Q&A: How Financial Leaders Can Move From Good to Great
The role of the CFO has evolved. Not only are financial leaders expected to manage cash flow and forecast with greater accuracy, but they now must involve themselves with many more aspects of the business, from retaining talent to finding new opportunities and partnerships to researching and implementing better technology.
The economy is hinging on uncertainty, consumer spending habits are changing, and businesses are forced to acclimate to it all. CFOs are at the center of these adaptations, expected to drive the business forward while protecting the bottom line.
We spoke with Jack McCullough, president of the CFO Leadership Council, Bernie Smith, founder of Made to Measure KPIs, and Melissa Hurrington, CFO and VP of operations at national public adjusting firm Premier Claims, for guidance and advice to help CFOs navigate 2023 and beyond.
➡️ The consensus seems to be that 2023 will be a transition year for both the economy and for many companies as they look to better growth in 2024. What should CFOs be doing now to drive that success?
JACK: CFOs need to plan for success and make investments in T and T: team and technology. A slowing economy creates opportunities for CFOs to build a better next year. The best way to do this is to invest in the team.
Also remember that your company needs to be operating from a position of financial strength to support growth. So, build a fast and efficient organization, make sure your investments are sustainable and strategic, and optimize your working capital.
BERNIE: The amount of business intelligence “insight” is overwhelming, and the production rate is accelerating. People are drowning.
Rather than attempting to pack more into dashboards and reports, identify the handful of critical, leading metrics and activities that are key to success. These measures are often not easily accessible or rich in raw data. The most valuable insights sometimes come from “proxy” indicators. A simple example of a proxy is your smartwatch showing you have an elevated resting heart rate as a leading indicator of an impending cold. Many businesses have hidden proxy indicators waiting to be discovered. The challenge of 2023 is to unearth and capitalize on those powerful early-warning indicators before your competitors do.
MELISSA: Not all growth is created equally, and we can all agree that you have to spend money to make money. So now that we are on the same page, CFO's should be spending time evaluating which spend is the right spend. They should be having conversations now about what success looks like in 2024 for "growth" and how we can most efficiently make spending decisions now to aid in that growth.
➡️ Customers' preferred way of doing business has been molded by the pandemic and now by a rollercoaster economy. What should CFOs be doing to ensure customers are delighted?
JACK: Proactive communications. CFOs inspire trust with all stakeholders: investors, employees, and customers. Elite CFOs are regularly in contact with their firm’s top customers – not to sell to them, but to build long-term relationships between the firms. Right now, companies are looking at their supply chain with more skepticism than ever and need assurance that their critical suppliers are financially viable and positioned to survive an economic downturn. This falls to the CFO, and she should do this proactively, not reactively.
BERNIE: Whilst the way of doing business may have changed, the best approach to delighting customers has not. Organizations must work hard to put themselves in the customer's shoes, listen to feedback, and take effective action to fix the problems they highlight as the root cause.
MELISSA: Ask them. No really ... ask. Pick up the phone, send out that email, however you want to collect your data, and go ask the customer what would make them happy. Absorb the feedback and implement as you see fit.
➡️ The talent shortage shows no signs of abating in the short- or long-term. How can CFOs reshape their business to improve efficiency and grow revenue more than headcount?
JACK: If a global pandemic did not end the talent shortage, then nothing we will realistically face is going to. We need to accept that there are going to be talent shortages in perpetuity, with brief exceptions. Now, with recent layoffs, particularly in the tech sector, there are opportunities to hire elite talent for the first time in years. Then, it’s on the CFO and the entire leadership team to create a strong culture and valuable company to keep these workers motivated to stay with you.
BERNIE: Resources to improve organizations have always been finite and overwhelmed by the scale of the challenge. The talent shortage makes this more acute. The most effective approach is to:
- Accurately record your efficiency losses at an individual “problem” level, not at a “bucket of problems” group.
- Attach a financial value to each of those identified problems.
- Tackle the highest-value problems first.
This “Pareto” approach will always ensure the biggest “bang for your buck,” whatever resources you have available.
MELISSA: Your people make your profit, so I will start there. Always, always, always take care of your people, as whole humans. A happy and engaged workforce doesn't respond to the LinkedIn message from a recruiter. Secondly, view efficiencies and automations as a value add to your teams, not as a cost-savings. It's all in the messaging. If I can eliminate the workload that is mundane and weighing you down via automation, then that frees up your time to take on more meaningful work and a new challenge. It's a win-win.
➡️ How can financial leaders ensure they are effectively using data to drive better decision making? And how can they make partners in the business use data in their decisions?
JACK: We may have reached a point where there is too much available data, so much so that it is slowing down decision-making. While it’s understandable to want to examine all of the data before proceeding, sometimes you just have to make a decision. One of my favorite quotes is from Amelia Earhart: “The most effective way to do it is to do it.” Paralysis by analysis is real. Great CFOs work across the C-suite and with other key stakeholders to determine the five or six things we need to know to optimize decision-making and drive the business forward. Spending 16 hours a day staring at spreadsheets is a colossal waste of time. Figure out your critical business drivers, and make a decision. That’s what data should help you do.
BERNIE: The best results often come from the blending of financial and non-financial information. For example, quantifying the financial impact of problems within the business can create a powerful and prioritized driver for change that is hard to ignore. This kind of insight can make the CFO a vital ally to partners within the business.
MELISSA: You have to figure out the story the data is telling you. The beauty of data comes from knowing the whole story and seeing the beauty in the marriage between the data and the more qualitative aspects of the decision you are making. The only way you get that whole story is by being immersed in the operations of the business and intimately involved across all departments. Gone are the days of the finance silo. Your finances are merely a result of the operations, so it’s imperative you understand the operations.
➡️ Which skills should CFOs hone now to become great CFOs in 2024 and beyond?
JACK: The main skills for a modern CFO are the people skills. CFOs with high emotional IQs, empathy, and the ability to connect with and inspire employees and others are positioned for success during both challenging and prosperous times. And CFOS with the aptitude to lead and embrace their organization’s digital present and future are invaluable. This does not mean CFOs need to be able to write code, but they should embrace the many ways technology can create a sustainable competitive advantage.
BERNIE: In a world of change and complexity, the ability to break high-level strategic objectives down into practical, detailed, and measurable outcomes will become an essential skill. Being able to record that strategic breakdown visually has the added benefit of making the design process easily accessible to a wider group within a business and providing a reference document for review and revision as the situation evolves. This skill set is the foundation for identifying meaningful KPIs, designing powerful OKRs whilst bringing the team with you.
MELISSA: Storytelling. This will forever be my answer. A CFO is so much more than a great analytical brain. They need to make the spreadsheets and reports and dashboards come to life in a way that makes sense to the audience. Whether that is the board, the shareholders on an earnings call, your team, or the company as a whole, being able to tell the story of the numbers is the single most important skill.
☁️ How NetSuite Can Help ☁️
The CFO’s job is complex, and NetSuite is here to simplify it. NetSuite manages end-to-end business processes with an integrated system of cloud applications that thousands of companies have used to go public, acquire capital, expand internationally, and remain audit-ready.
Learn more about NetSuite solutions for the CFO.
On-Demand Webinar: CFO’s Ultimate KPI Checklist
Business Guide: Got Goals? This Metrics Framework Gets You There
Business Guide: The CFO’s Guide to AP/AR Automation
Ebook: How to Build and Customize NetSuite Workflows
Financial Leaders: Custom KPIs – A Solution for Digestible Data
NetSuite allows financial leaders to not only track critical KPIs but also ensure that these metrics are visible and digestible across the organization.
For example: A VP of sales might track sales performance across regions. A VP of product can track the cost of goods sold for each item. And a VP of operations might track the average expenses across various locations.
Not seeing the KPIs you need? Use saved searches to create custom KPIs that reflect your organization’s goals. You can either modify an existing saved search or create a new one.
To create a new saved search to be used as a custom KPI:
- Choose Reports > Saved Searches > All Saved Searches > New.
- On the Saved Search form, enter a title for the search.
- Use the Criteria, Results, and Available Filters tabs to define your KPI parameters.
- [Save and Run] the Saved Search.
- The search is now available to use as a custom KPI for selection on the Key Performance Indicators portlet, KPI Scorecard setup, or Trend Graph portlet.
To learn more about Custom Saved Searches, watch “How Do I Create Custom KPIs?” in the NetSuite Learning Center. Visit Learning Cloud Support (LCS) to learn more about the LCS Company Pass.
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