What does it take to be a leading CFO in Australia?
Over the last four years of the Deloitte CFO Vantage Program, I have been privileged to hear many of Australia’s leading business executives share their insights into this key question. I have discussed the career paths of over 125 senior finance executives. I have listened to many of Australia’s leading directors, CEOs and CFOs share their views on attributes that are most important for a leading CFO.
So what have I learnt from all of this? What are the attributes that stand out for some, and elude others? I have reflected on all of this and distilled it into the insights below.
1. Value: Understand market dynamics, commercial drivers and value creation
“I just love business”. This is the answer one leading CFO gave to explain why he has been so successful. Another says, “You must be passionate about the business, you must love the business”.
Many of the finance executives I see have built their careers through relatively narrow channels based on technical or functional excellence. Stand out executives bring more to the table. They bring an intuitive feel for the business and understand how value can be created. They are deeply passionate about the business.
The Bottom Line: A great finance executive is also a great business executive. Are you both?
2. Capacity: Thrives on wide ranging responsibilities, complexity and ambiguity
Stand out finance executives thrive on big challenges. They look for the additional responsibility, complexity and ambiguity. They enjoy being in the middle of key business decisions and exerting their influence.
This is more than just intellectual capacity. It is not just about how smart you are (although that helps) but more about how well you embrace new challenges and cope with difficult circumstances.
The Bottom Line: The biggest and toughest challenges are great opportunities.
3. Diversity: Experience that demonstrates a willingness to challenge and expand capability
Many finance executives have had a variety of experience in two primary streams – ‘corporate’ roles that draw more heavily on technical skills and ‘divisional’ roles that draw more heavily on commercial skills. Both are valuable on the path to CFO.
However, a real trump card for the aspiring CFO is wider commercial experience. Challenging experience in operational roles with profit and loss responsibility or roles with a greater focus on the external market (e.g. investor relations, treasury) can really differentiate finance executives. If you get that chance along the way, grab it!
The Bottom Line: Are you making regular career choices that truly stretch you?
4. Leadership: Authentically inspires and motivates large teams towards a common goal
A couple of key principles stand out for me. Firstly, you must be able to create followership amongst your team. Seek the talent in your organisation and look to amplify it. Secondly, you must be able to do so authentically – in a way that is true to your working style and your values.
It often comes up that many finance executives are introverts. This may or may not be true; it doesn’t matter. Introverts can make excellent leaders, extroverts can make poor leaders. Stay true to your own values and believe in the value you can bring. And don’t use being introverted as an excuse!
The Bottom Line: People must know what you stand for and want to follow you.
5. Influence: Ability to understand and manage the human dimensions of multiple stakeholders
As one ASX10 CFO reflected after a year into the CFO role, “I was very clear on my priorities and I had a great team, but I totally underestimated the challenge of managing so many key stakeholders.”
In my opinion, many aspiring finance executives do not devote sufficient time to this. Building relationships and creating a platform for lasting trust will often underpin the ability to influence others. Human emotion plays a large part in day to day business so understanding and managing that dynamic is a key to success. You need to plan these interactions.
The Bottom Line: Investing in key relationships provides a platform for success
6. Communication: The ability to articulate complexity in a compelling way that creates confidence with multiple stakeholders
This is arguably the thing that will impact your career success the most. Great communication takes preparation and practice and great communicators will do both. I often observe that finance executives do not give enough thought and effort to key pieces of communication. These are opportunities missed to create confidence and inspire.
The ability to break down complexity is important. As one ASX10 CFO said, “The more senior you are the simpler your communication has to be.”
It is a two way process. If you aspire to be a great communicator, then aspire to be a great listener also.
The Bottom Line: Communication is a skill and can be learnt. Give it the time it deserves.
7. Relentless: Drives for positive outcomes continuously in the face of competing priorities and setbacks
One of my favourite attributes! It was used by an ASX10 Chairman to describe his longstanding and successful CFO. It wraps in equal parts of high energy, resilience and an ability to handle pressure. It requires not only contributing to strategy, but also the ability to continuously drive its execution.
The market will judge your performance and that of the company constantly. They will analyse every word you say. A leading CFO must be able to set a course and drive towards it continuously. They must deliver.
The Bottom Line: Create a performance culture and execute.
8. Courage: Ability to form objective opinions and challenge others under significant pressure
This is another favourite. It is possibly the most ‘unexpected’ word that I see commonly used by directors when speaking about what they look for in a leading CFO.
Many stakeholders have reflected that the CFO has a key role to counterbalance the CEO’s naturally optimistic outlook. They must bring objective rigour – in an appropriate way – to strong willed and sometimes emotive arguments. This itself is challenging as the sensitivities of doing so must be managed. Time and again I have heard directors explain how much they value this objectivity and willingness to challenge in a CFO as it gives them confidence that independent thought is being applied to critical business decisions.
The Bottom Line: Have an opinion and be prepared to stand by it.
9. Self-Belief: Inner confidence in personal capability and capacity to make a difference
So the big question is…. do you truly believe that you deserve to be a leading CFO?
One surprising insight over the last four years has been just how many aspiring CFOs lack confidence. You are not alone! It can be a big problem but can be overcome.
It is unlikely that anyone will give you more respect than you are prepared to give yourself. You must believe in your right to be at the top table and the value of your own opinion. Senior stakeholders and the market will look for the confidence a leading CFO will provide.
The Bottom Line: Believe in the value you can bring.
10. Luck: Be in the right place at the right time… and act on it
Luck has had a role to play in many of the career successes I have witnessed. This can come from the relationships with individuals on the Board or company attitudes to internal succession. It can often be an issue of timing – when an outgoing CFO looks to move on or the specific needs of a company at a point in time.
The good news is that the cliché is true – you can make your own luck. One of the keys I have witnessed is the huge value in maintaining and expanding your personal network. This will often be the source of future career opportunities, often unexpected. It takes work, but is worth it.
The Bottom Line: A strong network creates luck.
There is one key attribute I have not discussed above. In fact it has been raised by so many key stakeholders so many times that I have taken it as a given, and not as an attribute that differentiates an aspiring CFO.
That attribute is integrity.
It should be core to your values and reflect in all your interactions. People should naturally describe you this way. It is non-negotiable.
Some other trends
A question I am often asked is whether the CFO role is more likely to be filled with an internal or external candidate. Whilst I have not examined all CFO appointments in the market, I have examined those from the senior finance executives who have attended the Deloitte CFO Vantage Program.
Some interesting observations from this group are as follows:
- In the four years of the program in Australia to date, 126 senior finance executives have participated. 23 are now Group CFOs. 11 of these are ASX100 CFOs.
- Approximately 60% of these 23 CFOs have been internal appointments. The remaining 40% were recruited into new organisations.
- The percentage of internal appointments rises when looking at ASX50 – so if you don’t have CFO experience, your best chance of an ASX50 CFO role is to be promoted from within.
Some other trends I have witnessed in the market over the last four years have been
- A desire for Boards to appoint the experienced CFO over the emerging finance star. This could be due to the residual scars of the global financial crisis, which has favoured CFO experience over potential, although there is some evidence that this trend is changing.
- The trend of appointing a CFO from a non-finance background, often with the support of a more ‘traditional’ deputy CFO. This recognises the high value placed in some cases upon commercial experience and the intimate understanding of value creation and market dynamics it provides.
There is no one path to the role of leading CFO. There is no right and wrong answer to the attributes needed for success.
However, some things can be done to help the cause. A focus on the attributes above will fast track your talent and help create career opportunities. Hopefully, that includes the chance to be a leading CFO.