Colin Sampson

SVP and SAP Ambassador Asia Pacific & Japan Region

What Makes A Strong CFOOct 30, 2014

The world has gone digital. Music is now digital, and books are trending towards eBooks. GPS devices are disappearing – owing to the smartphone; newspapers are now “old news”; and smartphones are now cameras. With a shift as fundamental as this, organizations must remain agile and innovative to remain relevant. Specifically, what does this mean to the CFO?

CEOs are looking more than ever to their CFOs to guide them through these uneasy times, to act as a catalyst and an agent of change. Within this context, the role of the CFO is evolving.

Simply put, a strong CFO is vital and he needs to provide: first – a single source of truth; second – real-time finance processes underpinned with strong compliance; and third – unmatched insight and foresight.

To add on, there had been a long deliberation over how CFOs are moving from being a Steward towards becoming a Strategist. The discussion has further developed in recent years – the CFO has to become a strong Business Partner as well.

How will all these 3 roles come into play today, given the new digital world, and new waves of technological innovations…plus other elements that are evolving?

CFO as a steward

Being a steward involves CFOs being responsible for the day-to-day accounting, treasury, finance, risk management and internal-control function. Essentially, it is about safeguarding the assets of the organization by minimizing risk, and running a tight finance operation that is efficient and effective .

CFO as a strategist

Being a strategist involves contributing to the overall business strategy. This means going beyond delivering numbers and information, to delivering strategic insights which drive performance as well as the factors affecting it. As a strategist, the CFO must involve acquiring relevant resources for the organization, and delivering organizational goals sustainably.

CFO as a business partner

In terms of the CFO being a Business Partner, it has typically portrayed the CFO as a business catalyst, or value integrator. Ernst & Young describes the core of business partnering as the successful combination of “practical economic theory and the effective allocation of scarce resources to achieve financial objectives” .

The firm also emphasizes a number of factors which they believe makes a CFO a good business partner. One of the most important factors underscored, in my opinion, is the ability to manage the Finance function in

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operating from an efficient base, allowing the best resources to focus on analysis to support strategic and commercial operations which adds value.

Fundamentally, it must be about the CFO’s ability to contribute to business decision-making to seize the right market opportunities.

A regional CFO’s perspective: Striking the right balance

Ultimately, striking the right balance among the three roles – is key for the CFO to bring true value to the business as well as for his or her own personal development. This doesn’t mean an even split across all three aspects, but rather, what makes the most sense for the business.

For example, the shift towards the CFO being a business partner is translating into CFOs allocating more time meeting with business executives, and less time on pure financial and operational matters.

However, achieving a balance requires effort, dedication and commitment (by for example creating measurable metrics for the core aspects of each role) so that results of the tripartite-CFO role can be achieved.

With CFOs taking a more business-oriented role, it is likely that they will be increasingly handed change management roles and responsibilities. This could include aspects such as technology-driven transformation, the makeover of legacy Enterprise Resource Planning (ERP) systems to new technology innovations that will streamline processes, drive collaboration, and become an overall value creator to the business.

With such additional responsibilities, striking a balance will be challenging, and vital to success.

Leveraging the right innovations

Earlier, I shared that in today’s volatile world, we need strong CFOs who are able to provide: a single source of truth, real-time finance processes coupled with strong compliance, and unmatched insight and foresight.

Today, this has been made possible by a perfect storm of technology innovations – the convergence of cloud, mobile, social and big data that is reshaping the future of business, and acting as a catalyst to empower forward-looking CFOs to achieve the three key aspects of a strong CFO.

Indeed, after striving for decades to standardize processes and improve efficiency, organizations around the world are now entering a new era of business transformation.

For the first time, the same set of technology innovations can be harnessed to help make everything smarter, faster and simpler not only for businesses as a whole but also for individuals.

We know that transformational technologies will drive business innovation. As CFOs, if we can grasp the right innovations and leverage them smartly, we will become stronger.

[1] “Four Faces of the CFO”, Deloitte describes this aspect as being a Steward and an Operator. http://www.deloitte.com/view/en_US/us/Services/additional-services/chief-financial-officer/four-faces-cfo/index.htm

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2 “The DNA of the CFO”, Ernst & Young. http://www.ey.com/Publication/vwLUAssets/The-DNA-of-the-CFO-2010/$FILE/The-DNA-of-the-CFO-2010.pdf http://www.ey.com/GL/en/Services/Advisory/Managing-performance-through-famine-and-feast—2-cfo-as-business-partner

https://www.linkedin.com/pulse/20141030092847-110432144-what-makes-a-strong-cfo

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Dr. Travis Bradberry

Coauthor Emotional Intelligence 2.0 & President at TalentSmart

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Do You Have Grit?Sep 2, 2015

There are a ton of qualities that can help you succeed, and the more carefully a quality has been studied, the more you know it’s worth your time and energy.

Angela Lee Duckworth was teaching seventh grade when she noticed that the material wasn’t too advanced for any of her students. They all had the ability to grasp the material if they put in the time and effort. Her highest performing students weren’t those who had the most natural talent; they were the students who had that extra something that motivated them to work harder than everyone else.

Angela grew fascinated by this “extra something” in her students and, since she had a fair amount of it herself, she quit her teaching job so that she could study the concept while obtaining a graduate degree in psychology at UPenn.

Her study, which is ongoing, has already yielded some interesting findings. She’s analyzed a bevy of people to whom success is important: students, military personnel, salespeople, and spelling bee contestants, to name a few. Over time, she has come to the conclusion that the majority of successful people all share one critical thing—grit.

Grit is that “extra something” that separates the most successful people from the rest. It’s the passion, perseverance, and stamina that we must channel in order to stick with our dreams until they become a reality.

Developing grit is all about habitually doing the things that no one else is willing to do. There are quite a few signs that you have grit, and if you aren’t doing the following on a regular basis, you should be.

You have to make mistakes, look like an idiot, and try again, without even flinching. In a recent study at the College of William and Mary, they interviewed over 800 entrepreneurs and found that the most successful among them tend to have two critical things in common: They’re terrible at imagining failure and they tend not to care what other people think of them. In other words, the most successful entrepreneurs put no time or energy into stressing about their failures as they see failure as a small and necessary step in the process of reaching their goals.

You have to fight when you already feel defeated. A reporter once asked Muhammad Ali how many sit-ups he does every day. He responded, “I don’t count my sit-ups, I only start counting when it starts hurting, when I feel pain, cause that’s when it really matters.” The same applies to success in the workplace. You always have two choices when things begin to get tough: you can either overcome an obstacle and grow in the process or let it beat you. Humans are creatures of habit. If you quit when things get tough, it gets that much easier to quit the next time. On the other hand, if you force yourself to push through it, the grit begins to grow in you.

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You have to make the calls you’re afraid to make. Sometimes we have to do things we don’t want to do because we know they’re for the best in the long-run: fire someone, cold call a stranger, pull an all-nighter to get the company server back up, or scrap a project and start over. It’s easy to let the looming challenge paralyze you, but the most successful people know that in these moments, the best thing they can do is to get started right away. Every moment spent dreading the task subtracts time and energy from actually getting it done. People that learn to habitually make the tough calls stand out like flamingos in a flock of seagulls.

You have to keep your emotions in check. Negative emotions will challenge your grit every step of the way. While it’s impossible not to feel your emotions, it’s completely under your power to manage them effectively and to keep yourself in a position of control. When you let your emotions overtake your ability to think clearly, it’s easy to lose your resolve. A bad mood can make you lash out or stray from your chosen direction just as easily as a good mood can make you overconfident and impulsive.

You have to trust your gut. There’s a fine line between trusting your gut and being impulsive. Trusting your gut is a matter of looking at decisions from every possible angle, and when the facts don’t present a clear alternative, you believe in your ability to choose; you go with what looks and feels right.

You have to give more than you get in return. There’s a famous Stanford experiment where an administrator leaves a child in a room with a marshmallow for 15 minutes, telling the child that she’s welcome to eat the marshmallow, but if she can wait until the experimenter gets back without eating it, she will get a second marshmallow. The children that were able to wait until the experimenter returned experienced better outcomes in life, including higher SAT scores, greater career success, and even lower body mass indexes. The point being that delay of gratification and patience are essential to success. People with grit know that real results only materialize when you put in the time and forego instant gratification.

You have to lead when no one else follows. It’s easy to set a direction and believe in yourself when you have support, but the true test of grit is how well you maintain your resolve when nobody else believes in what you’re doing. People with grit believe in themselves no matter what and they stay the course until they win people over to their way of thinking.

You have to meet deadlines that are unreasonable and deliver results that exceed expectations. Successful people find a way to say yes and still honor their existing commitments. They know the best way to stand out from everyone else is to outwork them. For this reason, they have a tendency to over deliver, even when they over promise.

You have to focus on the details even when it makes your mind numb. Nothing tests your grit like mind-numbing details, especially when you’re tired. The more people with grit are challenged, the more they dig in and welcome that challenge, and numbers and details are no exception to this.

You have to be kind to people who have been rude to you. When people treat you poorly, it’s tempting to stoop to their level and return the favor. People with grit don’t allow others to walk all over them, but that doesn’t mean they’re rude to them, either. Instead, they treat rude and cruel people with the same kindness they extend to anyone else, because they won’t allow another person’s negativity to bring them down.

You have to be accountable for your actions, no matter what. People are far more likely to remember how you dealt with a problem than they are how you created it in the first place. By holding yourself accountable, even when making excuses is an option, you show that you care about results more than your image or ego.

Bringing It All Together

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Grit is as rare as it is important. The good news is any of us can get grittier with a little extra focus and effort.

Is grit really that important? Please share your thoughts in the comments section below as I learn just as much from you as you do from me.

ABOUT THE AUTHOR:

Dr. Travis Bradberry is the award-winning co-author of the #1 bestselling book, Emotional Intelligence 2.0, and the cofounder of TalentSmart, the world's leading provider of emotional intelligence tests and training, serving more than 75% of Fortune 500 companies. His bestselling books have been translated into 25 languages and are available in more than 150 countries. Dr. Bradberry has written for, or been covered by, Newsweek, TIME, BusinessWeek, Fortune, Forbes, Fast Company, Inc., USA Today, The Wall Street Journal, The Washington Post, and The Harvard Business Review.

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VP of FP&A

LOCATIONPosted: Jul 08, 2011

Boston, Massachusetts

POSITION DESCRIPTIONThe Vice President, Financial Planning and Analysis (FP&A) will serve as a key member of the Corporate financial leadership team and serve as a key financial interface between Regional FP&A finance and senior operational management and the Corporate management team.The VP FP&A will be responsible for delivering value-added business analysis as well as defining and reporting meaningful financial and operational metrics that lead to insightful, accurate business decision-making.The VP FP&A will be responsible for overseeing a financial planning organization that has a comprehensive understanding of all key business drivers and sophisticated financial models that enable the team to deliver insightful, value-added analysis across the company, including consolidated as well as regional analyses.

Key responsibilities include the following:

Supervise and manage the performance of a Senior Manager and two financial analysts. Oversee the financial planning and analysis organization and partner with the management team, both

regional and corporate, to provide value-added insight into the business. Prepare a monthly reporting package that includes full financial statements, comprehensive Key Performance

Indicator (KPI) reporting, operational Dashboard reporting, analysis of key business trends, actual versus budget variances and comprehensive executive level explanations of differences.

Drive an efficient, effective and comprehensive process for developing financial plans and analysis that links to the strategic objectives.

Develop and monitor the company’s annual budget and monthly forecasts, which shall include establishing budget tools, setting timelines and acting as project manager for the company, ensuring all budgets are accurate, comprehensive and completed on time.

Prepare and monitor the company’s long range strategic planning models. Support quarterly external reporting, including earnings releases and earnings call support information. Prepare and maintain an efficient and effective Investment Committee process of evaluating, tracking and

monitoring all acquisition activity (to the extent it requires Investment Committee approval) for the company with appropriate links to the annual budget and strategic plan.

Provide financial modeling, financial analysis and valuation support for acquisitions, new product development, long-term contracts and other ad-hoc financial projects.

Assist in preparing analysis, commentary and presentation material for the monthly and quarterly financial review meetings.

Actively own key finance and business process including but not limited to Cognos TM1 reporting tool, and implementing and modifying a company-wide budget tool. Provide a high level of thought process to drive improvement; recommend areas for improvement and lead projects to enhance the reporting and analytical infrastructure.

Develop and enhance competitive intelligence, customer intelligence, geographic economic data and technology trends.

Oversee preparing research distributions to senior executives and business leaders. Exhibit flexibility and willingness to take on new responsibilities and assignments as they are identified and to

assist with various ad hoc projects as needed. Maintain relationships with geographic finance teams to ensure quality deliverables and proper information

flow.

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Today’s CFO: Which profile best suits your company?

Profiles of today’s CFO show how the role is evolving and raise important questions for boards about talent and leadership

development.

January 2013 | byAnkur Agrawal, John Goldie, and Bill Huyett

Most readers are well aware that the role of the CFO generally has broadened over the past decade. Beyond the core responsibilities of financial reporting, audit and compliance, planning, treasury, and capital structure, many CFOs are playing a stronger role in corporate portfolio management and capital allocation. Others have become prominent as the voice of the company in investor relations and in communications to the board, as leaders in performance management, and as exporters of finance-experienced personnel to the rest of the organization.

Where does it end? It’s unproductive to stretch the role too far and unreasonable to expect a CFO to be good at everything. How can the CEO and the board—through the audit committee—shape a manageable profile for the position? It’s an important question, both for companies hiring a new CFO and for existing CFOs who see their roles expanding without a broad perspective.

To get a more detailed picture of how the role continues to evolve, we analyzed the experience, credentials, and backgrounds of CFOs of the top 100 global companies by market capitalization.1 1.From the top 146 largest companies by market capitalization, we excluded Asian companies and 14 others with insufficient public data, for a total sample size of 100 companies. We then compared CFOs hired prior to 2009 with those hired after. Our review, while not definitive, suggests that companies are shaping the role to meet their current needs. Indeed, we identified four distinct profiles of the role defined by the breadth of the current CFO’s experience in finance or in nonfinance functions; his or her professional focus, whether it’s an internal focus on operations or an external focus on strategy; and the sources of the CFO’s expertise, whether from years of experience at the current company or another one, for example, or whether it includes a traditional accounting degree or some other.

The four profiles include what we would characterize as the finance expert (or numbers guru), the generalist, the performance leader, and the growth champion. And while there is no single CFO profile that will fit the needs of every company—each must target candidates with competencies that best fit their strategy, the composition of the rest of the company’s top team, and current finance-function capabilities—these profiles do offer a glimpse into how the role is evolving and where peers are looking for talented and innovative CFOs. They also raise important questions for board audit committees thinking about CFO development or the profile of the person they would like to hire, as well as for executives seeking to shape their current role or considering new ones.

Four profiles of today’s CFO

Management roles vary by organization, depending on a company’s history, the characteristics of its industry, and the demands of investors. And although fitting CFOs into a clear-cut typology may seem artificial, we found it useful to understand how companies are filling the role to get a clearer picture of how it’s changing. Based on our research, we categorize CFOs into four general profiles.

The finance expert. Typically internal hires, these CFOs have years of experience rotating through multiple roles within the finance function—controlling, treasury, audit, financial planning and analysis, or business unit

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finance. They tend to have intricate working knowledge of the company and are often experts in relevant finance and accounting issues, such as financial regulation, international accounting, or capital structure. Many have advanced accounting degrees or experience at an auditing firm.

This type of CFO is particularly well suited to highly decentralized companies with stand-alone businesses or early-stage ones scaling up and professionalizing the finance function. Their strong finance-function knowledge across a broad spectrum of activities is critical to effective compliance and standardization of processes. The finance-expert profile may also be best for any company whose top team otherwise lacks strong finance leadership—or whose finance department is inefficient or in disarray.

The generalist. Companies in highly capital-intensive industries, such as basic materials, oil and gas, and telecommunications, put a high premium on operational capabilities. So they naturally look for executives with broad experience—including CFOs who have spent time outside the finance organization—in operations, strategy, marketing, or general management. Indeed, among the 51 CFOs in our sample who were hired since 2009, 31 of them have such experience, up from 17 of those hired prior to 2009. Among all the CFOs in our sample, 62 have MBAs or other advanced degrees, compared with only 28 with advanced accounting degrees—reflecting a premium for management and communication skills over deep technical expertise.

CFOs that fit this description tend to engage heavily in business operations and strategy and often bring strong industry and competitive insights. They are often found in companies in mature sectors, such as financial institutions, where operational similarities across business units provide a good platform to rotate managers among businesses and eventually into functional leadership roles; most are internally hired and already fill an executive function, often being groomed for a CEO role. These rotations give managers insights about different businesses that they need to support tightly run operations, allocate resources, and influence peers—which, regardless of industry or strategy, make them ideal for companies where personal influence is needed to get things done.

The performance leader. CFOs with strong track records in transformations both within the finance function and throughout the organization are what we have dubbed performance leaders. They tend to focus on cost management, to promote the use of metrics and scorecards, and to work to standardize data and systems. They are often hired externally, and many have previous experience as CFOs. Most have worked internationally—explaining in part why, among the 51 CFOs in our sample hired in the past three years, 30 have significant experience in multiple geographies, up from 21 of those with longer tenures.

Companies employing these types of CFOs are often highly diversified companies requiring rigorous analytics to compare performance across businesses, companies with aggressive growth or cost targets that must be met in the near term, or companies with scarce resources that must be carefully allocated.

The growth champion. Externally hired professionals are the least common type of CFOs, but they have risen to account for nearly 25 percent of new CFO hires. They are most common in industries with frequent disruptions that require dramatic changes in resource allocation—and in companies that plan to grow considerably or reshape their portfolio of businesses through aggressive M&A or divestiture programs. Such moves make external hires especially valued for their significant experience in M&A, as well as for their external networks, independent thinking, and strategic insight, often gleaned through working as a CFO or serving for years in professional-services firms. Many growth champions are among the nearly one-third of new CFOs who have spent a sizable portion of their career in investment banking, consulting, or private equity, up from one-fifth with a similar background prior to 2009.

Aligning the role with the company

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These profiles are obviously not prescriptive; it would be simplistic to suggest definitive rules prescribing a specific CFO profile for general categories of company. That said, with the profile characteristics in hand, companies can more explicitly weigh them against the skills and capabilities they expect to require from the CFO as they shape, refine, and implement their strategy for the future. Whether this means selecting a new CFO or rebalancing the role of an existing one, they will need a candid assessment of their current corporate strategy, the skills and temperament of the CEO, the composition of the senior-management team, the current capabilities of the finance function, and organizational and reporting structures. We propose four questions (by order of importance) that CFOs should answer when planning their own career-development plans—or that CEOs and boards should answer when beginning the search for a new CFO.

1. What are your corporate strategy and aspirations—especially considering the nature of your industry?

While there are certain trends in the hiring of new CFOs generally, CFO profiles often reflect the structure, conduct, and performance of a company’s industry. Stable sectors with large global footprints and extensive supply chains—such as oil and gas and consumer packaged goods—are more insular in their CFO selections. Only 4 of 28 CFOs in our sample in these industries were hired externally, and only 2 had significant experience outside the sector. However, international experience is very important, with 9 of 13 CFOs in oil and gas and 10 of 15 in consumer packaged goods having worked in multiple geographies. At the other end of the spectrum are industries with rapidly changing technology and significant R&D, such as pharmaceuticals and medical products (PMP) and technology. Companies in these industries tend to have CFOs with more experience in strategy and transactions, and they are much more likely to select CFOs from outside the company or the sector. For example, of the 14 PMP CFOs, 8 were hired externally, 6 had consulting or investment-banking backgrounds, and 9 had general-management backgrounds. Over half of CFOs in both the PMP and technology industries have experience outside their sector.

In addition to industry context, companies must consider how certain CFO characteristics might best support their own strategic plans. Leadership teams of companies following inorganic (M&A) growth strategies require a higher degree of market insight and strategic orientation. Senior executives of companies following organic growth strategies, meanwhile, exhibit a high competency in people and organizational leadership. So regardless of industry characteristics—and as long as candidates meet the threshold of finance expertise and performance-management skills—a company embarking on an ambitious M&A program, for example, would want to give a strong preference to those with significant transaction experience and industry insight, more akin to a growth champion. A company lagging in profitability or undergoing significant industry consolidation may require a CFO more similar to the performance leader—strong in performance management and cost containment.

2. What is the composition of your top-management team?

The selection of a CFO cannot be made in isolation; companies must consider the strengths of the rest of the top team, paying specific attention to its blind spots and missing capabilities. Recent research has found that the top teams of high-performing companies score higher on all measures of leadership competencies—including thought leadership, people and organizational leadership, and business leadership—than those of low-performing companies.2 2.See Return on Leadership—Competencies that Generate Growth, Egon Zehnder International and McKinsey & Company, February 2011. Finding the right set of leaders is clearly an important determinant of corporate performance.3 3.See Katharina Herrmann, Asmus Komm, and Sven Smit, “Do you have the right leaders for your growth strategies?,” July 2011. This means that the specific profile of your CFO may need to be different from that of other companies—even those in the same industry or those that have similar strategic goals—in order to create a robust top team.

Companies with a disproportionate share of leaders with a few areas of deep expertise—so-called spiky leaders—tend to outperform those whose leaders have a broad range of more general skills. This requires members of

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the top-management team to build on one another’s strengths and compensate for one another’s shortfalls. A company with a visionary CEO may require a CFO with a firm grasp of the economics of the business and enough influence capital inside the organization to provide a counterbalance against potentially risky moves. Or a company that recently hired a CEO from outside the organization may require a CFO with deep company expertise and a firm grasp of the numbers, such as a person who fits the finance-expert or generalist profile.

The downside of mistakes in selecting the top team, and the CFO in particular, is significant. Myopic top teams can undertake risky or costly acquisitions, fall behind on innovations in the market, or fail to retain key talent. High-performing CFOs must have the integrity and conviction to challenge the CEO and other members of the top team on key strategic and financial decisions and hence steer the company to a higher performance trajectory.

3. What is the current level of capability in your finance function?

As long as a CFO’s profile fits with a company’s strategy and complements the top team, further considerations are more tactical. The current level of capability of the finance function is the most important of these, since the CFO’s primary responsibility is to ensure the execution of core functions of the finance group, especially strong compliance and controls, accurate data, and systems integration. If a company struggles with efficiently performing the basic finance functions (relative to peers), then it may be necessary to promote candidates for CFO with considerable experience in a variety of finance roles and a track record of performance improvement.

However, if strong capabilities are already present in the finance organization, a company may consider candidates with other competencies, such as broader management experience or strategic insight. Companies that do so typically pair such a CFO with a senior finance executive who manages accounting and other traditional finance roles.

4. What is the organizational and reporting structure of your company? Which areas report to the CFO?

It is also important to consider the company’s reporting structure—that is, does it have solid or dotted-line reporting to the CFO—and the breadth of formal CFO responsibilities. For example, a CFO in a global company with a complex matrix structure and only dotted-line reporting must be able to exert a considerable amount of personal influence to be successful. In this situation, it may help to hire a CFO internally—regardless of which general profile he or she fits—who has the networks and institutional knowledge necessary to drive change. It is also important to define the areas of responsibility that may lie beyond traditional finance areas, such as IT, procurement, and transformation, which demand day-to-day hands-on management and people skills typically seen in the generalist CFO profile.

The right fit between a company and its CFO involves a complex set of trade-offs reflecting its strategy, the skills and abilities of top management and the finance function, and a given individual’s ability to drive change. Understanding how the role is evolving can prompt useful conversations that shape the CFO’s role at your company in the future.

About the authors

Ankur Agrawal is an associate principal in McKinsey’s New York office, where John Goldie is a consultant; Bill Huyett is

a partner in the Boston office.

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