CFO’s day with board directors

I was recently invited by professional advisory firm Ronalds East Africa to be one of the keynote speakers at their training event for Chief Finance Officers (CFOs) and other leaders of the finance function. My session was about advising the participants on how to interact effectively at the board level.

There was quite a spectrum in the room, from senior finance folk who regularly attended board and board committee meetings, to younger, more junior ones. Some of the CFOs were executive directors on their boards, with a regular seat at the top table, while others were only invited to contribute on specific items.

I asked them if they held responsibilities beyond financial management, and one lady told me she was the finance and administration manager – a not uncommon combination. (To me “administration” has always sounded rather old-fashioned and bureaucratic, and I suggested they think of a more contemporary term).

Elsewhere I have seen CFOs also oversee functions such as strategy and performance, risk and compliance, investments, mergers and acquisitions, and ICT. For obvious reasons, those whose portfolios are broadest are the ones most likely to climb further up the managerial ladder, I emphasised.

In my session I asked a series of questions, first about their alignment with the CEO. Did they work together as a close team, with mutual trust and respect? And then about management’s relationship with the board – individually and as a team. “Do you look forward to engaging with your directors, or do you dread the interactions?” I posed, before also asking if the directors looked forward to engaging with them.

Not very positive responses here, accompanied by several statements admitting that they only speak if asked to do so.

So, what holds them back? Why do so many CFOs underperform when they appear in the boardroom? My first point was that too many heads of departments, including CFOs, feel intimidated when in the presence of directors, and these feelings are reflected in their behaviour. It’s why they keep their contributions as short as possible, they don’t project their voice, and avoid eye-contact.

Others, however, are over-confident, perhaps being expert at spouting the numbers, despite lacking either the holistic organisational perspective or communication skills. They are inadequately prepared, not having translated their overcrowded spreadsheets into easy-to-absorb graphics; not having been coached in how to communicate for this level of engagement; and not having been through rehearsals to the meetings.

My next slide asked “Are you just Dr No?” Here I had them probe the extent to which the image they felt they should portray had them play too much of a stern-parent role, exception-reporting on the over-spenders and the under-deliverers… while remaining silent when the numbers looked good. Alongside this, many of their tribe enjoy being the most risk-averse in the room, displaying consistent worst-case pessimism and merely focusing on why any new initiative will not succeed, and in any case is unaffordable.

“Are you just book-balancers, number-crunchers, cost-minimisers?” I asked provocatively. “Or do you also see yourselves as advisers, consultants and coaches to your colleagues – including directors?” And how good were they at managing relationships, I inquired, whether internally with other functions, departments and locations, and between levels; or externally with investors, bankers, auditors and others?

To help them here I delved into my favourite topic of emotional intelligence, explaining how those with high EQ interact in ways that result in win-win outcomes, where everyone feels adequately satisfied and so owns the plans and commit to their implementation.

Whether in their technical financial skills or their non-technical skills of 360-degree relationship building, they need not only to be competent, I stated, but to match that with a healthy mix of confidence and humility, making others feel comfortable when interacting with them.

It is by expanding their comfort zone through developing new and broader skills that their circle of influence would expand. Their constructive, helpful voice will be listened to more, and those around them will see their potential for both higher cross-functional and boardroom responsibilities.