If there has been a radical change in any role in the corporate world it has been that of a CFO. From the traditional Munimji/Bade Babu, the CFO in corporate world has been the ultimate game changer.
From being the conscience keeper to strategizing growth, networking with the who’s who of the finance world, developing the internal team, managing the Board, managing the Shareholders, managing complex tax issues, ensuring absolute transparency in finance & accounts, the list is endless with respect to matters in which the new age CFO is involved. The core role being the same, the additional ones change depending upon the industry as well as the stage at which a company is at i.e. Start up, High Growth, Mature steady Business, Cash crunched business etc.
It is very important for a company that is looking to hire a CFO to understand the need as well as the intricacies of the role of a CFO before they hire one. Sounds easy ah? It is easier said than done. Here are some aspects, which I believe are non- negotiable while hiring your CFO.
Number’s & Compliance Guru:
Do I even need to even elaborate on this? The CFO should also always be the person for whom number crunching should be a passion as well as an obsession. The amount of data that the CFO possesses is immense, whether internal or external and there are chances that it might also be a case of TMI (Too Much information). The CFO should have the knack of assessing the numbers, making decisions on the basis of relevant information and ensuring that the time gap between getting, understanding and making decisions on information is shortened. CFO’s are traditionally the conscience keepers of the companies they work for. It is very important the CFO attaches prime importance to Statutory Compliances and Corporate Governance. In a nutshell, responsibility for financial statements, accurate meaningful & time bound MIS, taxation compliances, secretarial compliances, compliances both legal and financial are with the CFO. This is ‘Bread and Butter’, add a bit of marmalade and jam on top of this as well. Things that CFO’s should be good at irrespective of how complex the role gets to. Period!
It is extremely important the CFO has a business orientation. There are born CFO’s and there are CFO’s who have graduated from an accounts manager to a controller and finally to that of a CFO. What do you mean by born CFO’s? A CFO who talks business naturally is a born CFO. CFO’s with a business bent of mind have performed well over their peers who have been traditional accountants. The company hiring a CFO has to evaluate whether the person they are recruiting has been making active business decisions & partnering the business in his/her prior roles.
Driver of Growth:
Driving and managing growth in today’s dynamic world is of prime importance. Right from conceptualization to making it happen, CFO’s play a very important part. Companies wanting to work with good quality CFO’s need to assess their growth strategy and assess the pace at which they want to grow before they decide the kind of CFO they want to work with. Moving from the back seat to the passenger seat next to the ‘driver’ (CEO) is the change that companies now expect to see in a CFO. With the globalization of business modules and funding options availability in plenty especially the PE space, the CFO’s have had no choice but to be the prime growth movers in the organization. Growing is not as simple as it appears on a excel sheet. It has to be supplemented by managing growth and change. A majority of companies remain stagnant or fall apart, as they do not invest in the right leadership team and more importantly a ‘Smart CFO’ who is capable and flexible enough to manage the growth process.
Go to Person / Man Friday/ Saturday and Sunday:
What needs to be seen is also whether the person has it in him to deliver not just functionally but also has the strength of character to pull out of tough situations especially in today’s day and age when working capital cycles are getting longer and there is strain on cash. Businesses have cycles. There are downturns. There are recessions. Generally the go to person in a tough situation in any corporate has always been the CFO. In tough situations generally the line people are the ones who are handed the ‘Golden’ boot faster. The CEO or the founders in such situations need to rely on an able General who will maneuver the company through troubled waters.
When so much is dependent on the ability of the right CFO, shouldn’t CEO’s and Founders be setting aside enough time, thought and energy to identify, recruit and retain the right CFO? Let me leave the answers to you, ‘the reader’.