Ultimately, the role will be defined differently at every company, and by every CEO. But board members, recruiters, and consultants say there are some common themes among those CFOs who are truly strategic business partners and those who are not. How can you get into that first camp? Consider the following:
Strategic CFOs delegate. There is no shortage of finance-related activities to chase, what with the ambitious slate of projects at the Financial Accounting Standards Board (IFRS anyone?) and the increasing challenges of obtaining credit. For any hope of having the bandwidth to consider the big picture, CFOs must first hire or train others who are strong enough to handle their roles with a minimum of intervention.
“The single most differentiated attribute of performance leaders is that they spend significantly less time with finance,” giving their staff members more decision-making power than average, says Levin Somaya, senior director with the Corporate Executive Board’s finance practice. And while nearly everyone delegates things like accounting, compliance, and governance, this group also delegates some nontraditional areas, including strategic planning, resource allocation, and capital-structure management.
“While many CFOs are reticent to take their hands off of certain critical tasks, this finding reinforces how crucial it is that they make time to develop a senior team that in turn frees its time for companywide leadership tasks,” says Somaya. The one activity they hold closely, though, is operational reviews, so they can stay closely connected to the business itself. (See “The Next Stage,” CFO, March.)
Strategic CFOs start with the business, then move toward the numbers. It’s not so much what you do, some say, it’s the context you put it in. Some CFOs might look into improving working capital because it’s simply part of the finance function, a box they should check, says Chris Click, principal with Booz & Co., who is currently working with a company on reformulating its CFO role to be broader. Strategic CFOs, though, will get to working capital from a different angle.
“If you’re preparing monthly reports for the business units, walk down to the business leader and say, ‘Hey, as I looked at your results, I was thinking maybe there’s a way to drive down working capital to fund the build-out of the customer-service network in the Middle East,’” or some other desirable project, says Click. This is strategic in two ways: not only does the CFO get kudos for helping, but this approach may also motivate the business unit to work harder on an otherwise uninspiring task. And addressing the issue face-to-face, versus by phone or e-mail, also wins points.
It goes without saying that such CFOs have strong relationships with various people in the businesses. Eileen Kamerick, for instance, CFO at Tecta America and on the board of two public companies, says she regularly picks up the phone to check in with her company’s business-unit leaders. One recent example: she polled them on how changes in revenue-recognition practices could affect their businesses. “I wanted to know if it would create more paperwork or less, and if there is a way we can structure it so that it’s the least amount of trouble possible,” says Kamerick.