The Role of the CFO

Getting There From Here
Bringing your CFO up to speed on an expanded role may take some nurturing, noted Eric Apelfelbach, CEO of ZBB Energy. “You can stretch CFOs to get better and better by making sure they understand what you need to hear from them and challenging them to make decisions,” he said. “What I find most valuable is making sure that they understand they will sit with me on a monthly basis and give a report on the context of the entire business globally. It’s almost like mentoring.”

Broadening an existing CFO’s role requires changing the mindset of not only the finance chief but the rest of the organization, as well. “You have to truly empower them to be sure they have a seat at the table and that everyone knows it,” says John Lundgren, CEO of Stanley Black & Decker. “When someone says, ‘what did [Mr. CEO] say,’ they have to be comfortable saying, ‘I haven’t talked to him. Stop wasting my time.’”

Spending time in the field is another way to give your CFO the confidence to step out of his or her comfort zone. For Roger Shedlin, CEO of health services company OrthoNet, that meant taking a leap of faith. “The way we really got our CFO up to speed was by putting him in charge, soup to nuts, of a cardiology management company we acquired,” he explained. “I knew I had succeeded when other fellow employees had medical questions and our CFO would raise his hand and answer them. Getting him embedded both operationally and intellectually in the business was incredibly helpful and tremendously improved his performance as CFO.”

Ideally, companies that work toward growing the CFO’s skill set will apply the same concept to broadening the financial skills across the rest of the organization, noted David Cote, CEO of Honeywell. “I’m looking in both directions,” he said. “I want the finance guys to be able to have a strategic insight; and by the same token, I would like the general managers to have a fundamental understanding of finance.”

Toward that end, Honeywell has developed a five-day basic financial course for non-financial employees. The course helps the company’s general managers to truly understand terms like operating income and how cash flow differs from net income. “While all of us get measured on financials, many general managers in the organization really don’t understand the financials,” explained Cote.

“It’s really kind of surprising how there’s a fundamental lack of understanding in a lot of this among people who are being measured on it.”