomson: PlayVS has grown from having 16 employees at the end of 2018 to 41 as of September 2019 and plans to have twice as many before the end of the year. As a startup expands and you become responsible for assembling its finance team, how do you put on your “HR hat” and act in a different capacity from the finance function that you were trained for? 

Loeb: For me, that part isn’t hard per se – it’s just keeping that balance of the perspectives that I mentioned earlier. Fundamentally, business success will come from the group of talent we employ, so acting in an HR capacity (vs. a strictly financial role) gives me a much broader perspective on how we’re making progress toward our company-wide goals. Furthermore, I see the role of a startup CFO to be creating the structure, processes, systems and culture for quick, decisive action and accountability from a financial perspective. The HR function should, ideally, be similar, but from a “people-first” point of view. As we scale, we’ll bring in HR leadership to take us to the next level.

Thomson: What skills do you look for in hiring finance staff? What competencies and qualities make for good finance professionals in a startup as opposed to a more traditional company?

Loeb: Hunger to succeed, self-sufficiency, pride in ownership, deep domain expertise and the ability and desire to wear lots of hats successfully make for good finance professionals. Finance professionals in a startup are often a hub for the information, processes and analysis for decision making. So, having an interest in business operations and the ability to take a broad – and flexible approach to those operations is an important trait. They should also have an ability to be collaborative within the team and across the organization to allow things to move quickly. I know most people don’t think finance and accounting professionals need to have a high EQ (emotional quotient, i.e. emotional intelligence), but the ability to interact with and empathize with other people can help the organization make smart decisions faster, so it’s an important trait from my perspective.

Thomson: PlayVS has raised $96 million from venture capitalists in just 15 months. As CFO, how do you approach financial planning, analysis and reporting when you must answer to so many investors with a direct, sizable stake in the company?

Loeb: Ultimately, we have to grow and we have to generate revenue and positive cash flow. Our investors have placed a lot of capital in our care and they want it to be deployed in a strategic way that creates value. We have a massive opportunity in front of us, but we’re still early in our journey. So right now the most important thing is providing regular, transparent updates to our investor group about where we are, what success we’re seeing and where we see challenges that they can help us overcome.

This article has been edited and condensed.

'Persuader,' 'strategist' roles to lead finance departments in 2020

Source: https://tinyurl.com/tp6agz6

Corporate finance departments are experiencing a "skills gap" predicted to grow in 2020, according to research from Gartner Finance. These competencies, grouped into five categories, can help finance teams thrive in 2020 and beyond.​

The survey, based on information gathered from more than 1,000 finance employees, helped Gartner sort these competencies into categories, which they call personas, to help CFOs and finance leaders understand their departments' strengths and weaknesses. These five personality types are: builder, doer, learner, persuader and strategist.


Some skills, such as those relating to functional expertise, are well-covered, and are less likely to be in high demand in the future, Gartner said. But skills relating to IT fulfillment and finance analytics are in increasing demand.

"Although it’s probably no surprise to most finance leaders that technical skills relating to data analytics, IT fulfillment and IT innovation are in short supply, it’s not time to be complacent," said Melanie O’Brien, vice president at Gartner Finance. "Finance leaders should review the competencies of their current teams to understand what personas they have and where they need to build capability for the future."

While the five personas Gartner describes may not apply to all finance departments, "they do provide a template for finance leaders to think about what types of people and skills they will need in the future, and compare that to what they have available now," O’Brien said. "This lays the groundwork for building the finance function of the future."

The more pronounced these skill gaps become, the harder the impact will be to mitigate, O'Brien said.

 

The five personas

Builder

Skilled in business navigation, cross-cultural awareness, social intelligence and virtual collaboration, with an understanding of the nuances that drive the engagement of different groups (e.g., millennials and Gen Z).

Doer

Cross-functional expertise and the ability to exercise good judgment while exhibiting grit and resilience. Can balance timeliness with good decision-making. Talented project managers, able to delegate effectively and balance multiple responsibilities.

Learner

Agile, adaptable and confident, with a propensity toward entrepreneurship by suggesting changes in the department and understanding the risks and probabilities of success.

Persuader
Fluent with multiple business functions,able to find meaningful insights from data analytics and KPIs. Understands evidence structuring and builds a comprehensive body of evidence when creating insights and solutions.

Strategist

Excels at business coordination, IT and vendor management. Easily connects finance’s multiyear plan to business objectives and can suggest useful system modifications. Can build mutually beneficial relationships with IT vendors and maintain the kind of finance IT know-how that allows for vendor contract negotiation based on cost-benefit analysis.