Unveiling the hidden traits of an outstanding CFO
The Chief Financial Officer (CFO) is often perceived as the guardian of a company’s finances, primarily focusing on numbers, budgets, and driving shareholder value. While these are fundamental aspects of their role, there are other critical traits that define an outstanding CFO, traits that go beyond financial acumen. These lesser-known characteristics are pivotal in navigating today’s complex business landscape and contribute to the success and resilience of a company, its senior team, and its employees.
Emotional Intelligence
An outstanding CFO doesn’t just understand numbers; they understand people. Emotional intelligence, the ability to perceive, evaluate, and respond to one’s own emotions and the emotions of others, is vital in leadership. A CFO with high emotional intelligence can effectively manage team dynamics, creating a work environment that fosters productivity, creativity, and satisfaction. Their empathy allows for better investor and lender relations, as they communicate not just facts, but also confidence and company vision.
During the COVID-19 pandemic, the ability to empathize with what our team members were experiencing was critical. We made the principled decision to cover both employee and employer healthcare costs for our employees during an extremely challenging employment environment. Emotional intelligence in a CFO contributes to ethical decision-making, as they can better gauge the impact of their actions on various stakeholders and employees.
Strategic Foresight
An exceptional CFO must possess strategic foresight – the essential ability to anticipate and prepare for future financial challenges and opportunities. This goes beyond understanding current market trends, but also predicting future ones, ensuring the company’s financial strategies are robust, adaptable, and anticipatory.
Strategic foresight can safeguard the company against volatile market shifts and guide it through economic downturns.
Over the last two years, as inflation and interest rate increases were rampant, we reduced discretionary spending and postponed some hiring. Those anticipatory decisions were made to avoid potential layoffs and preserve cash reserves, should the economy head into recession. This foresight has served us well, and led to record top and bottom-line financial results.
Strategic foresight can also lay the groundwork for future results. For instance, by foreseeing the impact of digital transformation across industries and the advent of Open AI, we redirected our capital investments into areas where we can leverage those technologies, enabling the company to scale with personalized customer engagement, more real time operating intelligence with the same or fewer resources. This characteristic often remains in the background but is critical for sustainable growth and long-term financial health.
Technological Awareness
In today’s digital age, a tech-savvy CFO is essential. The ability to understand and integrate a wide and broad range of technologies will elevate efficiency across nearly all aspects of finance operations, accounting, tax, and revenue operations. Manual repetitive tasks of yesteryear are now performed with the robotic and machine learning capabilities. Forecasts and budgets are regressed and analyzed using artificial intelligence for predictive analysis. Tax filings, registrations, licenses, and reporting are all fully integrated with source systems. A technologically adept CFO can streamline financial processes, reduce costs, and unlock new insights from financial data. A tech-forward approach can also foster innovation across the company, encouraging teams to think creatively about solving financial challenges.
Regulatory and Ethical Acumen
CFOs are the stewards of not only a company’s financial health but also its ethical and regulatory standing. A deep understanding of the regulatory landscape and a strong commitment to ethics are crucial. This means navigating complex tax laws, financial regulations, and compliance issues with dexterity. An ethically grounded CFO ensures that the company’s financial practices not only meet legal requirements but also aligns with broader ethical standards, thereby safeguarding the company’s reputation and trustworthiness. Their role in ethical decision-making cannot be overstated. Think of the CFO as a barometer. Team members and executives constantly evaluate the CFO and their ethics in decision making as well as their ability to set the tone of compliance and ethics within the company.
In summary, the role of a CFO extends far beyond the traditional confines of financial management. Emotional intelligence, strategic foresight, technological savvy, and regulatory and ethical acumen are indispensable traits of an outstanding CFO. These qualities enable them to lead through the unknown with insight, integrity, and innovation. As the business world evolves, so does the critical role of the CFO, making these lesser-known characteristics increasingly important for a company’s success. Understanding and valuing these traits can help businesses identify and nurture CFOs who are not just financially proficient but are true leaders in their field.
