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Habits of Highly Effective CFOs

By Emily Houghton, Industry Marketing

Chief Financial Officers have long been the backbone of organizations, providing sound financial judgment. But recently, evolving trade and tax policies, new and complex regulations, and emerging technology like blockchain and AI have stretched CFOs beyond their regular boundaries. In addition to executing on traditional finance responsibilities, 81% of today’s CFOs are focused on identifying and targeting areas of new value across the enterprise.

According to the CFO Leadership Council, an organization that delivers cutting-edge professional development programs that focus on the “people” side of being a CFO, there are common habits that most successful finance leaders employ to adapt to the pressures and challenges that organizations now face. These highly effective CFOs:

Are Trusted Advisors to the CEO and Board

Successful financial leaders are strategic partners to the CEO and Board; taking an active role in developing both long-term and short-term goal setting. Particularly as technology enables business process automation, and operational environments become more complex, CEOs and boards are becoming considerably more dependent on CFOs to help them uphold fiduciary responsibilities.

Sarbanes-Oxley and events like the 2008 financial crisis represented critical points of reflection on executive accountability, and modern reforms like ASC606 and the new lease accounting standard have made these relationships even more paramount. According to a Russell Reynolds study, 98% of CFOs with “very strong” CEO relationships are comfortable bringing difficult issues to their chiefs; only 29% of CFOs with weak CEO relationships are comfortable tackling tough topics with their boss.

Poor communication, or lack thereof, can lead to ethics violations, as seen in the Enron and Worldcom scandals. Because 71% of finance leaders believe they will be increasingly responsible for ethics of decision-making, a strong partnership with executive peers is essential.

Act with Emotional Intelligence

To provide ethical leadership, many CFOs are honing their emotional intelligence (EI) skills—the ability to perceive, control and evaluate emotions. CFOs want to combine personal competence, such as self-awareness and self-management with social competence, such as social-awareness and relationship management.

While CFOs are widely recognized for their analytical prowess and financial acumen, it’s EI that allows them to communicate effectively with peers and stakeholders. In fact, a study by TalentSmart found that emotional intelligence is the strongest predictor of performance, explaining 58% of professional success.

Luckily, EI can be learned and developed. In an interview with the Wall Street Journal, Pete Shimer, CFO of Deloitte, noted that the best way for CFOs to sharpen their emotional intelligence skills is by participating in group activity. “An emotionally intelligent leader understands that strong leadership means thinking about and doing what is important for the team and the organization as a whole rather than for a specific individual.”

Focus on Building Elite Teams

Being a team player lends itself to the broader conversation about the role a CFO should take in sourcing and retaining talent. Erica Vollini and Sandy Cockrell III of Deloitte believe that the financial and operational impact of the “war for talent,” and its connection to the wider corporate strategy, make it crucial for finance leaders to be active in developing workforce strategy. Indeed, CFOs consistently site talent acquisition as one of their top internal risks and barriers to company growth, according to Deloitte’s quarterly CFO Survey, “CFO Signals”.

Technology and automation have created immense uncertainty about what jobs will be needed in both the short and long term. That, coupled with the fact that today’s workforce is undergoing a generational transformation—with millennials making up the largest population of the U.S. labor force has left organizations struggling to assess both their own hiring needs and how to meet the demands of the talent pool available to them.

In particular, the cultural and financial implications of the new millennial workforce have created the need for HR and finance to work closer together to ensure proper dedication of financial resources. Young professionals are more mobile than past generations, looking for companies with flexible scheduling and programs that further their personal and career development. Moreover, this is a group with an average of $42,000 in debt. Millennials are shopping around for employers with benefits programs that help repay student loans faster.

To meet these demands, CFOs must step up. They have the most complete understanding of an organization’s financial health and are therefore most equipped to assess the costs, ROI and infrastructure needed to manage and compensate new talent, as well as assessing the cost savings and productivity gains that may result from automation, contingent labor and remote offices.

Remember that “F” stands for Finance

Despite mounting pressures to influence nearly every aspect of the business, effective finance leaders never lose sight of their traditional charge: managing the company’s finances in compliance with GAAP. New technologies and regulations will inevitably change how this is done, but developing strategy with executive peers, tuning “soft skills” like emotional intelligence, and building a top performing team with financial fundamentals at the core will help CFOs remain highly valued amidst constant change.


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