8 Leadership Skills Every CFO Needs
The role of the CFO (chief financial officer) has transformed in recent years. Gone are the days when CFOs were seen as the holder of the budget: the c-suite leader you turned to when you had to report your department’s financial results or when you need extra funding. CFOs have now evolved with the changing leadership landscape to take on a greater role within companies.
Today’s CFOs have broken away from the concept of simply being number crunchers. They are often also a strategic advisor who provides an unbiased point of view, translating financial concepts for investors, board members, and colleagues. CFOs have become the second in command to their CEO (chief executive officer).
Financial professionals hoping to progress their careers to become a CFO need to develop their leadership skills. Many companies are choosing to invest in their CFOs as the future of their organisation and even as their next CEO.
Financial recruitment agencies, such as FD Capital, are seeing more companies searching for candidates with strong leadership qualities. They’ve provided us with an insight into 10 leadership skills that every CFO needs.
1. Risk Assessment Skills
Risk management is one of a CFO’s biggest responsibilities. Their role is to mitigate the effects of any economic or business crisis on the company. CFOs must understand every aspect of the business to identify potential risks and put forecasting in place that accounts for it.
The risk assessment skills of a CFO is one reason why their operational responsibilities are so important. Today’s CFOs need to be able to understand the risks throughout the company’s operations. Their risk assessment skills will require them to identify any compliance, personnel, security, and IT risks that exist.
These risk assessment skills are necessary for a CFO to be a strong leader and plan for the company’s financial future.
2. Strategic Outlook
Strategy is the backbone of every CFO’s leadership potential. They work in unison with other c-suite leaders to create a strategy to develop the company’s growth. Most CFOs find themselves implementing changes within their companies, whether on a financial or operational level.
Having a strategic outlook is a leadership skill that will help CFOs uncover potential opportunities for growth and tackle existing challenges within the company. Being strategic is key to the success of a part-time, full time or interim CFO as a company leader.
Every leader needs to be a strong communicator. Communication is what will make or break relationships. Many CFOs find themselves in a position where communication skills are vital to explain their strategy. CFOs engage with almost every stakeholder, from investors to board members and external partners.
They’ll be expected to communicate the financial ideas and strategy that the company is following. Most CFOs will find themselves taking on the role of translator to explain these ideas to non-financial professionals.
A CFO is the leader of the company’s financial growth, making them a vital part of the c-suite team. They’re the first point of call for investors and board members. CFOs will need to use their communication skills to keep stakeholders engaged and to understand their points of view.
The operational aspect of a CFO’s job requires them to have strong communication skills when engaging with other departments.
4. Analytical Mindset
CFOs should engage every situation with an analytical mindset to focus their decision-making process and encourage growth while mitigating risks. The analytics and forecasting produced by a CFO will help guide the company’s actions. Having an analytical mindset allows CFOs to be a leader by adding operational value to their role.
When a CFO has an analytical mindset, they’re able to use their data-driven strategy to maximise the company’s profitability and create sustainable growth. This aspect is part of the changing role of CFO to a more analytical leader.
CFOs will be expected to oversee various aspects of the company, from IT infrastructure to procurement and supply chain logistics.
One leadership skill that CFOs may be lacking is operations. Being a CFO requires you to understand every aspect of the company’s business model and industry. This is why many CFOs are now choosing to specialise in specific industries to focus their knowledge.
The financial insight that a CFO offers will guide and ground the company’s decision-making process. A CFO will provide an independent point of view and constructively access the company’s operations.
As a leader, they will identify areas for potential growth and where savings can be made. A CFO will use their industry knowledge to benchmark the company against its competition and prepare it for any market volatility.
6. Technical Knowledge
Today’s CFOs are undertaking a more technical role within their companies. Start-up organisations will often see CFOs double-jobbing and taking on the responsibilities of a Chief Information Officer.
While most CFOs don’t need to be technological wizards, they need to be experts in the overlapping of technology and accounting. Investing in technology can provide companies with better cyber security, allow for automated processing, and provide more accurate data analytics.
7. Team Building
A CFO is a company leader who will manage a team of financial executives. They will be expected to build a team around them that can feed into their financial strategy. CFOs will represent the company when hiring new talent or engaging with potential stakeholders. It’s not uncommon for CFOs to build their own teams and take on a mentoring role as the company grows.
It's worth noting that a CFO is a company leader who engages with almost every aspect of the organisation. They need to have strong communication skills to translate their ideas and understand the position of different departments.
Building a team also involves adding to the company culture. CFOs can take on a leadership role and enable team building outside of their department.
8. Industry Knowledge
Every leader needs to understand their industry. The changing economic picture and supply chain issues mean a CFO must have their finger on the pulse. A CFO should have strong industry knowledge and be aware of what’s happening within their sector domestically and internationally.
CFOs should also be aware of the bigger picture and what political, regulatory, and environmental factors could impact the company.
Companies are increasingly turning to recruitment agencies to find CFO candidates with these eight leadership skills. If you’re a CFO or looking to hire a CFO to be a leader in your company, contact FD Capital to start the recruitment process today.
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About the Author
This article was provided by FD Capital.