CFOs are accustomed to accountability. They answer to CEOs and boards, hold their finance teams to high standards and take responsibility for the accuracy of the numbers. But some of the toughest accountability work happens sideways.
Because CFOs are responsible for the company’s “financial truth,” they often find themselves providing the information used to assess the performance of their peers—or even their CEO. “This is inescapable, and requires finesse,” says Eric R. Alexander.
Alexander has had a four-decade career in finance, having spent 20 of those years as a CFO. Now, he is the founder and president of Six Arrows Consulting based in Amarillo, Texas. In conversation with CFO Leadership, discusses how CFOs can approach that responsibility, build stronger relationships with CEOs and bring a stewardship mindset to leadership
CFO are stewards for their company. How does that reality translate into practicalities in their role and as they lead their teams?
As stewards, CFOs are responsible and accountable for various valuable things entrusted to their care: the company’s finances, internal control processes, the strength of the contribution of their finance team, aspects of the company’s reputation and lots more. A mindset that acknowledges that all of this is ultimately not about the CFO, but for the benefit of others, transforms how they approach their work.
For instance, they should focus on longer horizons, make the tough decisions that would be easier to shirk and balance the need for protecting what’s been entrusted to them with the need to foster its growth and fruitfulness. This can be ennobling. It’s still hard work, but it’s hard work for something bigger and other than the CFO.
What are keys to fostering the best possible professional relationship with the CEO?
Honesty and integrity are essential. CFOs must both extend trust to the CEO and be absolutely, unreservedly trustworthy.
The CEO likely expects the CFO to be the executive who can speak hard truths about performance and expectations to executive peers and to business unit leaders. CFOs need to do that consistently, and they need to do it with the CEO as well. If something isn’t going well, the CFO needs to bring a heads up and some options to consider—soon rather than late. Communication should be both 100 percent honest and 100 percent respectful, 100 percent of the time.
It helps if CFOs work to foster a broad view of the needs, future and strategies of the company. They certainly need to be the voice of truth about the finances; their value increases the more they connect the financial dots with all the relevant strategic, operational and cultural dots as well.
Accountability can be tough, but it’s inescapable. What helps CFOs maintain effective accountability practices in their role?
Accountability is all about communicating clear expectations, monitoring performance and taking action on any gaps. CFOs are accountable upwards to the CEO, board, shareholders, various regulators and beyond. And CFOs also hold their finance team accountable.
Accountability can be challenging both directions on that vertical axis—especially when performance, the CFO or their team’s, fail to meet expectations. CFOs must tackle those challenges head on; the damage from failing to do so is serious.
But, and this can be especially challenging for finance people, including the CFO, CFOs should also regularly involved in what I call horizontal accountability: being injected, because of their role as the owner of the company’s financial truth, into someone else’s vertical accountability—providing information that the CEO uses to hold my peers accountable for performance, providing information that the board uses to hold the CEO accountable and so on.
This is inescapable, and requires finesse, confidentiality and dealing with all parties with deep respect.
What do effective stewardship and accountability look like as AI becomes more prominent in the workplace?
Do not assume the AI tool is much more responsible or expert than a bright, eager seventh grader. Make sure someone knowledgeable reviews all outputs for reasonableness. Do not permit the tool to operate as a black box; you must know how it arrives at its conclusions, and why.
And be wary of letting it assume 100 percent of the load for even more mundane tasks. You will still, even a decade from now, need finance people who can oversee the tool and its output, and often the best—and maybe only—way to develop that ability is by making sure real people have done the menial work themselves once upon a time.
Tell us about your new book that came out this summer, Stewardship Leadership for Stinkin’ Accountants.
Lots of technical finance books exist, and lots of leadership books exist. This book is about the intersection: leadership in the technical world of finance. It’s not a formal, technical work. Rather, it encourages and challenges CFOs and other finance leaders to embrace and excel in their stewardship leadership roles—both in the technical aspects and in the human aspects.
Not everyone understands or appreciates CFOs or their role, and some may even call us “stinkin’ accountants” or worse. I worked for a CEO who called me that. But the CFO’s role is significant. Stewardship Leadership for Stinkin’ Accountants is about maximizing the value of the CFO’s service in that significant role.
