CFO vs. Finance Director/Controller: The Stepping Stones

CFO stepping stones

By: Heidi Pozzo

Today’s CFO is no longer just the numbers person. They are expected to be a strategic partner to the CEO, helping to drive profitable growth and value creation. Like many other functions, finance and accounting career tracks start grounded in technical aspects. The jump from controller or finance director to CFO requires an expansion of soft skills, partnering, strategic mindset and technical expertise. In this article, I will provide an overview of the CFO of today and what it takes for the controller or finance director to evolve into the role.

The CFO of Today

According to the 2015 KPMG Global CEO Survey “The view from the top”, there are six defining characteristics of a high performing CFO:

  • Drives finance to optimize global business strategy
  • Turns the regulatory environment into a competitive advantage
  • Stays ahead of technology and masters the complexities of data analytics
  • Has a deep knowledge of the business and its customers
  • Finds the right model for the finance function
  • Invests in and motivates talent, promotes key skills and collaborates

While the survey is focused on large global companies, the message is a good one for businesses of all sizes. The CFO looks at the business and tells the story of what is going on through the numbers. They understand the context of the business, it products or services and customers, and is focused on value creation. They need to have both an internal and external perspective.

The importance of the CFO in providing credibility and confidence to external parties cannot be understated, particularly in small and midsize companies. Being able to provide an overall perspective on the business and its drivers while maintaining an appropriate control structure is critical to attracting capital. People and companies only want to provide capital to businesses that are managed well.

Stepping Stones – Finance Director

The finance director typically focuses on analyzing the business. Budgets are created based on a set of assumptions. Over time, budget to actual results are analyzed, trends evaluated and updated forecasts prepared. Usually there is a partnership between those performing financial analysis and the sales and operations arms of the business.

In stepping into the CFO role, the finance director needs to broaden their technical background, increase their external perspective and strategic viewpoint. The expansion of the technical tool box should include an understanding of accounting, tax and treasury structures and strategies. The external perspective includes how the company fits into the market, investor expectations and banking relationships. From a strategic perspective, providing guidance and leadership in growth strategies, understanding profitability of product lines along with the appropriate allocation of resources to growth initiatives.

Watch out – The potential stumbling block for the finance director moving to CFO is not fully appreciating the technical side of the house. In a worse case scenario could include having regulatory challenges and in a best case scenario, not fully leveraging the regulatory environment as an opportunity. Developing a robust, agile team and delegating appropriately is a must.

Stepping Stones – Controller

The traditional role of the controller focuses on closing the books, accurately capturing transactions in the proper general ledger accounts and compliance with GAAP. They may also be responsible for overseeing the external audit and filing a variety of reports with regulatory agencies. Depending on the size of the organization, they may also be involved with the preparation and filing of tax returns. The focus is on compliance.

As the controller moves into the CFO role, they must broaden their understanding and ability to analyze the business, expand partnerships with sales and operations, increase their external perspective and develop a strategic viewpoint. The mindset shift is incredibly important as the controller must not just focus on debits and credits, but must understand and drive margin by product or service and customer. Depending upon the organization, the controller may not have worked closely with sales and operations historically. A successful transition will include taking time to get to know the perspectives of sales and operations and what is important to them. The external and strategic perspectives expansion is the same as outlined above under the finance director.

Watch out – The potential stumbling block for the controller moving to CFO is staying too grounded in the technical side of accounting and tax and not partnering with sales and operations. Timely information for decision making (margin by product or service, etc.) is critical for the business to be successful. Developing a robust, agile team and delegating appropriately is a must.

Call to Action

Moving into the C-suite requires an expansion in perspective, insight into the business, partnering with key stakeholders and talent management. The evolution required is dependent upon the background and skills of the individual. It is unusual for any person to be successful in undertaking the steps necessary to grow on their own. Having a plan and getting support is a must. How are you getting the support you need to grow and develop? If you haven’t made the shift from your old role to your new role, don’t hesitate to get started today!

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Copyright © 2017 Heidi Pozzo – All Rights Reserved

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Heidi Pozzo is a strategy and performance improvement consultant. She has helped transform businesses by connecting the people in the company to the strategy, resulting in significant increases in earnings and business value. To find out more about her services,

visit www.heidipozzo.com

or call 360-355-7862.