Maximizing the CFO-Board Relationship

Written by Carol Coughlin. Posted in Operations Management

Among the management team, the CFO is typically the most visible management member to the board other than the CEO. It is therefore critical that the CFO, in addition to the CEO, work well with the board.

Of course, as in any relationship, both sides must commit and contribute in order to create a powerful partnership. So the following is what boards need from CFOs and also what CFOs need from boards in order to maximize the CFO’s contribution to the board’s work and, ultimately, to forward the success of the company.

What the Board Needs from the CFO

High-Level Information, Not a Data Dump: CFOs need to be expert at distilling and crystallizing complex information to avoid taking the board into the weeds and crippling their ability to understand and contribute. Most boards like to spend their time discussing issues and will ask questions if needed, so presenting information in a way that facilitates discussion is far more valuable to the board than receiving volumes of data. This doesn’t mean the CFO shouldn’t have full understanding of in-depth information – they absolutely should – and have it available in case they need it.

Clarity Not Buzzwords: CFOs who speak clearly and simply without the use of acronyms and buzzwords reduce confusion and increase understanding. CFOs need to keep in mind that some board members do not have financial backgrounds and may not be adept at financial-speak. So taking the time to use layman’s wording goes a long way toward facilitating more meaningful board discussions that leave no room for misinterpretation.

Share Trends and Patterns Not Just Data: Boards rely on CFOs to share insights about the company’s financial health and it’s the CFO’s responsibility to stay on top of trends and report them to board so that the board can help leadership determine if action is needed. Using visuals, such as charts, to convey what’s trending over time can help board members quickly see what’s happening in the business. In general, presenting information visually can be extremely valuable in helping people understand complicated scenarios and CFOs should consider this approach when sharing much of the information they need to convey to the board.

Solutions for Course Correcting: It’s the CFO’s responsibility to share issues facing the company, such as where the company may be off track in achieving its goals. But simply telling the board there’s a problem is not enough. CFOs need to be to be able to tell the story behind a problem and also what management is doing to course correct. The board may have their own suggestions as well, but their role is to provide guidance not solve day-to-day problems and the board will question leadership’s abilities if problems are consistently dumped in their laps with no mention of how the company is addressing them.

What the CFO Needs from the Board

Strong Working Relationships: The CFO needs to establish strong relationships with board members based on transparent, two-way communication and, above all, trust. Without a trust-based relationship it is difficult for the CFO and board members to have the frank discussions that are necessary for the health of the company. Of course, trust must be built on both sides of the equation and the best way to do that is through regular, honest and communication about the company’s financials.

Honesty: The board needs the CFO to convey expertise, authority and knowledge, but in a way that even board members without financial backgrounds can understand. This means that board members who do not communicate that they’re having difficulty understanding the CFO’s financial reports and/or recommendations are not doing anyone any favors. The CFO needs board members to be upfront about their level of understanding so that the CFO can work on improving their communication and presentation skills if needed. The CFO needs to be open to feedback on areas for improvement.

Willing Brains: It’s essential that the CFO take time to educate new board members on the company’s financial picture. Doing this involves making the time to meet with board members individually, as well as building learning opportunities into the CFO’s regular interactions with the board. So the CFO needs board members who are eager to learn about financial matters, and who are willing to commit time to sitting down with the CFO to better understand the company’s financial position. Taking the time for one-on-one interactions with the CFO also goes a long way toward building the two-way trust that the CFO-board relationship requires.

An Outside Perspective: The CFO should be able to rely on the board (especially the audit chair or board members with financial backgrounds) to serve as a sounding board, provide insight and even play devil’s advocate. While it’s the CFO’s job to understand how the company is doing and educate board members on the company’s financials, being able to learn how other companies do things is invaluable and board members who can share from their outside experience are true assets to the CFO.

When both sides of the CFO-board equation understand what’s needed from them to maximize the relationship, the result is two-fold: A board that’s better equipped to guide the company; and a CFO who’s better equipped to excel in their dual role as a resource to the board and as a partner to the CEO.

Of course, the most important result is the positive net impact a strong CFO-board relationship has on the company. If your CFO and board are not cultivating a powerful working relationship, it’s time to step in. The attention you give to helping them both work better together will be energy well spent.

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Carol Coughlin

Carol Coughlin founded BottomLine Growth Strategies, Inc., in 2006 as a way for small and medium-sized businesses to access the same high-level financial and operational expertise that gives large companies a distinct advantage. Using her own extensive corporate experience and willingness to sit in the hot seat as a catalyst, Carol helps BottomLine Growth clients climb to the summit of their success.
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