Bragg characterizes such assessments of the business as “trying to cover yourself” to avoid nasty surprises. Other best practices include reviewing legal agreements and setting up such metrics of company performance as gross margins by product line and sales by salesperson. Also, make sure to understand where the company’s risks are and how they’re being mitigated. “Summarize all insurance information so it’s right in front of you,” advises Bragg.
Some finance executives are likely to be itching to take on broad roles such as corporate strategy once they reach the C-suite. But Bragg insists it’s imperative that green-eyeshade activities, such as cash flow, performance metrics, and insurance contracts must first to be squared away if the CFO is to be successful.
• Lose that To-Do List.
It’s important to note that the financial best practices Bragg describes above are priorities the new CFO must attend to—not a checklist of activities to execute personally. “They can be delegated,” notes Bragg. For example, while cash flow should be addressed immediately by any new CFO, finance chiefs might direct their controllers to report bank reconciliations of cash flow to them on daily basis instead of doing it personally.
In fact, say Bragg and other experts, one major adjustment for new CFOs is the role of delegating responsibilities. “The day is not structured [for a CFO],” says Bragg. This is an especially big change for former controllers. “Controllers are used to a long checklist of things to do – that goes away when you become CFO.”
Executive coach Mary Herrmann encounters this often in her new-CFO clients. “Many CFOs will say, ‘I feel like I’m not doing anymore,’” she observes. “In becoming a C-level executive, there’s less of a ‘to-do’ list.” She adds that she advises clients to establish a “vision” for their new leadership role, then communicating it to colleagues and staff.
That vision goes deeper than the details. “At some level,” Melissa Cruz, CFO of Concord Communications, says, “being a good CFO is understanding the business well enough to intuitively understand what the drivers of the business are.” A key part of the task is getting to know your peers on the executive team and making sure they understand the role of finance in the organization, she says.
• Get Out More.
Finance executives aren’t widely thought of as being extroverts who press the flesh. It’s no surprise that experts stress the importance of getting out of the office and establishing relationships with staff, other executives, and auditors and other company advisors. What’s especially important, however, is getting out there and meeting with customers. This will be a big change for former controllers especially.
“The CFO can’t be up in an ivory tower trying to come up with plans that have no basis in reality,” says Bragg. “You must meet with customers.”
Cruz says understanding the customer is especially handy in investor relations, another new territory for many first-time CFOs. “How do you communicate the company’s story to the investor? The best way is through the customer’s eyes,” she maintains. “Why this company has value: that’s a very different place for a former controller.”
To sharpen their communication skills, Cruz recommends that finance executives get involved in the speaking circuit and deliver talks at conferences, conventions, or industry association meetings.
But first-time CFO Sorenson says becoming more people-oriented doesn’t have to be an intimidating venture. “It could start with something as simple as shaking everyone’s hand at a meeting.”
Herrmann also recommends taking small, practical steps to get externally oriented. “Focus on areas that are going to foster communication,” she says. For example, new finance chiefs should consider holding a meeting to touch base once a week with their managers or call the staff together for a team-building exercise.
•Manage your managers.
Managing people isn’t a new skill to senior finance executives bound for the CFO spot. But it does become qualitatively different at the CFO level. As Cruz explains, the CFO is less of a supervisor of staff. “Now you’re managing managers. You’re engaged in an ongoing development of people.” As CFO, Cruz actively looks for ways to develop her vice president of finance, considering such things as having him speak at industry conferences.
Of course, to develop managers you have to hire them first. In a way, that also involves letting go of the to-do list, especially for former controllers. “Lots of new CFOs who were controllers just keep working like controllers,” observes Bragg. In fact, he says, he’s seen many controllers-turned-CFOs make the mistake of waiting too long to hire a new controller. “You cannot juggle CFO responsibilities with controller tasks. This is the number one thing where people crash and burn.”