Do you know how many prom dresses there are? I have three daughters and for the first time I had the opportunity to go prom dress shopping in Chicago with my youngest daughter and her friend. As I looked at the dizzying options in a sea of dresses with other daughters and their parents looking for “their” dress, I started thinking of the types of Chief Financial Officer (CFO’s) there are; based on an article I read last week. Yes, I know it’s an odd correlation, but as I patiently waited for the young ladies while they tried on dresses my mind wandered. Can you blame me?
Lately, I’ve addressed the CIO/IT Manager to CFO relationship because I believe it is a vital reporting function to get right. It’s important to determine the type of CFO you have on your team. Knowing the CFO type is an important factor is to make sure you get the truth on best practices, accurate numbers, and to establish a relationship that you can trust.
When looking at your CFO, you should know how they are naturally wired, and then make sure you cover their weaknesses to ensure your business strategy is aligned financially and technically. So here is the quick rundown of the classifications of CFO’s:
1. The Numbers CFO
Experienced in multiple positions in finance – including controller, auditing, and financial planning.
Usually an internal hire and has a strong understanding of internal company operations.
2. The Strategist CFO
- Hired outside of finance.
- Experience in operations, marketing, and general management.
- Runs a tight ship and has major influence with teams and business decisions.
3. The KPI CFO
- Love their scorecards.
- Measurable targets are the focus and clear goals are communicated.
- Best practice metrics, costs and standards without bias drive them.
4. The Growth CFO
Least common of CFO’s as this is typically a CEO/COO role.
Growth is the target and key motivation.
Usually experienced in mergers/acquisitions, private equity, or venture capitalism.
All of the 4 classifications of CFO’s contain great strengths and most CFO’s can have multiple traits in each category. The same can be said for CEO’s who don’t have a CFO on staff.
The CEO/Owner must:
- Pay attention to bookkeeping and financial management.
- Create and use KPI’s (key performance indicators) to align business strategies.
- Keep a strong eye on leveraging technologies (now reporting to CFO).
As a business owner or CEO you should be concerned with the financial and technology direction of the company — and know definitely what type of CFO you have. The key is to determine which one fits you to have a productive business synergy, just like the night at the prom.
TAKE THESE ACTIONS NOW
- Determine what type of CFO you have.
- Determine the weaknesses and make sure they are covered – it may have to be you.
- Keep accountability of IT on the table, as you need to make sure it is a strategic asset, not just a cost center, which is how it is looked at by some CFO’s.
- Have them take the Strengths Finder 2.0 test – it might give you some insights.
- See my blog on knowing your Strengths.
Business strategy is about People, Strategy, Execution and Cash. The CFO is a person who is usually watching cash, so make sure you have the right one with the proper objectives on your bus.
Tell me what you think. I’d love to hear from you!