Open Menu

Four must-have traits in a CFO

Numbers—drilling down into a complex spreadsheet of financial data—can be unsettling. Even to those who are accustomed to reviewing their own financials and metrics on a regular basis, it’s entirely possible to feel degrees of panic when faced with looking at the numbers. Why? Because there’s no hiding from the truth with numbers. In your weekly status meeting, your executive team may sugar-coat the truth about a project that’s going off the rails. Your direct reports might be marking up your “360 review process” with above-average scores because they fear the consequences of sharing some harsh truths. But when you look at your cash flow last month, there’s only cold reality: where you started, what changed and where you ended.

And yet, it’s the responsibility of every CEO to not only be aware of their financial position, but to manage the entire company to create the results they’re after. So these numbers need to change from being a cold and distant reality into something much more important: a story. When you begin to see your financial statements and metrics dashboards as just another way of telling the story of the operations of your business, you start to unlock their greatest potential. It’s a story of your history—and of your current state—that cannot be sugar-coated. Getting real about where you’ve come from and where you stand today is the first and absolutely necessary step before you can begin to reach the goals you are chasing.

Accountants excel (really, very sorry for the pun) at telling you what happened. They “account” for the transactions and events of the company. Some accountants also have a gift for interpreting the data and providing valuable insights, but this is not the service you receive from most outside professional accounting firms. Typically their work ends at delivering your financials. And then what? Who’s going to take that information and use it in the best way possible to steer the company in the right direction? Certainly you could do this as the CEO, but like so many positions in an organization, ultimately it’s not the optimal use of your time. As soon as you are able, you must begin the search for a CFO.

In many organizations the CFO is one of the closest advisors to the CEO—and for good reason. It’s important that you as the owner or CEO never completely relieve yourself of being responsible for your numbers. It’s your company, your results that you’re driving toward. But having someone with the right strengths “working the numbers” with the same intensity that you bring to every aspect of the business can yield some amazing results: declines are discovered sooner through early warning signs, unprofitable business segments or products can be abandoned and resources diverted to profitable ones…just imagine.

So what are the attributes you need to see in this CFO candidate? Here are a few that I feel are important:

  • Attention to Detail: This may seem like it goes without saying, but attention to detail is a must-have. Most owners and CEOs (though not all) tend to be “big picture” kinds of thinkers. That orientation rarely works in a CFO, mainly because every business generates a lot of numbers. A lot. That’s where attention to detail comes into play, because paying equal attention to all aspects of your company’s performance takes a dedication and patience that most “big picture” thinkers will at best struggle through.
  • Storyteller: Converting the data into meaningful stories is another key attribute in a strong CFO. Why? Because the organization will be stronger and stronger the more every employee in every department starts to care about the numbers. But it’s hard to care about numbers on a page without any context. Translating the numbers into relatable and actionable stories helps everyone involved understand better what’s happened and what needs to change.
  • Creativity: This might surprise some of you, but a CFO needs to be fairly creative. Beyond simply counting the beans, they need to be able to creatively explore solutions and imagine potential causes for what they are seeing. It’s not enough to see that Plant and Facilities expenses are on the rise—generating some hypotheses about how and why its happening is the first step to the solution.
  • Deep, Deep, Trust: You must, must, must be able to trust this person undeniably. There’s huge risk associated in anybody having the discretion and confidential information of a CFO, and it’s the CEO’s responsibility to mitigate risks. The best way you can do this is to seek someone out who you know you can count on. It’s the reason CEOs will often call on old friends who are in unrelated industries to join their executive team—the value of trust outweighs whatever industry experience they lack. If you’re engaging in an open interview process, the best thing you can do is trust your gut feeling. If you get a slight hesitation, you probably haven’t found “the one.”

But once you do, and you start to feel the impact they are having, it’s not uncommon to wonder how you ever functioned without them. What did you look for in hiring your CFO? What’s holding you back from doing it if you haven’t?

What are you missing by not finding them?

P.S. Check out Cheryl Pia’s story in episode 3 of On It to see the difference hiring a CFO made in her business.

Martin Kamenski

Written by Martin Kamenski

Martin is a CPA and former business owner whose passion for small business began with childhood memories of Al’s Carpet Cleaning—his grandfather’s business. Martin writes about leadership, strategy, finance, and entrepreneurship.