What Your Board Should Expect from the CFO

There’s little doubt that the level of transparency, rigor and effectiveness provided by the CFO has significant impact on the success of a company. Especially in today’s disruptive marketplace where challenges loom around every corner and where boards are under tremendous scrutiny, the CFO’s role in ensuring the profitability, sustainability and value of a company is undeniable.

The reality is that the efficacy of many decisions the board makes rely heavily on the performance of the CFO and how well the CFO works with the board. And, on how well the CFO works internally with the management team.

So what are the roles and responsibilities of the CFO in relation to the board and what should a board of directors expect from the CFO?

Here is a summary of just some of the non-negotiable expectations boards should have of the CFO:

• Has a strong understanding of the business model, how the company makes money, the key drivers for enterprise value and risks to it.
• Big picture thinker; delivers data-informed insights and recommendations rather than numbers.
• Partners with the executive team, board directors, investment partners and other stakeholders on non-financial initiatives for increased effectiveness related to performing primary CFO functions.
• Straightforward and confident in discussing key issues and making recommendations.
• Collaborative; working closely with the board rather than making decisions in a silo.
• Exceptional and respectful communicator, comfortable supporting their position even when others disagree.
• Educator, relationship builder and valued advisor.
• Provides leadership in ensuring compliance, actively manages risk, questions assumptions, quantifies outcomes and makes information-backed recommendations.
• Understands markets and economic situations, and exceptionally manages resources for increased efficiencies during both turbulent and stable times.

The CFO’s primary role in serving the board is ensuring the integrity of all financial information, as well as the quality metrics that enable quality decision-making by the board. But the CFO’s role doesn’t stop with providing accurate data.

The CFO is also the individual who helps board members deepen their understanding of how different parts of the company are connected, how they create value individually and together, the risks the company is taking to achieve success, and the gains or losses that result from those risks.

Of course, the information the CFO provides can be less than helpful if it’s communicated to the board as a data dump. Therefore, one of the most important qualities a board of directors should expect the CFO to have is skill at delivering insights and discussing key issues, as well as how they’re being addressed, in a clear, credible and transparent manner.

Further, directors are highly aware that CFOs must spend significantly more time educating directors about potential risks and financial reporting practices than they have in the past. In fact, in today’s regulatory environment, the success of the board-CFO partnership requires increasing both the amount of communication and the quality of that communication.

A CFO who is a good communicator is able to build trust faster, further strengthening his or her critical relationship with the board. The ability to be assertive and support his or her position – even if it means respectfully disagreeing with the board – is also a highly desirable quality in a CFO.

As a CEO or board director, you are likely well aware that CFOs have a challenging role. They are attempting to meet the diverse needs of many groups from management to employees to stakeholders and shareholders to the board. So good working relationships also serve to protect the CFO from the discouragement and overwhelm that often goes hand-and-hand with the necessity of serving multiple masters.

Boards should also expect the CFO to be able to deliver news with confidence – whether it’s good or bad – and to deliver it quickly. Plus, recommend approaches to get the numbers back on track. This is far more likely to occur if the CFO has built a high level of trust and credibility with directors already.

Because the CFO plays such a far-reaching and ever-increasing role in ensuring the success of a company, today’s boards need the CFO to be active in ways they might not have in the past.

As the CFO’s role related to board effectiveness continues to grow, what other proficiencies do you think today’s CFO needs to possess? Share your thoughts with me at ccoughlin@bottomline-growth.com.