Between expanding job creep, the possibility of a recession still looming in the near future, and pressure to increase technology spend, the CFO’s responsibilities are, in some ways, more demanding than ever.
When taking the financial helm, whether as a serial CFO or as first-timer, these leaders usually have somewhat of an inherited stewardship, but in order to have a successful tenure, they need to learn how to become strategists, said Ajit Kambil, program research director of Deloitte’s Global CFO Program in an interview.
Kambil created Deloitte’s Executive Transition Lab and published his new book “The Leadership Accelerator” last month.
“If you look at S&P 500 companies, most have quadrupled in value in the last 30 years,” said Kambil. “If you're going to be above average, in your five years, (as CFO) you better almost double the value for your company. That's not going to happen automatically.”
Today, the CFO tenure is about five years long, according to the most recent FTI Consulting Global CFO survey, putting finance chiefs 20% of the way through their impact window after their first year.
The first 100 days myth
The first 100 days — a precedent set after President Franklin Delano Roosevelt’s presidency — has been a benchmark for judging the impact of an executive’s tenure based off of their first few months at their post. However, for a CFO, those first days are not as vital as one may think, according to Kambil.
“It just takes time to understand the nuances of the business, especially at a large company, whether you've been in the company and you're promoted, or otherwise,” he said.
Laser focusing on those first 100 days will lead CFOs to focus on quick wins, which Kambil says is not what they are there to do.
“When you are at the top level, they’re not hiring you for quick wins, they’re hiring you to set the company on the path to create the value that shareholders and other stakeholders want,” he said.
In order to achieve this, CFOs need to focus on building relationships first before anything else. Learning the nuances of the company comes down to talking to both internal stakeholders and, sometimes, even to customers as well, according to Kambil.
“The first part is really listening, learning and connecting with stakeholders, but after that, the most important thing is to get your team correct,” he said.
All of these things take time — up to even six months of just building out your team — and set the foundation for then achieving wins for your organization at large.
“Don't get fooled by artificial constraints like the first 90 and 100 days,” he said.
A serial versus first time CFO
After a newly minted finance chief becomes an expert on the nuances of their business, and thoughtfully builds out their team, the next step is building strong relationships. Just with the C-suite alone, mastering communication and collaboration can ease some of the burdens finance chiefs face when it comes to doing the bulk of the heavy lifting.
When it comes to a serial CFO versus a fresh faced finance chief, Kambil says the difference lies in the respect and level of importance talent is given in those first few months.
“Serial CFOs really get this time, talent trade-off. They spend time on talent quickly and early to get that foundation in place,” said Kambil. “First time CFOs, especially internal promotions, overestimate the quality of the team around them because they came from that team,” he said.
A newly minted chief in their first time role, whether a veteran of the organization or not, needs to double down and take a hard look of the quality of talent around them and whether or not it can set the foundation for a successful first year, according to Kambil.
