Tag Archives | CEO

Why the CEO Needs to Like Their Financial Leader

When The Strategic CFO was first founded in 1999, there was a lot of disregard for financial leaders and CFOs. If accountants could do their job, there was no need for a CFO. At least, that’s what many CEOs have thought. But we have been writing, consulting, and coaching those in leadership roles to lead the company financially. Companies cannot simply rely on great salesmen or impeccable marketing campaigns. They need a real strategic financial leader. As the relationship between the Chief Executive Officer and the Chief Financial Officer has evolved, we have concluded that the CEO needs to like their financial leader and vice versa.

Why the CEO Needs to Like Their Financial Leader

These two roles have two different responsibilities in the company, but they also need each other desperately. They are the yin and yang to each other.  This is truly a partnership and without the chemistry, this is a dysfunctional relationship. The CEO has the vision and drive; whereas the CFO has the financial data that should back up what the CEO wants to do. Simply said, CEOs and financial leaders need each other.

CEO Needs to Like their Financial Leader

CEO and Financial Leaders Need Each Other

While we’ve been talking about how the CEO needs to like their financial leader, the financial leader also needs to like their CEO. We have seen that when the CEO and their financial leader (CFO, Controller, etc.) have a good relationship, transparency and confidence is increased. This is a critical part of a CEO/CFO partnership.

Russell Reynolds Associates surveyed more than 100 CFOs and found that, “82% of CFOs surveyed gave their CEO high marks for overall effectiveness. Further, the vast majority of CFOs said they trusted their CEOs. But there’s still plenty of room for improvement. Less than half of our respondents gave CEOs a high score when it came to their ability to coach and develop the CFO. And only 49% of CFOs surveyed said they had a “very strong” relationship with their CEOs, the highest relationship ranking in the survey’s 5-point scale.”

It’s a two way relationship. If the financial leader trusts the CEO’s vision, they will be more likely to support their decision. Conversely, if the financial leader does not trust the CEO, then they are less likely going to support them with the financial information they need to make a strategic decision. Likewise, a CEO is going to trust their financial leader if they try to find a solution to implementing a new strategy, campaign, vision. But they will be less likely to trust their financial leader if they are what we call a “CFnO.” In addition, the CFO must have the confidence and relationship to question the CEO and his conclusions without anyone getting their feelings hurt.

CEOs Need Financial & Strategic Direction

Our team has worked with plenty of entrepreneurs and entrepreneurial leaders over the course of our companies life. That being said, we have also seen how much the CEO needs financial and strategic direction. CEOs need to focus on the future of the company – the captain of the ship. They need to steer the ship to success. But they need someone to analyze the data, advise, and help them direct the ship forward. Furthermore, the CEO needs a wingman – a trusted advisor.

CEOs need a trusted advisor or wingman to guide them financially. Click here to access your free How to be a Wingman guide.

What a CEO Needs Most

The CEO needs to like their financial leader because they need someone to make their flight path clear. As a result, they need more of you (the financial leader) and a wingman to guide them.

They Need More of You

What do CEOs want from their CFOs? They need more of them. There is a misconception between what the CEO needs and what the CFO thinks they need. Check out the results of a recent KPMG survey below:

“In a worldwide survey of 549 chief executives by KPMG, 30% said their CFO doesn’t understand or assist them enough with the challenges they face in running the company. “One thing is clear: something has to change if CFOs are going to close the gap between the expectations of their CEOs and the reality on the ground,” KPMG said in its survey report, “The View from the Top.””

They need more of you, not your “no’s.” Start by providing your insight on how to make their ideas come to fruition. As the financial leader your job is not to be a road block, it to understand the operations and the financials and come up with solutions.  In addition, get involved and start collaborating with your CEO. This will both increase the amount of communication and help them with their challenges.

The CFO should be CEO’s wingman, but it’s often difficult to learn what they want and need. Learn how you can be the best wingman with our free guide

The CEO Needs a Wingman

What is a wingman? It’s a trusted advisor that guides the CEO through business challenges. One way to be a wingman is to stay current with the trends. For example, keep your CEO out of trouble.  Look at trends in your financial statements, your industry and the economy.  Know your ratios, working capital and debt covenants so your CEO does not have any ugly surprises.  A good wingman always has his CEO’s back. Click below to learn How to be a Wingman.

CEO Needs to Like their Financial Leader

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

CEO Needs to Like their Financial Leader

1

Become a Trusted Advisor to your CEO

Summer is quickly transitioning to fall as the weather gets cooler and millions of Americans get ready for football season. Fantasy teams are drafted. Lucky jerseys are dusted off. Schedules are cleared for Monday night football. The action is enticing and our minds focus on all the excitement outside of work. But many neglect to look where the real action is – your career. This fall is your opportunity to become a trusted advisor to your executive team. Get ready for some major movement and success in your career this season!

What is a Trusted Advisor?

A trusted advisor is someone who translates all the technical data into functional and applicable resources necessary for business leaders to make intelligent business decisions. But let’s break that down further… There are two major factors in this role: trust and advice.

Trust is the confidence and ability to rely on something or someone and know that it’s correct. A trusted advisor is dependable, accurate, and able to be emphatic to the position of the CEO. Why? Because as the face and leader of the company, a lot is on the line for them. Respect the weight of each decision they make for the company. By understanding them, you can build a trustworthy relationship.

Advice is a suggestion on how to act according to a situation. When someone takes an advisor role, they are not expecting whoever they are advising to transfer every piece of commentary into action. But rather, they are sometimes blinded and the advisor is helping lead them to a safe, reliable, stable path.

Your CEO wants you to be a trusted advisor or a wingman. But where do you start? Download our free “How to be a Wingman” guide to go beyond the initial steps required to be a trusted advisor.

Transitioning to a Trusted Advisor Role

You have gained the trust of your executive team and they willingly take your advice, but you need to take it one step further if you want to become a trusted advisor. As a financial leader, you cannot talk the talk without walking the walk. So that means you need to get up from behind your desk to see how the business runs and what it needs by talking to those who are involved in production, operations, and shipping. By being an “operational CFO“, you can more quickly gain the trusted advisor role.

Operational CFO

As the needs of your organization change, you need to change your role from a financial CFO to an operational CFO. That may seem a little contradictory, but let’s investigate. If someone asked you to put together a bookcase and provided all the pieces but no instructions, you could probably figure it out with some time. This is the financial CFO: they provide all the data and reports but no instructions on how to interpret them, what they mean, and how to use them to lead the company forward. But if you are given the resources along with instructions, guidance, and coaching, you would be able to build that bookcase in a matter of minutes.

How to Become a Trusted Advisor

There are three primary ways to acquire the insight required to become a trusted advisor or wingman to your CEO. Those include: on-the-job training, apprenticeship, or have a coach. The first option requires 20-25 years of experience, quality experience, and it must be the right experience. Because of the time and quality aspect, this is the most difficult path. For example, you may have 20 years of experience only to realize it is the wrong experience. The second option requires someone who will let you study underneath them; but this is also difficult because computerization and time demands limit the number of CFOs available to mentor. However, the last option is great and can be a quick path to becoming a trusted advisor, but you must find a good coach.

We have put together 5 easy steps that anyone can do to become a trusted advisor in their company.

become a trusted advisor

Ask Them About their Goals

Goals are a huge part of operating a business. Therefore, learn where your business owner, entrepreneur or CEO wants to take the company in 3-5 years. There are two purposes to this: 1) it enables you to help set the course to success and 2) it demonstrates your commitment to being the CEO’s wingman. You will be able to learn why that is the goal, what the plan is, and how you can help get there quicker.

become a trusted advisor

Build a Team

There are eleven men from the opposing team on the football field, then there is you. What are the chances that you can play both offense and defense and win against another team that is switching people in and out depending on their position? Probably 0 So how can you become a trusted advisor to your CEO without having a team to support you?

You are not able to execute the game plan alone. so you need to get others in the company on board. They don’t all need to come from the financial side of the business. Building relationships with other departments outside of finance makes you a more valuable and effective financial leader. This goes back to transitioning to an operational CFO.

become a trusted advisor

Have Their Blind Side

Do you like surprises? If you are a business owner, you most likely hate surprises. As the financial leader of your company, it’s your job to “peed around the corners” to protect the CEO. By having their blind side, you can enable the CEO to focus on executing their vision rather than fighting whatever is distracting them or worrying about things they may not see coming.

become a trusted advisor

Don’t Get Called For Holding  

CFOs often get a reputation for being the “CFnO” or no-man. While it is important to guard your CEO’s back as a trusted advisor, it is not wise to hold them back from doing their job. You will either get excluded from being part of the key strategic decisions or have your job seen as non-essential. You don’t want to get stuck in this situation.

Remember, there’s a find line between playing defense and being an obstacle for your CEO to avoid. Be aware of where that line is, and don’t cross it. Instead, try to enable them to safely take risks or suggest other options that are less damaging to the company.

become a trusted advisor

Keep Score

Teams don’t get to the College Football Playoffs or the Super Bowl based on the score of the last game they played, but instead get there based on what they did all season. Imagine the disaster where a team that only won one game in a season playing against a team who won every game! Keep score of your accomplishments. By keeping tab of what you have accomplished and what you are working on, it’s easier to put a dollar value to it and prove your value. Quantifying your contributions not only builds your confidence, but shows the value you have added in terms that the CEO can appreciate

Conclusion

Your CEO, whether they realize it or not, needs a trusted advisor or wingman. The captain of the team cannot do anything without other leaders. Be the trusted advisor your CEO needs. Download our free How to be a Wingman guide by clicking the link below. Take your career to the next level and step up into the trusted advisor role.

Force Majeure

Strategic CFO Lab Member Extra

Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

become a trusted advisor

0

The CFO Guide to Your CEO

Wouldn’t it be great if we had a guide for everything we do? A guide for marriage? A parenting guide? A guide to dealing with difficult times?  Or maybe a CFO guide to understanding your CEO?

cfo guideTypically, Chief Executive Officers (CEOs) come from an operational or sales background. Naturally, Chief Financial Officers (CFO) do not always see eye to eye with their CEO. But over the past 25 years, The Strategic CFO has been working with CFOs to not elevate their status within companies, but also to make them more useful to the CEO… And therefore, more valuable to the entire company.

What The CEO Wants to Know

Just like every person in a company looks at their own focus areas (finance, marketing, operations, etc.), the CEO needs to know specific things and can go without knowing other things. To improve the way the CEO sees and respects the CFO’s role and guidance, it is critical to know what they want, why they want it, and how to communicate with them effectively.

CFO Guide to Your CEO

The first step in our CFO guide is to understand how your CEO thinks.

1. Future, Not Past

The typical CEO is future oriented. What’s the next move? What are the company’s goals for this next quarter? The CEO acts as the visionary for the company – a pilot, a ship captain, a general. They look forward at the horizon, protecting the people behind them as they march forward. Therefore, instead of focusing on past records or past performance, make the future path clearer for the CEO. The future is more important than the past in the CEO’s role. But don’t neglect past performance’s value to the CEO. Past performance can help predict the future. Although the past is the past and nothing can be changed in the past, you can change the future and that’s what your CEO wants to know.

As the financial leader of your company, you may struggle with focusing on the future, as you have been trained for so long to justify and rationalize the past. One thing you should impress in your mind is that your CEO and other executives are laser-focused on the future. Use what you have recorded to display your vision of what lays ahead.

2. Know Your Numbers

One of the top things taught in business school is to know your numbers. What does “know your numbers” mean? Think about your unit economics. Go back to the basics. If your company sells 10,000 widgets at $1 in a month but your company is wanting to increase costs to $11,000, you should be able to immediately indicate that decision would not be wise as you will then be unprofitable.

Everyone in your company, especially the financial leader, needs to know the numbers of the company. Have the facts and data to support every claim, prediction, or forecast. If the CEO is relying on your financial expertise, you better be able to lead them forward financially. Know your numbers and how they impact your company in the short-term or long-term.

cfo guide3. Cash, Cash, Cash

Cash is king. To operate the company successfully, cash is absolutely critical. Whether you are paying down debt, keeping up with growth, or allowing for flexibility, you as the financial leader need to know exactly where you are with cash always.

What happens when you need more cash or when you want to improve cash flow in your company? It’s difficult to know where to start. But you don’t have to guess anymore… Download the 25 Ways to Improve Cash Flow to start increasing the amount of cash in your business today!

4. Impact, Not Progress

You are painting a picture… The CEO doesn’t need to know the type of paint, the kind of paint brush, or the size of the canvas. But they do need to know the big picture and how it’s going to look after it’s finished. They don’t have enough time in the day to know all the details about progress; however, they do want the big picture updates on the impact of what is happening.

Remember, progress is still important. The managerial level needs to know the progress of projects. When you meet your CEO, have the project’s progress in the back of your mind in the case the CEO wants to know anything more specific.

Try to summarize all outcomes and updates on milestones concisely. Their high-level thinking does not need to be clouded by minute details and the nitty gritty of day-to-day operations. Sometimes details are necessary for the CEO to know when deciding the future of the company; so in that case, don’t hesitate to expand on the details.

What does impact mean?

Impact is defined as the “measure of the tangible and intangible effects (consequences) of one thing’s or entity’s action or influence upon another” (Business Dictionary). Think about it this way… Whether you are the CEO, COO, CFO, Controller, manager, community leader, a parent etc., you are responsible for people. Your worry should not be focused on the past but on how your decisions will impact people in the future. The CEO is responsible for everyone underneath him or her so a decision that will change the future for their employees, partners, stockholders, family, etc. is a big deal. Adjust your mindset from past performance to future impact.

5. Understand the Big Picture

Unfortunately, your CEO does not have all day to listen to you. The quicker you understand why your CEO acts the way they do and what they need to run the company successfully, the better you will be able to perform in your role as a financial leader. Align your goals/decisions/recommendations with the visions and priorities of the company.

For example, cash is tight but you want to get a software program that will report more timely and accurately the things you need to do your job. If you approached the conversation by trying to convince the decision maker (i.e. CEO) by sharing all the features, you will most likely get a “no”. But if you understand the big picture, communicate how this investment will serve you better long term versus the current software. Hint: Show some numbers of how this solution will improve cash flow, profitability, productivity, time, and money.

Conclusion

You should be your CEO’s partner, wingman, guide, confidant. Know what your CEO wants, thinks, and needs. To get started on improving your relationship with your CEO and to improve cash flow, download the 25 Ways To Improve Cash Flow whitepaper for free. Find other ways to improve your cash flow within 24 hours.

cfo guide

Strategic CFO Lab Member Extra

Access your Cash Flow Tuneup Execution Plan in SCFO Lab. This tool enables you to quantify the cash unlocked in your company.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

cfo guide

3

CEO’s Role in a Company

Former Microsoft CEO, Bill Gates

Former Microsoft CEO,
Bill Gates

There is some confusion about just what exactly is the CEO’s role in a company. Some people think it is to be the manager of the organization. Others think it might be to be the face of the company to the public.

CEO’s Role in a Company

Let’s ask the question another way. How does a CEO define success?

The answer is all of the above!

So what is the CEO’s role in a company? To put it succinctly; the role of the CEO is to grow the company profitably! Now many CEO’s might grow a company, but not all of them do it profitably. Often the CEO comes  from a sales or operations background. Consequently, they focus on either sales volume or product quality. Growing sales volume doesn’t require that the sales have to be profitable. Delivering a high quality product does not mean that it may be at a good price!

How does he or she do that? In order to reach their goals they need to surround themselves with a good team. They need to be able to leverage off of everyone’s skills and expertise. To grow a company it takes building an organization that is scalable.

A scalable organization requires that the CEO delegates responsibility of Sales, Marketing, Operations and Finance. Each function has its’ own definition of their role. For example the Vice President of Sales would be held accountable for reaching sales targets. The VP of Operations would be held responsible for the quality of the goods or service. They might have additional team members included in the management team, such as IT or HR.

So if the CEO’s role is to grow the company profitably, what is the role of a CFO? To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

CEO's role in a company

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before your financial statements are prepared.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

CEO's role in a company

1

Check Out These 10 Super-Successful CEOs’ First Jobs

CEOs' First Jobs

Check Out These 10 Super-Successful CEOs’ First Jobs from Silicon Alley Insider:

CEOs’ First Jobs

At some point in their lives, every young adult realizes that they no longer want to ask for Mom and Dad’s permission to purchase their latest “need,” like that new outfit, or the latest awesome video game. Or just lunch.

So they go out and get a job of their very own. One day, those same young adults will look back and consider that first job more than just an insignificant side step taken to collect a few extra dollars. Instead, it could have been the beginning of a gradual ascent toward the C-Suite.

From flipping burgers, to teaching in public schools, to working in the rice fields of China, some of the world’s most powerful CEOs started out their careers in humble places.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs. Find out how you can become a more valuable financial leader.

CEOs' First Jobs

Strategic CFO Lab Member Extra

Access your Flash Report Execution Plan in SCFO Lab. The step-by-step plan to manage your company before your financial statements are prepared.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

CEOs' First Jobs

0