What type of person makes a good CFO
Being a Chief Financial Officer (CFO) is a tough job requiring unique skills and qualities. From managing budgets and finances to guiding the company's financial strategy, a CFO has their hands in almost every aspect of their organization's financial operations. To be successful, they must have the right qualifications and experience, but they also need to possess certain qualities that make them great CFO.
This blog post will explore ten traits of what it takes to be a stellar CFO. We'll also discuss how to develop the skills needed for CFOs. So, read on if you're looking to become a CFO or are just curious about what type of person makes a good CFO.
Being a Chief Financial Officer (CFO) is a challenging and vital role that requires
- A strong foundation in financial concepts and the ability to accurately analyze and interpret financial data.
- CFOs should also have strategic thinking skills and be able to anticipate future financial needs and challenges and develop and implement long-term financial plans that align with the company's overall goals and objectives.
- In addition, CFOs should be strong leaders who can effectively manage and motivate a team and have good communication skills to interact with employees effectively, board members, and other stakeholders.
- Attention to detail and the ability to accurately identify and address financial issues is also essential for CFOs, as is adaptability to quickly respond to changing business environments and pivot financial plans as needed.
- Finally, CFOs should have strong ethical values and be committed to acting in the company's and its stakeholders' best interests.
What Makes a Good CFO?
The qualifications and experience you need are pretty straightforward regarding being a CFO. CFOs are expected to have a professional degree in accounting like CPA, ACCA or CA or economics, as well as a few years of experience in the field. They should also be able to demonstrate knowledge of accounting standards, financial regulations, and tax laws.
But a CFO's qualifications and experience are only part of the picture. To be successful in the role, they must also possess certain qualities that make them great CFO. These qualities include:
1. Financial solid skills:
A good CFO should have a strong foundation in financial concepts and be able to analyze and interpret financial data accurately. This includes understanding financial statements, budgeting, and financial modelling.
For example, a good CFO can quickly analyze a company's balance sheet and identify areas where cost-cutting measures could be implemented to improve profitability. They should also be able to identify trends and patterns in financial data and accurately forecast future financial performance.
Tim Stone, CFO of Snap Inc., has demonstrated his financial expertise through his successful management of the company's financial operations, including developing and implementing financial strategies that have helped drive Snap's growth.
2. Strategic thinking
A good CFO should be able to think strategically and anticipate future financial needs and challenges. They should be able to develop and implement long-term financial plans that align with the company's overall goals and objectives.
For example, a good CFO can anticipate a potential slowdown in the market and implement measures to reduce the company's risk, such as increasing cash reserves or reducing debt. They should also be able to pivot and adjust financial plans to meet changing business needs.
CFO such as Carol Tomé of Home Depot have demonstrated their strategic thinking by developing and implementing financial strategies that have helped drive their companies' long-term success.
A good CFO should be a strong leader and effectively manage and motivate a team. They should be able to communicate effectively with employees, board members, and other stakeholders and make tough decisions when necessary.
For example, a good CFO can lead a team through a restructuring process and ensure that the company's financial operations run smoothly during a change.
CFOs such as Mark Weinberger of EY have demonstrated their leadership and communication skills through their successful management of large and complex financial organizations.
4. Attention to detail
A good CFO should have strong attention to detail and be able to identify and address financial issues accurately. They should be able to identify trends and patterns in financial data and accurately forecast future financial performance.
For example, a good CFO can identify an error in a company's financial statements and quickly take steps to correct it.
A good CFO should respond quickly to business environment changes. They should be able to pivot and adjust financial plans to meet changing business needs.
For example, a good CFO can quickly adapt to new tax laws or regulatory changes and implement the necessary changes to the company's financial processes.
CFOs like Patrick Pichette of Google have demonstrated their adaptability and flexibility by successfully managing their companies' financial operations in rapidly changing industries.
6. Ethical behaviour
A good CFO should have strong ethical values and be committed to acting in the company's and its stakeholders' best interests. They should be transparent and accountable in their financial decision-making and ensure that the company's financial practices comply with all relevant laws and regulations.
For example, a good CFO can identify and address potential conflicts of interest within the company and ensure that the company's financial practices are transparent and above board. They should also be able to maintain the confidentiality of sensitive financial information and ensure that it is only shared with those who need to know.
Andrew Bonfield, CFO of National Grid, has demonstrated his ethics and integrity through his commitment to ethical practices and transparency in financial reporting and his ability to make difficult decisions with integrity.
7. Digital literacy and technology fluency
As technology continues to advance and play a more significant role in business operations, the CFO needs to have a strong understanding of digital tools and systems and the ability to use them effectively. This may include knowledge of data analytics, blockchain, RPA, and other emerging technologies.
Luca Maestri, CFO of Apple Inc., has demonstrated his digital literacy and technology fluency by successfully managing the company's financial operations, including implementing advanced technologies such as artificial intelligence and machine learning.
8. Data-driven decision-making
The Fourth Industrial Revolution is being marked by an explosion of data, and CFOs need to effectively collect, analyze, and use this data to inform their decisions. This includes identifying relevant data sources, using data visualization tools, and developing data-driven strategies.
Beth Comstock, CFO of General Electric, has demonstrated her data-driven decision-making by using data analytics and visualization tools to inform financial strategies and decisions.
9. Collaboration and partnership
The CFO is often a key player in the development and implementation of cross-functional initiatives, and now it's increasingly crucial for CFOs to collaborate effectively with other departments and stakeholders, both within and outside the organization. This may include developing solid relationships with technology providers and other strategic partners.
Anne Finucane, CFO of Bank of America, has demonstrated her collaboration and partnership skills through her strong relationships with technology providers and other strategic partners and her ability to collaborate effectively with other departments and stakeholders within the organization.
10. Emotional intelligence
Leadership requires individuals who can effectively manage their emotions and those of others. A good CFO should communicate effectively, handle conflict, and build strong relationships.
For example, Goldman Sachs CFO Stephen Scherr has demonstrated his emotional intelligence by effectively managing relationships with various stakeholders, including employees, investors, and regulators.
How to Develop the Skills Needed for CFOs
Developing the skills needed to be a CFO takes time and dedication. The best way to do this is to get as much experience as possible in the field. This could include internships, working with different organizations, or undertaking projects requiring financial analysis and planning.
There are several ways that a CFO can develop the characteristics and skills outlined above:
- Education and professional development: Pursuing formal education in finance, business, or a related field can help a CFO gain the knowledge and expertise needed to manage financial operations effectively. Continuing education and professional development opportunities, such as workshops, conferences, and certification programs, can help a CFO stay up-to-date on industry trends and best practices.
- On-the-job experience: Gaining hands-on experience in financial management roles can be valuable for a CFO to develop their skills. This may involve taking on progressively responsible roles within an organization and seeking out opportunities to work on cross-functional projects or lead teams.
- Mentorship and coaching: Working with a mentor or coach can provide a CFO with guidance and support as they develop their skills and advance in their career. A mentor or coach can offer valuable insights and perspective, as well as help a CFO identify areas for improvement and set goals for professional development.
- Networking and industry involvement: Building relationships and connecting with other professionals in the finance and business sectors can provide a CFO with valuable insights and opportunities for learning and growth. This may involve joining professional organizations, attending industry events, and seeking opportunities to collaborate with others in the field.
- Stay up-to-date on emerging technologies and trends: To stay current in the rapidly changing business environment of the Fourth Industrial Revolution, a CFO needs to keep abreast of emerging technologies and trends. This may involve enrolling in fintech training and certification courses, attending conferences and events, and participating in professional development opportunities focusing on these topics.
- Seek out opportunities to learn and experiment with new technologies: To gain hands-on experience with emerging technologies, a CFO may seek out opportunities to work on projects or initiatives that involve these technologies. This may involve collaborating with other departments or organizations using these technologies or taking online courses or workshops to learn more about them.
- Develop a culture of innovation within the organization: A CFO can encourage and support innovation by creating a culture that values experimentation and encourages employees to take calculated risks. This may involve providing resources and support for employees to try new approaches and recognizing and rewarding innovative ideas and initiatives.
- Personal reflection and self-assessment: Regularly taking time to reflect on one's strengths and weaknesses, and seeking feedback from others, can help a CFO identify areas for improvement and set goals for professional development.
Being a CFO is a tough job and requires a unique set of skills and qualities. To be successful in the role, CFOs must have the right qualifications and experience, as well as certain personality traits and skills. They must also be able to analyze financial data, understand the business environment, and lead a team effectively.
Developing the skills needed to be a CFO takes time and dedication. The best way to do this is to get as much experience as possible in the field, stay up to date on the latest trends, get certified, and network with other professionals.
At the end of the day, what type of person makes a good CFO depends on the organization and its specific needs. However, the qualities and skills mentioned in this blog post can help you to develop the skills and qualities needed to be a successful CFO.