Preventing Dreams from Becoming Nightmares: Why the CFO Has the Hardest Job on Your Leadership Team

We live in the era of the “rock star CEO” with chief executives splashed on magazine covers and regarded as thought leaders on social issues. Presumably, we lionize CEOs for their punishing work ethic and ability to set and execute their vision amidst enormous pressure.

There’s a lot to be said about how much we over-index on the skills of CEOs (especially when you consider the contributions of the Executive Assistants and other unsung heroes who keep all the wheels spinning each day). But if you ask me, we especially overlook what may be the most challenging position on many executive leadership teams – the Chief Financial Officer.

With the increasing complexity of business operations, the CFO’s responsibilities have also increased. The modern CFO must balance competing priorities, manage complex financial systems, build and maintain relationships with so many different types of stakeholders, and manage change effectively.

But unlike the CEO, they also need to achieve all of this without being the top dog in the food chain. This shared accountability is one the most challenging aspects of the CFO’s role is balancing financial control with the CEO’s priorities.

For example, the CEO may want to invest money in a new direction like hiring more employees. Often the CFO must sign off on the decision; you can see how this would be a challenging dynamic, finding yourself in the position of telling your boss that their idea isn’t financially prudent. I know what my friends in HR may say – they have to sign off too! True – but it’s the CFO who is most often on the hot seat if the right control process isn’t followed.


A Tough Balancing Act

The CFO is responsible for the control environment, which includes policies and controls that the CEO must adhere to. In the best scenario, the CEO and CFO are in sync when it comes time to present numbers to, say, the board of directors (the CEO’s own bosses) and make the case for new investments. The CFO oversees the integrity of the numbers, and must ensure the business is adhering to budget, policies, laws, internal goals, and external expectations. All of this ultimately falls, of course on the CEO, but the CFO is relied upon heavily to ensure that everything runs smoothly.

There’s no doubt that many members of the executive team find themselves taking arrows and taking their turn in the hot seat from time to time. But the CFO spends far more time in the crosshairs – often responsible for the “blocking and tackling” that are necessary for the CEO’s priorities to come to fruition. Many less experienced senior leaders simply don’t know what a good CFO looks like.  They wonder – why is the CFO asking these questions? Why are they in this meeting? Are they trying to take away my budget!? 

In simplest terms, they don’t fully appreciate the depth and breadth of involvement that is needed to do the CFO job well.


Wearing Many Hats is Tricky

Some may want a CFO who simply makes problems go away. Others want a CFO who can act as a strategic advisor. And still others are looking for someone to do the dirty work and be the “bad cop.” Some may say “just give the numbers and get out of the way.”  The varying expectations across the whole range of constituents can make it especially challenging.

The CFO also needs to manage the expectations of external stakeholders. They need to hit the numbers, keep the company out of trouble, find ways to fund projects, stay out of the spotlight, while also helping and supporting the whole executive team and CEO. The CFO needs to provide fast and accurate financial reports and ensure compliance while keeping everyone happy.  When the company achieves its growth targets, rarely do we tip our hats to the CFO.  It’s the CEO and the head of sales who take that credit and receive all the plaudits. 

The CFO’s relationship with the CEO is complicated due to shared responsibility and at time conflicting mandates.  This relationship is critical to the organizations success because of the many different personalities, agendas, and stakeholders involved. The CEO can adapt to their strengths and what they see as the current need of the organization, while the CFO needs to meet all the needs of the role all the time. Even if the CEO wanted to give the CFO a break, they couldn’t because there are too many other constituents to serve.


So how do high-performing CFOs handle all this pressure?

 ·         To be successful in the modern business environment, a CFO needs to have impeccable character. They must be, in effect, unicorns – capable of great relationships, vision, leadership skills, technical expertise, discipline, and able to be a great manager of teams and processes.

·         They need to be confident but not arrogant, prudent, responsible, while also taking smart risks, and be able to delegate but not pass the buck.

·         The CFO also needs to ensure that the company takes the right risks and invests in the business while also keeping a check on expenses and financial resources. They need to become the trusted and indispensable business partner to the team, ensuring a rock-solid process for controls, reporting, and decision-making. The CFO needs to create an environment in which good decisions are fostered and come to light easily, where everyone knows the goals, milestones, rules, and key metrics, and have buy-in from everyone.

Lastly, the role of the CFO differs from that of the CEO and COO in terms of responsibilities and decision-making. The CEO, at many organizations, is the de-facto “dreamer” – setting a bold vision that can inspire and harness the talents of the company. But it’s the CFO who is tasked with the project of figuring out how to hold it all together. The CFO makes the dreams happen by applying the discipline, insight, and risk mitigation required to keep the company on the right track – and prevent dreams from turning into nightmares.

A great CFO is worth their weight in gold. And you know you’ve found one when all of the leadership team feels they can come to them as someone to trust. Ideally, anyone should be able to walk away from a CFO after making a request with one of three things – 1) what they need, 2) a clear understanding of why they can’t have it, or 3) a better idea to achieve their goal.

By my money, being a modern strategic CFO is undoubtedly the hardest C-level job. However, it’s also one offering enormous opportunity along with the challenges. With the right skills, the CFO has a unique opportunity – helping their organization to effectively navigate the complex landscape of modern business and help ensure the long-term financial sustainability and stability of the company.

 What skillsets do you see as most important in a Chief Financial Officer?