Today’s CFO – A Partner for the Entire Organization

By Anthony J. Testa, Jr., JD, MBA, CPA (*) 

The historical role of a Chief Financial Officer as the top bean counter is no longer sufficient in today’s organizational leadership model. Instead, critical to the long-term success of the organization is engaging an individual with distinctive personal and professional attributes wrapped around a solid core of technical expertise. A CFO with this combination of attributes and expertise is not only an outstanding finance professional, the CFO is also a key partner to drive financial and operational success for the entire organization. 

Based upon more than 20 years of personal experience serving as a Chief Financial Officer for businesses and as a CFO/Adviser for private equity companies, I consider the top three key attributes for the financial leader of the organization to be a strategic thinker, a hands-on leader, and someone with a depth of skills in finance. The CFO with this combination of skills has the talent to enhance an organization’s overall value, improve its bottom line, and provide prudent financial insight into the organization’s future.

Following is perspective for each of my top three key attributes for today’s CFO.

Strategic thinker. A strategic thinking CFO is not someone who works most weekends in the fall to have next year’s budget drafted by December 1st; nor is it someone who can calculate the amount of tax due but is unable to identify legitimate opportunities to mitigate or defer the tax liability and maximize cash for use in the business. Rather, a strategic thinking CFO assesses the organization’s economic health and well being, formulates value-centric opportunities and presents a platter of well-considered business ideas.

• For example, while recently serving in a CFO capacity as an independent advisor, I created a sound and comprehensive business model for the entire organization designed to optimize organizational performance (not just financial performance) and achieve growth in enterprise value. In a nutshell, what I did was assess all current sources of revenue and identify several new and practical channels of revenue. Also, I critically did an in depth look at entire costing structure (from direct costs to generate revenues to indirect and fixed costs to provide back office support and “keep the lights on”). For each of the current and potential new revenue streams and for each of the key elements of cost and expense, I created an interactive, multi-year business plan to demonstrate where and how my client could significantly improve revenue, gross profit and operating profit while also optimizing organizational performance. I then worked closely with the COO and CEO to fine-tune the model, met with other organizational leaders for input, then finally created an interactive summary of the model for presentation to the Board of Directors. With input from the Board and a little more fine-tuning, the comprehensive business model that emanated from the CFO and was ultimately shaped by all key decision-makers ended up as the blueprint (a/k/a strategic plan) for the next few years and the engine for improved financial results and organizational value.

Hands-on leader. A hands-on CFO is not someone who spends day-after-day sitting in their office crunching numbers, sending and answering e-mail or “tied up” in meetings. A CFO who is not well-connected with the entire organization is truly not a partner with the entire organization. Instead, to be a key member of the leadership team bent on rendering exemplary service to all constituents – i.e., customers, employees, vendors and others -- a hands-on CFO is engaged with everyone in the organization.

• For example, while serving as a CFO, I made it my mission every day to walk around and greet everyone who was readily accessible. My purpose was to establish a connection with everyone; to show by my actions that I was a human being capable of and very much enjoying interaction. Over time, for most co-workers, I came to know their family, roots, favorite activities and teams and shared lots of personal information. But I also went beyond engaging in a personal connection with my co-workers; I also often used time to ask questions about the pain-points -- and the highlights -- of their work and about the company. In addition to the genuine personal connections that I formed with many co-workers, the information that I gathered on my daily walkthroughs about their work and the company had a profound impact on how I, as an organizational leader, thought and worked to achieve both the mission and the success of the organization.

Depth of technical skills. If you have concerns about the health of your heart, you see a cardiologist. If your child has chronic ear infections, you take him or her to an ears, nose and throat specialist. If your organization needs a finance leader to take the organization to the next level while simultaneously safeguarding your financial interests, you hire someone with deep financial skills. A person with a depth of financial skills is much more than someone who understands the debits and credits, cranks out financial statements and Excel worksheets or someone who passed the CPA exam. It’s also more than someone with a bachelor’s degree in accounting or finance or an MBA.

• A learned CFO has a broader and more comprehensive technical skill set that includes the experience and (among other capabilities) the ability to: drive the design of and report on the organization’s key performance indicators (“KPIs”); identify and assess key income tax exposure points affecting the organization and its key owners; pinpoint business processes to maximize efficiencies and enhance accuracy; recognize and propose solutions to control weaknesses in key areas that affect the organization’s systems and finances; structure and negotiate financing and maintain a close and open line of communications with secured lenders; assess the effectiveness of the organization’s treasury functions; distinguish the reasons for and the consequences of acquiring or selling stock vs. acquiring or selling business assets; ensure that entire finance team operates cohesively as a unit while maintaining strong, professional ties with co-workers in other departments; and, confidently give insightful financial presentations (and not just report the numbers) to other organizational leaders.

Undoubtedly, there are other criteria that may factor into the analysis. Previous experience working for, say, a public company or an organization with international operations. Industry experience, for example, may also be perceived as important to reduce or avoid a learning curve. I challenge the emphasis that businesses sometimes place on industry experience though because someone with strong talent in my top three key attributes will not only take relatively minimal time to ramp-up on the industry, the individual will more likely than not bring to the organization fresh new ideas and thinking that will help drive future, if not immediate, financial success.

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So whether you are an employer considering the need for a professional to lead the financial operations of the organization or a CFO in-training, I challenge you to think beyond traditional notions of a Chief Financial Officer. The synergy of a strategic thinker and hands-on leader who has a solid core of finance skills will have a profoundly beneficial impact on the organization.

I welcome your feedback and questions. 

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(*) Tony is a strategic thinker and hands-on team leader who produces organizational excellence by developing and leading teams passionate about optimizing organizational performance and rendering exemplary service to all constituents. Tony is retained as a CFO and Business Advisor for private equity and privately-held entities in independent contractor and employee roles.

Tony’s interdisciplinary experience working with businesses encompasses areas including: accounting; finance; strategic, business and inter generational succession planning; commercial lending and real estate financing; risk management; operations management; advising and assisting clients with business mergers, acquisitions, dispositions and related due diligence and integration activities; corporate governance; contracts, corporate, partnership, LLC and business law; designing and evaluating income and wealth transfer tax minimization strategies; drafting estate planning documents including wills, living wills, trusts (revocable, irrevocable, dynasty and directed trusts) and health, financial and durable powers of attorney and, federal, state and local income, trust and estate tax planning and tax audit representation. The size and scope of Tony's clients has ranged from under $20 million to over $500 million in annual revenue, and from one location to over 100.