Ever wonder why your CFO spends more time in their office than anywhere else? Or maybe you have a CFO who is always out meeting with people outside your business when you are trying to talk with them about an issue? Do you have a Controller who feels ignored by your CFO? Do you have a CFO who is great at talking about the needs of your business, but can’t seem to answer a detailed question about the financial statements?
In my years as a CPA/auditor, an employee within companies in finance management roles, and as a recruiter focusing on senior finance positions, it is very apparent one can put a CFO in three categories.
Of course, not everyone is a single variety grape wine, most people are a blend, but I have found these three categories quickly summarize the most common types of CFO in the eyes of the CEO and others in an organization.
The question as a CEO or business owner is, do you have the right type for your organization?
The deal maker CFO can very often be confused with your business development leader or VP Sales. This type of CFO gets their energy from working on a large transaction: acquiring a business, seeking and obtaining investors for the company, or working on closing a debt transaction to name a few examples.
It is the thrill of the hunt that motivates this CFO. They understand the details to close the deal, but quite often the day to day operations of a business or their accounting department is not their primary area of interest.
This type of CFO usually spends more time with commercial bankers, investment bankers, current or future investors, CEO’s or CFO’s of other companies, and attorneys. Their schedule is full of meetings, quite often away from the office.
Pitfall – lack of guidance to the accounting team, not interested in ongoing monthly reporting requirements, spends too much time away from the office
Accounting Oriented CFO
This is what many call the green eyeshade accountant type of CFO. You have great internal accounting controls, financial statements are getting closed in a timely manner, accounts are being reconciled, and the reports are accurate. Yet, as a CEO you find you don’t understand the meaning behind the numbers and quite often your CFO is explaining them from an accounting theory standpoint, not from a business perspective.
You find your CFO spends more time in their office than anywhere else. In some cases, the extreme accounting-oriented CFO ends up being called the “CF No” because “no” is the only answer people get when they ask, “can we do ______.”
Pitfall – numerical analysis is done without the human component, difficulty in communicating business meaning behind the accounting numbers, acts more like a gatekeeper than a partner
Operations Oriented CFO
The operations-oriented CFO is an accounting and finance leader whose primary interest is business as a whole. They are fascinated by how a product is made physically, or how a customer is using the business’s services. They know the importance of running a strong accounting operation because only by having timely and accurate financial information can an operations-oriented CFO be able to dig into the details to provide the business reasons for financial performance.
However, the operations-oriented CFO makes sure there is a strong accounting team in place, they don’t want to jump in to make journal entries like an accounting-oriented CFO would. They want to guide the accounting team, but their lens is knowing the business inside and out when reviewing financial statements.
This type of CFO spends more time out of their office, they are on the shop floor, attending a sales department meeting, going with the head of HR to an employee engagement seminar, or taking part in a peer advisory group to learn from others. This type of CFO also understands how important it is for all employees to understand the financial statements of the business and will quite often be explaining the basics of a balance sheet, income statement and statement of cash flows to employees.
Pitfall – the operations-oriented may become your CEO or someone else’s CEO, and then you need to find a new CFO.
What do you need?
Each company has unique needs, challenges, and opportunities. The key is to determine does your current CFO meet those needs and if not, what is the solution? Full-time replacement or maybe filling the gap with interim help for a project?
A key aspect to consider of the three types is that it is rare for one type of CFO to become another type. The pattern of positions, roles, and projects they seek and take on in their first 10 to 15 years in their career pretty much say it all about the type they are. You typically cannot make an outstanding MBA, financial analysis and modeling whiz turn into a technical GAAP expert. If they truly loved FASB, GASB, FARs, GAAP, IFRS, name your accounting oversight acronym they likely would have started in accounting positions or sought a CPA. Or they would have quickly pivoted after a few years as a financial analyst into an accounting operations position.
When considering the CFO who started out as a CPA and in public accounting, a CEO should learn about what type of work they did in public accounting and how well can they talk about the business of their clients versus the accounting or tax issues of their clients.
As noted earlier, most people are a blend of styles but a CEO needs to determine the preferred style of their CFO (deal maker, accountant, or business operations). And also to consider how some styles are likely too rare a combination and if that is your need, maybe you need two positions filled, or a full time CFO and a part time consultant, the deal making accountant for example.
Each type can be a great CFO if their type is what a company needs. A company with long-term customers, ownership that has an internal succession plan, and using outdated business information systems should not consider the deal maker CFO even though the CEO and members of management get enamored with the outgoing and dynamic personality of this CFO. That CFO will get bored quickly and will hope that someone else takes on the task of implementing a new accounting system.
What type of CFO do you need? If you need help deciding, please contact us here. We would be happy to help your review the options.
About the Author
Alex de Soto anchors the CFO Selections search practice. He brings over 25 years of experience in accounting, finance, human resources, and executive search to his role as leader of the search team. Since 2008, he has spent most of his time helping CEO’s and CFO’s of Pacific Northwest based companies find that unique match they seek for a CFO or Controller.