At the fulcrum of business activity, a CFOs priorities range from the everyday work of finance to strategy setting for their company and highly effective CFOs know that there is a significant opportunity cost to their workload.
For every non-strategic task that they carry out, the CFO understands that something of greater value is left undone.
We have long held the view that this goes for the rest of the finance function too and that removing manual and non-value-add work allows the department to concentrate on more useful and effective tasks for their business.
A new survey released by research and advisory company Gartner now backs up these thoughts and gives us some key findings that CFOs can use to develop their departments.
Effective CFOs are leading rather than doing
One of the most interesting findings from the Gartner survey was that the most effective CFOs spend less time on finance activities yet have the most effective finance teams.
This perhaps echoes anecdotal evidence from CFOs who long to spend more time on value-add work and delegate all but the most complex, high-level activities.
It is clear that highly effective CFOs develop not only their own skills but also that of their department, ensuring that delegation is a natural progression and that they can leave the day-to-day running of the finance function in the hands of capable deputies.
What we see from the data is that although the CFO is doing less ‘accounting work’ within the department they do not suffer poorer finance performance as a result.
In fact, the effectiveness of the CFO transfers itself to their department and highly effective finance leaders in turn produce highly effective deputies.
We also see that traditional finance activities such as financial governance, financial information provision and resource allocation are all enhanced with an effective CFO at the helm and whilst these may not get the attention of some of the more exciting tasks within the company the smart executive knows that they form the bedrock of a well-constituted company.
Effective CFOs develop exceptional teams
Developing the finance team should be at the top of the CFO’s priorities and the results of the survey bear this out.
Finance leaders who invest their time in developing the capability of their direct reports find that they are heading a system that encourages delegation.
Admittedly, this takes courage and effort from the head of the department but it pays dividends as finance leaders find that they are able to hand off many more tasks to their direct reports and have full confidence that they will be carried out to the highest of standards.
What we also see is that this percolates down the department with senior managers taking a lead from their manager and developing and delegating to junior managers.
To an extent, the department then becomes a ‘management machine’ with every level ensuring that it invests time and effort in enhancing the skills of the next level down.
Importantly the data points out that very effective finance leaders promote almost twice as many people to non-finance posts within a company than other departments.
This means that a leader who spends time developing the skills of their direct reports not only improves the ability within the finance function but also provides the company with a supply of very capable senior managers who can go on to apply their talents across the organisation.
Effective CFOs add value to the strategy-setting process
The survey shows that CFOs improve their value to the organization when they are taking a full and active part in the strategy-setting process.
As a result, what we see is the best CFOs taking a leading role in the executive life of the organization, setting strategy, adding board-level insight, and in many cases concentrating on investor relations.
For the smart CFO information is the key and as CFO Sergio Stelmach points out “Having good financial planning is essential to validate the company’s strategic planning” consequently the formation of a slick finance function that produces data and information quickly and accurately is the key and as Sergio goes on to say “only with accurate information can informed decisions be made”.
Highly effective CFOs know that they need to have the ammunition in the form of exceptional information allowing them to supercharge their decision-making process.
In summary: the CFOs priorities have to include development
To become truly effective a CFO has to make sure that they prioritize team development.
This is often easier said than done and there may be missteps along the way but the Gartner survey data shows that the only way that CFOs become truly effective is by developing a team that is in turn highly effective. In short; the investment is worthwhile.
The effective CFO knows that in time their department will start to carry the load, freeing the CFO from finance-related activities and allowing them to concentrate on strategy and aspects of business life that will provide more value for the company and its investors.
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