While CFO at a private scientific research company, Stewart Griffin identified a major new piece of equipment — an automated microscope-slide feeder — whose return on investment was disappointingly low. The variation in slides from one client to the next, it seemed, nearly wiped out the saving that the automated feeder was intended to generate; each batch of slides had to be painstakingly recalibrated.
Griffin, who took on the task of making this expensive slide feeder pay its way, determined that a further investment was needed — standard slides, which the company would provide to its clients. The standard slides cost his company another $7,000 — and returned a $300,000 saving to the research lab.
Writ large, this is the same approach that a successful turnaround artist might take to overhaul a troubled company. Turnarounds are a bit of a specialty, of course, and you’re unlikely to find yourself tackling such a job until you’ve spent some time in the trenches.
6. You Don’t Care Enough about Operations
Finance chiefs have to travel to plants and facilities, attend industry conferences, and visit clients, says Calgon Carbon’s Cederna, so they understand what’s behind the numbers. There’s no other way, he maintains, for them to become “true business counselors and advisors.” Worthy CFO candidates don’t view finance as an isolated function, adds Pfefferle; they see past the numbers to explore how corporate finance can help usher in business improvements.
A prospective CFO also needs to dig into the company’s core competencies, says ImmunoSite’s Vennare, who demands that his finance chief understands the company’s business and financial model, not to mention its relationship with the capital markets. “If the CFO is still learning about my business, the learning curve is already too long,” notes Vennare. He adds that a candidate hoping to join the C-level should be more of a teacher than a student. “If I wanted a CFO who was just good at finance,” quips Vennare, “I would have hired a graduate student with good marks in finance.”
Other sources we spoke with agree: A CFO who is short on basic operational knowledge won’t have enough information to make the best financial decision. Of course, the CFO shouldn’t get bogged down with operational details — or with financial details, for that matter. To some degree, a finance chief must rely on unit managers to direct the appropriate information up to the C-level. (Maintaining a close connection with operations may be more critical than ever due to some of the reporting requirements of Sarbanes-Oxley.)
7. You’re the “Quiet One”
If you can’t step up in front of a large group and speak about your company’s finances and business, you won’t make a good CFO, counsels Clothier of Howe and Associates. Eloquence may not be essential, but you’ve got to be good on your feet. “You rarely see a wallflower become a CFO,” asserts Clothier, especially when you consider how often the finance chief must stand in for the CEO.