I was at the FEI (Financial Executives International) conference in Niagara Falls a few weeks ago. There was some great content over a couple of days, but one of the best sessions was the opening keynote from Maureen Sabia who is Chairman of the Board at Canadian Tire. She has enjoyed many years serving on public company boards, and is very clear in what she expects from a CFO. With her experience, knowledge and confidence I was not about to argue, and she was very compelling with her views.
To many people the CFO is “the bean counter”, and there is a stereotype expectation that he/she will be a little “straight”, not necessarily a people person, a little risk averse, a little nerdy and not very social. Many accountants will play up that stereotype, but my experience with senior financial executives and especially those at the most senior levels is that they are not at all like those stereotypes.
Here is what Maureen Sabia had to say about CFOs.
The very basic expectation of a CFO is that they know the technical aspects of their job cold. Good with numbers, good with understanding the nuances of the numbers and able to report efficiently and accurately.
There is an expectation that the CFO will offer no surprises to those who rely on her to provide information. The board and the other company executives should have absolute trust that she will not hold back.
Board members and most importantly the audit committee should expect to meet with the CFO prior to any board meeting, and should expect to hear anything they need to know before going to the board meeting (see #2).
The CFO should cultivate relationships beyond her domain … with other executives, board members, industry members and peers.
Maureen talked about the 4 distinct roles that the CFO will have … The Strategist, The Catalyst, The Guardian and the Operator.
The Strategist. In this role the CFO applies his financial leadership in M&A situations, capital markets, financing and in aligning the financial strategies with the business strategies. The CFO should have an excellent understanding of the business, so much so that a previous role with business management responsibilities is extremely valuable.
The Catalyst. The CFO will share in leadership responsibilities with the CEO, ensuring the disciplined execution of the corporate strategy (together with the rest of the executive team). The CFO will bring a rigor to the processes of the company, change management skills and a good understanding of the risks inherent in the business strategy.
The Guardian. The CFO will protect the assets of the company, bringing the right balance of risk to the growth strategy. She will not shy away from challenging the CEO, bringing a healthy tension to the executive suite ensuring that the CEO is not surrounded by “yes men”. The CFO must have the trust of the executive and the board, which is achieved through openness, honesty and her strategic value to the organisation.
The Operator. The CFO will bring the right talent to her team, delegate and mentor to ensure she has the time to execute on all of the expected roles. The CFO is just expected to be extremely competent at this part of the job … the numbers need to be reported accurately, completely and efficiently.
Tenure is important … when a company has a great CFO they need to hold onto them, ensuring continuity and reducing the risks inherent in turnover.
I must say that having worked with my CFO for the last 18 years, in a private enterprise, I can understand exactly what Maureen is describing. To be able to trust absolutely, to know that the advice comes with a deep understanding of the business and to know that the technical aspects of the CFO role are “a given” is very important to any CEO.
How does your CFO stack up? If you are a CFO are there areas that you need to work on?