How CFOs Can Be Strategic Leaders
From setting strategy to leading implementation, financial heads at associations are tasked to do more than crunch numbers. It’s a tricky job, but they’re not alone in managing it.
CFOs don’t get to just be CFOs anymore. Increasingly, they’re being called up on to take on the leadership roles that have long tended to stay in the CEO’s office.
“If you google it, it’s everywhere now: The CFO needs to be the strategic partner to the CEO and the organization,” says David Diedrich, founder of Berkshire CFO Partners, a nonprofit financial consulting firm. “The CFO really needs to be asking the right questions to elicit a very candid discussion about what’s possible. That’s a very different framework from the CFO as the risk-averse, compliance-focused, ‘let’s get the audit clean and the budget complete’ mindset.”
A 2016 Ernst & Young study revealed the scope of the challenge for CFOs, who are being asked to help organizations act more strategically but who still have to get the numbers properly sorted. A solid majority of CFOs—68 percent—said they anticipated being asked to take on more strategic duties, even while most CFOs (56 percent) say they have a hard time doing so because of everyday operational responsibilities.
How to square that circle? First, it can help to get a better understanding of the kind of strategic work a CFO might be called on to do. Diedrich plans to explore that question during a Deep Dive session at next month’s ASAE Associations at Work Conference, where he and a group of panelists will lead attendees through some common leadership scenarios where a CFO’s particular expertise can be useful.
Think of technology, for instance: An AMS upgrade is an expense that touches a lot of departments, and a CFO may be best equipped to understand how those departments are affected—and what adjustments the association may need to make to ensure the implementation is successful. “It’s really a lot of change management and setting expectations, Diedrich says. “It’s going to impact staffing and the ability to execute on certain projects that are meaningful to the board. They have compliance implications. Success can depend on how the CFO engages his or her peers to work through those inherently messy discussions.”
In response to the 2016 Ernst & Young survey, leadership consultant Douglas M. Kleine, CAE, suggested that CFOs need to be more of a “strategic plan implementer” and “the practical answerer of ‘We can’t do that’ with a ‘Yes we can, and here’s how.’” Associations can be infamously risk-averse institutions, and Diedrich agrees that the most successful CFOs will keep an eye on the numbers not to keep an association inflexible but to look at how it can responsibly stay on top of trends.
“Many associations don’t really have ‘crises,’ so to speak,” Diedrich says. “They’ve got this very stable revenue model that insulates them in a way that a lot of industries are not insulated. And oftentimes it creates this barrier to a positive change management. The issue isn’t, ‘Hey, we’re losing money and we have to make serious changes.’ It’s more like, we’ve got some initiatives that we’re investing in, so how do we tilt the organization to those initiatives accordingly?”
If that role still makes the CFO’s inbox groan, there’s some consolation in that nobody expects CFOs to handle these duties entirely alone. The CFO-as-advocate-and-traffic-manager is just one member of a more collaborative C-suite, where heads of marketing, meetings, and other departments are expected to think more strategically. And learn to work together: Diedrich says the Deep Dive is designed to create scenarios where leaders learn to collaborate and read each other, not just speak clinically about organizational challenges.
“In the [Deep Dive] discussion, there are interactions between a CEO, CFO, and chief marketing or membership officer,” he says. “There’s that actual dynamic where they’re observing the body language, the communications, and the candidness or lack of candidness in the exchange. You need to understand how clear the planning is, the kinds of questions that are asked, and choices that are made.”
How well integrated is your financial head into the leadership of your organization, and how do CFOs balance strategic and operational duties? Share your experiences in the comments.
(macgyverhh/iStock/Getty Images Plus)