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Faced with mounting internal and external demands, finance executives are at the end of their ropes, Cynthia Jamison, an executive-services provider, thinks.
Sarah Johnson, CFO.com | US
May 1, 2007
Finance executives have always been pulled in different directions by boards, CEOs, shareholders, and regulators — all of whom want constant reassurance about the corporation's financial health. But over the past few years, those groups have tightened their grips, putting the CFO role at a near breaking point. After certifying their company's financials and answering board members' and the CEO's demands, finance chiefs have little time left for working on long-term strategy or improving the strength of their own departments. Frustrated with falling short of perfection, more CFOs are cutting their tenures short or getting pushed out, says Cynthia Jamison, a partner of Tatum, an executive services firm.
A former finance chief at several companies and an audit committee chair of two boards, she hopes finance executives will change their roles by realizing they can't "do it all." They need to improve their management skills and relationships with board members and convince the CEO that they need more resources. In a recent interview with CFO.com, Jamison acknowledges that taking these steps won't be easy.
CFO.com: Have CFOs experienced such levels of frustration about their roles before?
Cynthia Jamison: I think it's never been worse. It's driven by a couple of things that are different than five or 10 years ago. One is the heightened regulatory pressure and the compressed deadlines for filings. The other is the fact that in the late '90s, there were a lot of business decisions made outside the finance department by marketing, or operations, or even the CEO that were more based on intuition. It was a less data-driven period. Since the dotcoms blew up, there's been a return to corporate decision-making that's based on a lot of analysis and data. That's good, but it adds another the layer onto the CFO that's heavier than it was.
CFO.com: How can CFOs redefine the dimensions of their role?
Jamison: I don't think there's a way for them to narrow their scope. But they can get more sophisticated about creating more bandwidth under them. CFOs try to do so much of it themselves when they should be building and flexing resources under themselves like muscles.
CFO.com: From the external and internal demands put on CFOs, who has the loudest voice? And who are CFOs neglecting?
Jamison: Across and down the company is what gets sacrificed. The CFO is the recipient of so many voices that they have to prioritize. Then typically they do a lousy job of communicating to all the others why they prioritized as they did.
In general, if you had to rank, you do the regulatory stuff first because you have to do your filings and you have to be compliant. You do the board stuff second because the CEO looks bad if the board isn't happy. And then you do the CEO stuff. What typically falls off is the peer-level support across the organization and the staff training and support.
There's an awful lot of political maneuvering that can start happening when your peer group gets mad at you and doesn't think you're responding to them. They typically will go to the CEO and start agitating and that can get the termination rumblings going. Communicating with your staff, boards, and CEO is important, but peers can also do a lot of damage if they're not happy.
CFO.com: Why aren't more CFOs taking the time to effect change in their role?
Jamison: CFOs don't like breaking their own behavior patterns. Nobody does. It's very uncomfortable to try to change behavior when you're older in your professional life and older in your living life, but that is what part of what the solution requires.
CFO.com: How can CFOs explain to their board and CEO that they want to make changes?
Jamison: They need to first start a conversation across to their peer group and up to the CEO about what life stage the company is at today and where they want to get to in the next 24 to 36 months. That starts a strategy conversation that the CFO is leading and really allows them to get out of the day-to-day grind and step into a role where they're thinking longer-term and more futuristically. And it helps them put realistic goals in place.
Another way is to form a collaboration with the chairman of the audit committee. They can do that by having informal meetings. Yesterday afternoon, the CFO of a company whose board I sit on called me out of the blue. He said, "Can I shoot you my script for the earnings call? I want you to take a look at it and give me your feedback before I get on this call with investors." It's great that he trusts me. It's an easy, casual kind of relationship where he views me as an educated set of eyes that can help him.
CFO.com: Audit committees are taking up more of CFOs' time and putting the CFO in a teacher-type role. How can the CFO push back on some of the committee's questions?
Jamison: In some cases audit committees are asking for high-level, operational kinds of detail that they really don't need to have their fingers in. It's problematic, but that's more for the CEO to tackle than the CFO. I don't think it's a fair position for the CFO to be in, but I think it's dangerous for him to be the one to push back. In a perfect world, you'd have savvy board members who understand what their roles are so they're not doing this to the CFO, but I think we have a ways to go on that.
CFO.com: You've mentioned that CFOs are unfairly perceived as being ethically challenged. How can finance chiefs change that taint, assuming it exists?
Jamison: I don't know that there's anything an individual CFO can do other than just do their best and be a good CFO to rebuild the trust in the profession. CFOs are often unfairly made to be scapegoats. There are only two management positions that typically are integral to the board process — the CEO and the CFO. When the board gets upset and they're looking for change, they look to one of those two. It's human nature for the CEO to point the finger at the CFO. Building some of those relationships more casually with board members is a good defensive move for CFOs.
CFO.com: But do CFOs have to be careful about creating too close a relationship with board members?
Jamison: CFOs have to be savvy about how they communicate what they're doing to the CEO. A CFO is challenged to make sure that the CEO is comfortable that he's building these relationships and trusting that they're for the greater good as opposed to leaving the impression that he's doing end-runs around the CEO and having conversations he shouldn't be having.