How to Generate More Value as a CFO

Adding value beyond closing the books and reporting financial information can be a struggle. Here's how to break out of the 'bean counter' mold.
Bill BudicinOctober 14, 2014
How to Generate More Value as a CFO

Like it or not, stereotypes are a fact of life. When we think of stereotyping we usually think of it from a social perspective, but it happens in business every day. If I asked you to picture an engineer or a salesperson in your mind, you would picture two very different people.

Bill Budicin

Bill Budicin

A lot of CFOs are stereotyped as accountants because most CFOs do indeed have accounting degrees. I graduated from college with an accounting degree, got my CPA and was proud of it — for about two weeks, until I heard the term “bean counter” for the first time.  One of my parents’ friends said, “So you’re going to be a bean counter?” and I said “God, I hope not.”

I’ve been in consulting all my life and have worked with more than 100 companies and even more CFOs. I have to say there is a reason for the stereotype. Many CFOs rarely get out of their office, they are not very engaging and they view their role in the company very narrowly, putting a premium on closing the books.

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In those circumstances, the rest of the C-level executives don’t consider the CFO to be adding a lot of value and often don’t include them when setting the strategic direction of the company. If you want to be more valuable in your role as a CFO, follow these steps:

1. If you have your CPA certificate hanging on your wall, do yourself a favor and take it home. Take CPA off your business cards. I did a long time ago and it changed the way clients thought of me. (For the younger folks out there, I’m not suggesting you don’t get a CPA. The knowledge you gain from getting one is very valuable, but the stereotype is tough to fight.)

2. Expand your thinking and your role. Value is about exceeding expectations. Closing the books in three to five days without error is an expectation in today’s environment. You have to do more to really generate value in your organization.

One way to expand your role is to have IT report to you and restructure the way IT interacts with the rest of the organization. In most organizations IT has an endless list of data requests while other functional areas are still information-poor. A company being data-rich and information-poor is a reality and as a CFO you can fix that problem.

Try creating a new process for requesting reports out of IT that includes documenting the decision being made, information needed to make the decision and the data needed to provide the information. Too many reports are requested that will never impact a decision being made. If every report is tied to a decision, you can eliminate a majority of the report requests and increase the value of information going out to the functional areas of the company.

3. Restructure how metrics are used in the organization. Every company should have strategic and tactical metrics. Strategic metrics, by definition, should tie into the strategic plan. Each year there should be three or four key initiatives that will support the strategic plan. Help devise the metrics that will measure the progress of those initiatives. Think about how to communicate those metrics to the rest of the organization. Too often those metrics are shared only at the C-level, and the rest of the organization has no clue what the strategy is or how their daily efforts contribute to strategy execution.

Each functional area should have tactical metrics. As CFO you should be involved in helping set those metrics. The goal of tactical metrics is to identify a problem as quickly as possible. No matter how fast you close the books, financial statements come out too late to enable you to react. Tactical metrics should come out weekly; some may need to be daily. Help the other functional leaders identify the right metrics. It is better to have fewer, but more meaningful, metrics. You will probably end up eliminating a lot of metrics that have little value. The more interaction you have with other functional areas, the greater your visibility and the higher your value.

Opinion_Bug74. Manage risk. Managing risk is an important role of the CFO. Managing risk doesn’t mean always saying no. Your job is to objectively evaluate risk versus reward and help the management team make good decisions. Most people think of risk as legal or environmental, but any R&D or growth initiative carries some element of risk. I hear CFOs talk about value added and non-value added activities, and I advise you to add a third category: “investing” activities. It’s amazing to me how much money is tied up in investing activities that management doesn’t think about or that don’t have a return-on-investment expectation. Help your company identify all investment-related activities and rethink not only ROI targets but the total amount you want spend on these initiatives.

Value is a perspective that is not your own. As a company you had better listen to your customers, and as a CFO you had better listen to your internal customers’ definition of value. Talk to the other functional leads and understand what they need and how you can help them. If you do this well, you can eliminate the stereotype, be a high-value contributor to the organization and take on more exciting projects.

Bill Budicin is a Director of The Keystone Group, focusing in the areas of mergers and acquisitions, financial and operational restructurings, profitability and cash flow improvement. Bill received his bachelor’s degree in accounting and finance from the University of Illinois.