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Why CFOs Play a Critical Role in Strategic Decision-Making

Written by Step Change | February 15, 2018

How many of us have walked out of an important meeting with a client and then dived straight into the post-match debrief with our team?

Who was in the room?

What was their role?

Did they like what we said?

Who warmed up to us? Who didn’t?

What did we learn?

And then, after all of that, we realise, “What was the name of that one in the corner who didn’t say a lot and might have been a little quiet? I didn’t engage with her too much. What was her name again?”

Well, she was probably the CFO.

The Chief Financial Officer is a key player in any organisation and is someone you need to successfully engage with if you want to create positive change in an organisation. A CFO can be your biggest ally — or your greatest nemesis.

While many of us may think of a CFO role as being passive and inward-looking, focused on counting numbers and ticking boxes without any real say in their company’s decisions, the reality is very different. Modern CFOs are much more than that — they are business partners and have a significant influence on company strategy and direction.

In this article, you’ll find some reasons we love working with CFOs and why you should love it too.

 

1. It’s in the DNA: CFOs often have complementary skills.

Nowadays, great solutions, while simple and customer-driven, often need a team of skills.

Not just great strategic thinkers. Not just great creative with impact. And not just technologically advanced. We need all of these.

And with a consultancy landscape that is often hyperspecialised, it makes sense to make sure that you have all the right skills on your team. And what better skills than a brilliant business mind with a financial and analytical strength?

CFOs are passionate about the business and you winning (and bringing $$ in!). If you are working on a proposal, run it past your CFO to get their insight — they can make it sharper, more commercial, and help you optimise profitability or even point out simple calculation errors.

Remember, your client will also have their own CFO review your proposal prior to the deal going ahead, so you would want to make sure that it has information that the CFO would need — and who can do that better than your own CFO!

 

2. Because they understand the mechanics of the business, CFOs play a central role in strategy development.

No matter what type of change you’re creating (yes, even in a not-for-profit world), it needs to have a commercial reality to it. This is one of the key functions that CFOs perform.

Everything we do should have some form of business case to it, even if it’s purpose-led. But even the purpose-led cases can have quantifiable impacts and lead and lag measures.

If it isn’t purpose-led and it is commercially driven, then, of course, financials come into play.

So moving from those briefs that have generic statements around “disruption” or “growing awareness”, all businesspeople need to have the discipline to move to specific, measurable objectives — such as using this formula in strategy development: x <verb> y by <when>. For instance, “We will move x to y by February 15”.

You’ll find that most people working towards these objectives aren’t able to do it and don’t really understand the mechanics. But when you really dig and set that as a must on every major objective, you’ll realise that the CFO has your answers.

 

3. An independent, objective sounding board, they often have the ear of the CEOs (and other C-suites).

We see so many great CEO and CFO combinations, and we see great CEOs that were actually CFOs.

At some point, on any major decision, the C-suite will turn to the CFO and ask: How will this grow my business? Do you believe in it? Can you help me take the thinking into numbers in a model? And (finally, of course) can we afford it?

If you’re trying to create change in your business, and there isn’t a great answer to these questions, then moving forward becomes difficult.

And because these conversations often involve private and detailed financial information, they don’t always happen in the room that you’re in. Sometimes, they happen behind closed doors.

So we need to make sure that either we have that information available to make the best possible decisions or when these conversations happen in private (which is completely the right of any business), they happen in a way that allows us to positively influence change in the business.

 

4. CFOs often have HR responsibilities and influence, making them great agents of change.

It was Peter Drucker who said, “Culture eats strategy for breakfast.” And it’s true. The greatest strategies or ideas in the world are nothing without a culture that is ready, willing, and able to execute. That includes culture and capability.

So if we are trying to start a holistic and long-term change, doing that in many businesses without a pragmatic lens on the implications to the people and what will need to change for those people to enable growth is foolish.

So why not fully involve, leverage, and partner with the people that hold this responsibility?

 

5. CFOs own price and affordability

We mentioned that before, but it deserves its own section. It is never what something will cost; it is always the upside, the risk, and the affordability.

That’s right — cash flow.

So it doesn’t matter how good a solution, an idea, or a strategy is — if it doesn’t sit inside the P & L, that’s just not going to work. And this is the CFO’s domain. So while mentioned before, it’s worth mentioning twice!

 

6. CFOs sometimes get overlooked

This seems outrageous to anyone in partnership with an amazing CFO in any capacity. But truth be told, how many meetings have you been in where one of the key decision-makers was either not fully engaged or their skills and expertise are not fully leveraged?

And, dare I say, too often this can be the CFO.

CFOs tend to be cautious and adverse to risk, especially if the CEO is outgoing and has a greater risk tolerance. Many CFOs prefer to have all the facts before they speak and influence people, and what they need to discuss is inherently complex, detailed, and hard to communicate. And it might also be that some of these types are naturally a little quieter (of course, not all).

But the reasons actually don’t matter. It is everyone’s responsibility to get the best of everyone in the team. So put those reasons aside, and get the right people on your team who can create change for good!

 

 

Authors

Elena Gildina is Step Change’s Financial Controller. With over 15 years of experience in consulting and professional services organisations, specifically in all aspects of financial management and control, she plays a vital role in Step Change’s operations. She supports the Leadership Team by overseeing company’s general management, including HR, IT, and operations. She is passionate about equality, diversity, and women’s rights and takes every opportunity to raise awareness and progress these issues in the workplace and general community.

Jeff Cooper is Step Change’s Founding Partner. Jeff learnt his most valuable lessons in strategic thinking by spending his own money. His entrepreneurial pursuits began back in 2004 when he started his first business, designing exhibition spaces and running events, which eventually gave birth to an interactive event concept later adopted by the likes of Big Day Out and other major festival organisers. A decade later, in 2014–2015, startups in which Jeff was involved raised over $1M in investment, and Step Change — which he cofounded — became a multimillion-dollar strategy consultancy, serving clients across five continents. He’s a true generalist, with ownership and Board interests in businesses from retail solar to beauty and beyond, at life stages from startup to over $150m revenue annually.