For private companies, notes Vennare, it’s more important to have a CFO who understands the industry, but a CPA is always a bonus.
2. You Can’t Handle Office Politics
When a company has many capable financial executives competing for attention, says Chip Clothier, “one of the things that allows an executive to rise to the CFO spot is the ability to manage the politics of the business.” Adds Clothier, the managing partner of executive search firm Howe and Associates, a winning CFO possesses the “executive presence” to juggle the concerns of corporate constituents — the CEO, unit managers, directors, Wall Street analysts, bankers, and the finance department — without being skewed one way or another.
“Corporate constituents have to trust the numbers and the CFO,” says Pfefferle. That means more than simply managing the organization downward; a CFO must also “manage upward,” presenting facts and ideas to the CEO and the board. On occasion this might mean standing up to the boss; on rare occasion (headlines aside), this might even put the CFO’s job in jeopardy. A finance chief who decides to play it on the safe side, or is outmaneuvered because of a lack of political savvy, will likely find himself or herself in a weaker position the next time around. Certainly, the company will suffer.
Too many people pay homage to their bosses rather than engaging them, explains ImmunoSite’s Vennare; the finance chief needs to be able to argue a point with the CEO and not shrink away the next time they meet. “I love a CFO who doesn’t mince words or worry about my feelings when he’s got observations that need to be aired,” says Cederna. The CEO and CFO form such a “tight-knit team” — bonded partly by respect and trust, and partly by chemistry and other intangibles — that a vacant CFO spot is very attractive to an incoming CEO. In fact, the privilege of hand-picking his own finance chief was one of the factors that drew Cederna to Calgon Carbon.
For a CFO to be a successful strategist, says Melissa Halpert, a managing director at institutional investor Providence Capital, he or she need to understand the board, not simply to ask the right business questions. That requires a significant storehouse of management experience as well as financial expertise. “A good CFO knows the board’s modus operandi,” remarks Halpert, who adds that the finance chief should strengthen the board by using its members’ expertise to enhance the business.
3. You’ve Got a Swelled Head
Dealing with the CEO requires self-assurance, notes Pfefferle, but all too often, bright managers are cocky, strong-willed, and overconfident. Executives with big egos tend to overlook little things, or things they deem insignificant, says ImmunoSite’s Vennare, who has “turned down [prospective] CFOs because of their egos.” Swelled heads can lead to missed opportunities, adds Pfefferle, when information about those “little things” ceases to flow through the organization.