Why do CFOs fail?
That thorny question was tackled by headhunters at a recent panel discussion of what chief executive officers are looking for in their CFOs.
Walt Williams, managing partner at Clarity Partners and panelist at the recent CFO Rising conference in Atlanta, offered the following reasons that certain CFOs don’t measure up:
- Failure to anticipate.“Not being able to forecast or give the CEO early warning usually is where the CFO gets fired,” Williams says. Failure to anticipate often stems from a lack of total experience— something CFOs at many Internet start-ups were lacking, he added in a follow-up interview.
- Lack of breadth.Williams says narrow vision is often a stumbling block for internal candidates for the CFO job after a finance chief has left the company. “The CEO sees lots of financial specialists, but no one with the breadth,” he said during the panel discussion. “That’s one of the most common things.” And it’s why many companies turn to candidates from the outside.
Sure, there are a lot of good controllers, but in some cases, they have not developed the breadth of understanding, beyond accounting and treasury roles to make them strong CFO candidates. When executives look for a successor, Williams said in a follow-up interview, they want to make sure that the person has experience in such things as planning, M&A, operations, and human resources, as well as finance.
To get involved on a strategic level, the CFO must also understand the markets and customers, and that means having the freedom to go out and speaking with the customers. Only a strong support staff can supply such freedom.
Spend more time in developing subordinates can provide another kind of career boost for a CFO. If your ambitions are to become CEO, Williams adds, unless you’ve groomed strong people below you, other people will be reluctant to promote you because there is not an easy replacement in the CFO role within the company.
Such ties breed credibility in a CFO. Says Henry Deaver, a partner at Ray & Berndtson: “If the analysts lost confidence in the CFO, that’s the beginning of the end.”