Strict, number-crunching and process-driven. These are just some of the phrases that spring to mind when we think about a stereotypical CFO. But in today’s fast-paced business world, the CFO working style is in fact varied and fascinating. This is a stereotype that’s long overdue a refresh. Let’s take a typical scenario as an example.
Imagine a CFO sat at his desk, squinting at the computer screen as he concentrates on financial performance for one quarter, and cross-references it carefully with planning for the next quarter.
Someone comes into his office and says he’s found a great new business proposition – an opening in a new market – and he thinks the business will grow rapidly if it invests.
The CFO, who’s just finalised his planning, looks up from his work to consider the proposition. At this point in the story, the working style of the CFO – stereotypical or not – affects whether the business explores this new opportunity.
To keep a business moving, CFOs are required to provide other members of the C-suite with vital insight at the drop of a hat. Their systems have the potential to facilitate (or hold back) plans, allow (or slow down) the analysis of business data, and arm their peers with the information they need to make the right business decisions (or not). The CFO’s working style dramatically affects the speed, flexibility and insight with which the business is able to do this.
Epicor Software recently commissioned Redshift Research to question around 1,500 financial decision makers from across the globe about how they work. We discovered six groups of financial decision makers: over a quarter of CFOs were classed as politicians (27%), a fifth were revolutionaries (20%), 18% were carers, 17% were conductors and one in ten (9%) were classed as visionaries.
An additional one in ten (9%) CFOs were categorised as traditionalists. Research shows these CFOs are strong when working within existing agreed systems and processes but can be bureaucratic.
They are also the least likely CFOs to acknowledge any need for change – only 14% believe their systems should be updated compared to the average of 32 per cent. It perhaps comes as no surprise then, that in the same research these CFOs were found to be less likely to experience profit growth than their more innovative, less traditional counterparts (56% compared to the average of 64% of their peers).
In this scenario, these CFOs would slow down the business’s ability to explore the new proposition; sending his colleague out of the door.
The opposite of the traditional stereotype are the revolutionary CFOs who are charismatic by nature and not afraid to think outside the box. In the scenario, if the CFO is a revolutionary, they will be happy to take a less structured approach and work outside of formal systems and processes to make the new business opportunity possible.
These CFOs are risk-takers – 58% of revolutionaries will make decisions based on instinct if they don’t have the empirical data they need. Their drive and innovative attitude make the revolutionary the most likely CFO group to facilitate business growth – in our research nearly three-quarters of revolutionary CFOs (72%) had experienced profit increase.
Although revolutionaries are powerful working styles, in our survey, CFOs most commonly fall under the category of politician (27%). These are more cautious leaders, with a methodical team-based approach.
They like to consult widely and build consensus before making important decisions. In fact, 27% of these CFOs believe collaboration is a challenge that needs addressing.
By contrast, conductor CFOs have a tendency to make decisions alone. They are strong defenders of corporate culture but are more likely than average (54% compared to 46% of their peers) to make decisions based on gut-feel rather than hard data. In our scenario, this could easily lead to fast-paced work but the potential of mistakes is increased.
Carers on the other hand might miss the new business opportunity all together – they are cautious CFOs and 52% of them worry about a lack of accurate data when making decisions.
Visionaries however, are unlike their carer colleagues. These creative CFOs gloss over details when exploring a new business proposition – perhaps because a quarter of them (23%) are worried about not having the time or resources to produce meaningful insight.
Considering the CFO stereotype, we can be forgiven for expecting just one, rather traditional, rather rigid, outcome to our scenario. However, the research demonstrates that the outcome might in fact vary considerably depending on the working style of the CFO in question.
No matter which working style a CFO adopts, their ability to provide other members of the C-suite with relevant empirical information, at the right time, can help their business make better, informed decisions. By using intelligent technology to streamline day-to-day financial tasks, this becomes possible.
Imagine the scenario now – with accurate insight, traditionalists might be more prepared for change, revolutionary risk-takers might need to base less on instinct, and, carers might spend less time stuck in intricate detail.
The age-old image of a process-driven, strict CFO might be somewhat engrained in our psyche, but it’s long overdue a refresh. With the right technology delivering the right information, all types of CFO could have the power to help businesses be more strategic, more flexible and adapt to change.