The evolution of the modern CFO to CEO business partner

Sireesha Venkata, CFO at Socialize | We Are Social, joined our CFO Summit and gave the following presentation.

More and more CFOs are becoming strategic thinkers, equipping them with the tools necessary to evolve into effective business partners.

But how can the modern CFO transition into a business partner to the CEO?

In this article, I discuss the four pillars for a successful relationship between the CFO and CEO, what CEOs want from their finance leaders, and how you can become a successful business partner.

Topics covered:

Four pillars of the CFO and CEO relationship

1. Open dialogue

The CEO and CFO should be able to communicate effectively without fear of judgment or criticism from either party. They should be able to give each other constructive feedback, and exchange ideas for better decision-making and to help form a healthy working relationship.

2. Mutual respect and trust

Both roles must have mutual respect and trust for each other. They need to rely on each other's expertise and knowledge to get decisions done speedily and have honest conversations free of any blame.

3. Goals and objectives

Both parties should clearly understand what needs to be accomplished for the company to succeed. Setting measurable goals ensures that both the CEO and CFO are held accountable for the team and company’s performance.

4. Willingness to collaborate

A CEO and CFO should be obligated and look forward to working together on projects that benefit their expertise and skill sets. The CEO should view the CFO as a champion in spreading the culture of wise spending instead of as a roadblock to growth at all costs. The CFO, in turn, should enlighten the CEO on the best ways to exceed company goals while remaining cost-effective.

Understanding the CEO personality

Pay close attention

To understand the CEO personality, you must pay close attention to the questions you’re being asked. You’ll often learn more when you listen. So, pay attention to the questions the CEO asks and find out what’s important to them and what’s top of their mind. You can also gauge their commitment to values and ascertain if they share your attitude to ethics.

Cultivate relationships with peers and board members

It’s important for the CFO to cultivate relationships with peers and board members, which is integral to your success. You must spend time with the board to understand their priorities in the business, and also their relationship with the CEO. And we can use this relationship to ask about hot button issues which are not obvious or what you might have expected.

Attend client meetings

Attend client meetings not just when you’re needed to help close the business, but to learn about the business. This way, you can help assist the CEO with business challenges they face in running the company. This will help you to better understand the business from the CEO’s lens.

Take data from multiple sources

You need to take data from multiple sources to help make you a better ally. Spending time with the team beyond finance will also help you to gain more understanding of the rules and build competitive intelligence.

Knowledge of the whole business – not just the financials – is the foundation of a strong CEO-CFO partnership.

How to build trust with the CEO

Here are some tips to help you build trust:

Consistently delivering ahead of schedule
Arriving at meetings prepared
Delivering bad news before meetings
Creating structure calendar of events
Circulation of information before meetings
Relationship with service providers
Identifying ways to evaluate instead of reasons

Dynamics of CEO-CFO relationship

The dynamics of this relationship involves understanding three things:

What do CEOs want?

“This is determined by the circumstances of the company size, the industry the companies in the stage the company is in, and of course the personal preference of the CEO.” – Jack McCullough

Most CEOs want something very specific, such as:

Skilful communicators: A communicator who can articulate the vision and values of the company, be able to present complex data, and support them in communicating the vision of the company and business strategy to others.

Strategic thinkers: CEO’s value strategic thinkers more than financial expertise. They expect us to get involved in all aspects of the businesses and be able to craft a business strategy. They need insights beyond numbers.

Candor: They expect candor from their CFO and for that person to be able to deliver unvarnished truth. They need a CFO to support them in public, and challenge them in private. They are the person they rely on to have difficult conversations.

Versatility: CEOs expect the CFO to be a business partner. They want the CFO to be enterprise wide executive with the financial expertise.

What do CFOs need from the CEO?

“The critical aspect of modern businesses, CFO is not a finance person, but a business problem solver, who brings a finance perspective.”

Here are the three things a CEO can do to make the partnership with the CFO successful:

Create platforms to build business context

A CEO should be able to provide a CFO with a good platform where they can get proper business context. They can do this by including the CFO in all management committee meetings and involving them in critical hiring decisions. That way, a CFO can understand the business context better.

The more a CFO knows about the business opportunities and challenges, the better their quality of input will be in the decision-making processes.

Empower

CEOs must empower their CFO. CFOs can go beyond the conventional aspects of the role. This involves not just doing budgets and forecasts, but getting involved in designing frameworks and monitoring any deviations in the parameters. This is the empowerment a CFO would need from CEO.

Sounding board

A CFO would like to be a sounding board for the CEO. When a CEO leverages the CFOs ability of being objective and articulate in company's interests, that will develop a balanced perspective in decision making processes.

If a CFO gets all this, they will be set up for success.

What do CFOs need to do?

To ensure the basic needs and wants of the role covered, here are three things a CFO must do to make the relationship work:

1. Be a solutions builder, not a ‘naysayer’

Realize being a good accountant and risk manager are core competencies, not their entire role.
Go above and beyond to propose solutions to CEOs. By doing so, they become valuable business partners to their CEO.

2. Articulate via stories

Willing to put themselves in the shoes of internal customers.
CEOs are comfortable with numbers. However, they often prefer straightforward, accessible ways of understanding performance.
Rely on charts and graphs.
Don’t just present numbers, interpret them, to identify the root cause of dropped performance and recommend an action plan to rectify the situation.

3. Engage on the right matters

Engage on the right issues, at the right time and for the right time.
Most CEOs lose interest if conversations become too operational, technical/financial, or short-term.

Tips to enable the CFO-CEO relationship

Adopt a collaborative approach to strategic planning

Forward thinking and collaborative planning enables CFOs to successfully execute the plan. Traditionally, CEOs used to lead future things and CFOs would provide context to financial planning and challenges. Collaborative approach involves both parties getting involved more and agreeing on the overall management approach.

Ensure good team and tech. Automate data collection and presentation

Hire good managers who can grow in their career in a few years. Serve as a mentor and CFO and build a good team around these managers. Try your best to empower them with good technology. It’s also advised to set up financial modelling, connect all revenues and expense data to view real-time dashboards.

Develop a finance communication plan

Work together with the CEO to create a communication plan to disseminate financial information to the wider organisation. Tell a story by putting the context of the financial data connecting to the day to day jobs of all employees in the office.

A CFO must also act as a bridge between the CEO and head of the departments. So this would be from the point of view of budgets and forecasts.

Challenge the CEO in the right way

Honesty is the key for any successful relationship. We need to be very careful about it. My advice is to be specific with the information. Don’t say it will not work. But instead , say “I understand your of view and the details X X, and when I consider Y, Y, I believe things can go different, so let’s explore the options Z, Z."

💡

Support in public. Challenge in private.

Shifting your mindset

To excel in this field, you must adopt the right mindset to make this relationship successful. A great way to get started with this is to embrace continuous learning and commit to learn and develop yourself. Stay up to date with latest information in the industry and try to attend workshops and webinars where possible.

Take ownership of your career, set goals and seek out opportunities. Be proactive in pursuing your ambitions and make sure you build your personal brand to cultivate a growth mindset.

It’s also important to practice effective time management and focus on the big picture. Practice being your future self. I you struggle with time management, for example, practice being a future version of yourself that is productive. Having a big picture view like this helps us to make real progress. If you have many things on your plate, concentrate on doing the important tasks first.

The evolution of the modern CFO to effective CEO business partners