As a new CFO embarking on a new role, you may encounter a multitude of challenges and a steep learning curve. It can be overwhelming to prioritise tasks and determine what should be included in your plan for the first year.
In this guide we identify key areas that will have the greatest impact on your performance and where to concentrate your efforts for maximum returns.
What to do first?
When stepping into a new role, there is a mix of excitement and uncertainty. As a new CFO, the expectation is for changes to come. This can bring about a sense of apprehension or optimism, depending on the existing frustrations and business culture.
It’s important to take the time to understand the mindset of the people in the organisation, even though most start their new roles with a general understanding and support for change from the CEO. Building relationships, asking questions, and actively listening are key to setting the right tone from the start. Delving into the business, its culture, structure, and key players will help uncover areas for improvement and pain points. Armed with this knowledge, you can develop a plan to drive positive change. Execution of this plan will require access to data, effective communication, collaboration, and a team capable of providing valuable analysis and insights.
Mastering the role and key relationships – First 30 days
Understand the business
When starting a new CFO role, it’s crucial to understand the inner workings of the business. This includes delving into investor relations, which may require more in-depth forecasting and specific reporting. Conducting a strategic review is a great start to assess how value is generated within the organisation and provides insights into the company’s revenue sources, profit margins, and return on invested capital (ROIC). It’s essential to identify areas for growth, operational enhancements, and potential changes in the business model to drive value creation.
Moreover, adapting to new sectors or businesses may involve navigating cultural differences, varied schedules, and fluctuating demands. Your role could become more prominent in a growth-oriented business with private equity investors, or within a well-established brand. Certain departments within a company may require more attention due to their significance or influence. Balancing these demands while ensuring equitable development and investment across the business can be challenging. Navigating cultural nuances in a new role poses its own set of challenges and complexities.
It’s essential to establish strong relationships with key stakeholders, including the board, investors, functional managers, and your team. Building trust with leadership, gaining respect from colleagues, and understanding the organisation’s pain points are crucial for driving successful outcomes. Identifying key influencers and leveraging their support can help in implementing necessary changes and garnering backing for strategic initiatives.
Ultimately, your team plays a pivotal role in executing plans and achieving organisational goals. Assessing their skills early on and ensuring alignment with your vision can significantly impact your success as CFO. Listening to feedback on processes, information access, systems, and communication gaps is essential for identifying areas that require improvement.
CFOs should prioritise supporting general managers, fostering growth, and embedding value-driven finance practices within the organisation. By focusing on critical activities, building strategic relationships, and proactively managing responsibilities, CFOs can effectively drive business success and create long-term value.
CEO
Work with the CEO to on strategic opportunities identification and innovative growth opportunities.
Sales
Work closely with sales teams to pinpoint the most advantageous areas for finance to contribute, such as optimising contract terms and pricing strategies, and identify where decision support tools can make a significant impact.
Operations
Evaluate the existing product lineup to pinpoint areas for consolidation and developing streamlined product platforms.
- Work closely with frontline operations to provide financial decision-making assistance.
Marketing
- Analyse sales forecast data thoroughly and evaluate project and/or product risk profiles.
- Work together with the marketing team to assess the return on investment for marketing activities.
Build relationships
As CFO you should prioritise building relationships with internal colleagues to gain a deeper understanding of operations. Whether it’s the board, investors, functional managers, or your team, each member is essential and should be heard for different reasons.
Winning the trust of key stakeholders is crucial to gaining support for your ideas, while earning respect from colleagues and team members is necessary to address any existing frustrations. Identifying key influencers and spending time with them can help secure backing for your proposals and drive necessary changes. This may involve focusing on managing investor relations, working with auditors, or collaborating with key functional heads, all of whom are internal customers of the finance department.
Your team is indispensable in executing your plans successfully. Conducting an early assessment of their skills is vital as they play a crucial role in bringing your ideas to fruition. By addressing issues related to processes, information access, systems, and communication, you can better understand where improvements are needed.
CFOs should also prioritise supporting general managers in driving growth and implementing value-driven finance practices throughout the organisation. Exceptional CFOs dedicate structured time to meeting with general managers and are often sought out for advice.
Business unit relationships – best practice
To maintain a positive tone with general managers early on in their tenures, new CFOs should maintain mutually beneficial interactions with the business on a regular basis. Capture the cross-functional perceptions of finance support to the organisation to help:
- Understand internal customers’ priorities for the finance function
- Assess corporate finance’s performance in serving internal customers
- Target areas of misalignment for improvement
Elevate your interactions with BUs beyond performance appraisal, to facilitating identification of, and execution against, the BUs’ most pressing opportunities. Leverage your “seat at the table” and avoid adding complexity and duplication of efforts, by clearly understanding how finance can add value when interacting with the BUs.
CEO relationship – best practice
New CFOs who have limited interaction with CEOs (compared to more experienced CFOs) should focus on maximising the value of their meetings.
It is crucial for new CFOs to take the initiative in steering conversations with the CEO towards strategic topics. This can be done by outlining and presenting key discussion points they wish to address before their scheduled meetings.
- Establish structured agendas for your recurring CEO meetings, ensuring to allocate time specifically for discussing non-finance related business matters.
- Consistently schedule meetings with general managers to analyse their strategic plans and business prospects, offering diverse insights to your CEO.
- If your CEO is seeking to delegate tasks, consider requesting responsibilities that are more focused on operational aspects like strategy, corporate development, or a business unit, rather than administrative functions such as IT or procurement.
Assessing personal – after 30 days
Finance Team
Your team are critical in supporting your plan so understanding their capabilities is essential. Finding skilled finance professionals can be challenging in today’s market. It is essential that they are focused on adding value to the business. Spending time on tasks like number crunching, reconciling data, and defending information may not contribute significantly to the overall goals.
On the other hand, a team that actively asks pertinent questions and analyses results is vital for a forward-thinking organisation. It may be necessary to provide training for outdated skills or consider bringing in new talent. The more adept your team is at addressing issues, adapting to new processes, and streamlining the production of financial data and plans, the more they can support you and free up your time for other strategic tasks.
Assessing the finance technology stack – after 30 days
Finance technology
Improving processes is a key driver for organisational transformations. However, with the introduction of new technologies and the potential benefits in terms of time-saving and cost reduction, it is crucial to carefully evaluate whether the advantages outweigh the investment and time required to implement these changes.
In addition to considering the benefits, it is essential to factor in the time it takes to realise these benefits. While some improvements yield quick results, others may take longer to materialise. For example, implementing a new ERP system can offer extensive benefits but may consume months of resources, whereas enhancing reporting functionality can lead to better-informed decision-making and only require a few weeks to implement. Therefore, it is vital to assess how a significant project will impact both your team and yourself. Time is limited, so it is important to avoid overwhelming your team and yourself with projects early on in your journey.
Creating a plan is just the beginning; bringing it to life is where the real challenge lies. Collaboration and input from all stakeholders are essential in crafting a comprehensive plan that considers growth, targets, and overall business performance. A successful plan hinges on accurate data, scenario modeling, and strategic analysis to inform financial and operational strategies. Utilising the right tools and maintaining up-to-date information is crucial, especially in a rapidly evolving business environment where outdated plans can lead to confusion and uncertainty.
Effective planning drives informed decision-making, accurate performance measurement, and valuable insights. By ensuring easy access to information and fostering open communication, everyone can understand and contribute to the plan’s success.
Never underestimate the power of clear communication in executing your plan. Providing relevant, well-structured information in a format that resonates with your audience encourages engagement and active participation, ultimately leading to successful plan implementation.
Focussing on critical activities – after 60 days
Carefully prioritise your time to focus on activities that will have the most impact.
- Review how you allocate your time across all responsibilities.
- Delegate tasks that do not add significant value.
Focus on high-impact decisions
Although improving administrative processes can lead to cost and efficiency gains, successful operational execution is a crucial factor for long-term competitive success. Additionally, the impact of making poor operational decisions is high, while the consequences of administrative decisions are relatively low.
Implement change then delegate
CFOs may need to lead non-finance departments during periods of centralisation and streamlining, but should not do so permanently. Develop a long-term plan for the function that includes a handoff to a capable new owner.
Tasks specialisation
Outstanding CFOs reallocate administrative tasks and consistently evaluate the efficiency of their oversight with the CEO.
Proactively guard your priorities
Establish clear boundaries around your role and consistently reassess the scope of your authority in collaboration with the CEO.
About Kybos
Kybos is a dedicated UK Jedox gold partner. We build planning and analysis solutions that deliver value fast using accountancy qualified consultants. Whether you want a fully customised application or to build upon an existing solution, Kybos consultants are here to help.