If you want to be a CFO, develop these three skills

There are three areas you need to develop in if you want to be a good Chief Financial Officer or Finance business partner – business acumen, tools/techniques and behavioural skills.

And my intention is to unpack these three areas a little bit, so that you can get to grips with planning your development journey more effectively.

In another article I shared my belief that Finance business partner is the new best route to a CFO role. That is to say, core CFO skills are Finance business partnering skills. And well-developed Finance business partnering skills are what you need to be a CFO.

That’s why I’m talking about the two together, and why I believe that if your ambition is to be a CFO, you ought to be thinking about the same areas of skill that Finance business partners need.

And since with any skill you can’t develop it without practice, what better practice for a CFO role than a Finance business partner role?

So, let me tell you about the three skills areas you have to concentrate on.

But before I do, I’m going to be up front and say that this is not my original thinking. I’m taking this from a very good book by Alan Warner, called Finance Business Partnering – the search for value. (Don’t be deceived by the boring cover or the fact it’s only available on Kindle – it’s definitely worth a read!)

And Warner’s work is based on case studies working with large businesses such as Shell, Unilever, BAT, Rolls Royce and Aviva.

He has summarised the common themes amongst the leaders in implementing Finance business partnering. And in terms of skills required, these fall into three categories:

• Technical skills
  
• Business acumen
  
• Behavioural skills
  

I think this is a really helpful way of looking at it. So, I’m going to do my best to outline what’s under these three headings.

You need advanced tools and techniques

Firstly, as you progress through Finance business partnering and on to a Chief Financial Officer role you’ll need to develop higher technical skills.

But which technical skills?

Well, I don’t mean you have to be the “Technical Accountant”. You don’t have to stay up to date with all the latest pronouncements from the IASB and FASB.

Sure, you do need to be able to grasp the way that accounting standards apply to your business, especially where things are changing. But so long as you have someone who is good at that kind of thing in your team, you don’t have to be the one keeping track of it and going on the update courses.

So, don’t use up your external course budget going on IFRS update courses!

Partly, I’m talking about what we used to call management accounting - the stuff of FP&A.

These would be the skills involved in business performance management. They are all about the tools that help to manage performance.

So, here’s a (non-exhaustive) list of ideas to get you going:

• Activity Based Costing
  
• Product/Customer Profitability Analysis
  
• Balanced Scorecard
  
• Key Performance Indicators
  
• Forecasting
  
• Financial modelling
  
• Data mining and query building
  
• Dashboards and data visualisation techniques
  

But I’m also talking about non-accounting tools and techniques too. So, other things to learn would be things like process analysis, LEAN six sigma and project management.

If you can think of any others, please get in touch and let me know!

You need business acumen

Secondly, Finance business partners and CFOs need to develop business acumen.

Now, business acumen is one of those concepts that sounds a bit vague. So, let’s make it a little more real. Because how can you develop something when you don’t know what it is!?

I did a little bit of research into what is meant by business acumen. And there is no generally accepted definition of it. Every place you look explains it differently. So, here’s the way I’ve synergised what I’ve learnt.

Firstly, here’s what Alan Warner says:

“We see the core requirement as understanding what running a successful business is all about, how each function and management team need to make an appropriate contribution to long-term value creation. It is about encouraging fact based decisions, understanding the importance of strategic advantage and how it can best be applied in different contexts. It is also about understanding the competition and knowing how to beat them, about knowing your customers and how best to meet their needs. And finally it is about joining in the identification of business opportunities while showing understanding of the pressures and constraints of colleagues.” (loc 405, Alan Warner, Finance Business Partnering - the search for value, Kindle Edition.)

The unfortunate thing in my view – and I may be misunderstanding – is that, whilst most people acknowledge the need for business acumen, and have a general feel for what it is, in terms of development it’s lumped into a category of “knowing the business” and left to grow through experience and “being curious”.

Now, if you’ve followed me long enough, you’ll know that “be curious” is one of my favourite expressions when it comes to the requirements of being a Finance business partner. So, I’m not downplaying that at all.

It must be possible to break down business acumen into skills that can be both intentionally learned and practiced.

So, here’s my attempt to do just that:

• Business strategy development
  
• The purpose and role of business functions
  
• Strategic performance management techniques
  
• Financial acumen (which all qualified accountants should already have)
  
• Concepts of marketing and sales
  
• Concepts of supply chain, manufacturing and logistics
  

All of these areas need to be understood generically first, and then applied specifically within your business.

So, basically, you first understand how businesses make money, then how my business makes money.

One other reflection I have on this area is that business acumen looks different depending where you are in the business.

So, there is a general understanding of business. But then there is where I fit into the business. Once you understand and appreciate how the business works, the other thing to really grasp is what your role is in that context.

So, for Finance what business acumen looks like, ultimately, is knowing and understanding the role of Finance in business performance management. It’s how to fit into the value chain as a Finance person and performance manager (which is what a CFO is).

And if you have any other ideas about business acumen for Finance people, please do get in touch and share them with me.

Behavioural skills for Finance professionals

The third area to consider when thinking about CFO skills and Finance business partner skills is what many people call ‘soft skills’, often described as ‘behavioural’ skills.

These skills broadly relate to the way that we do things, or the way we relate to other people in our daily lives.

One of the conversations I regularly observe starts with asking why there isn’t more interest in developing these skills amongst Finance professionals.

I agree with the sentiment in that question.

In my 25-year career in accountancy and finance, I can honestly say that what I’ve learnt in this area has been more helpful, more revolutionary, more career- and life-propelling, than any technical area. These are skills that not only help you at work, but will help you in every area of life, in marriage and relationships and friendships.

And the flip side is that these skills are the ones that really give you what you need in the CFO role. Talita Ferreira, former CFO and mentor of numerous CFOs and senior Finance professionals, commented recently, “The issue ... is that when [they] get to a senior level and they don’t have these skills, they get told they don’t have enough gravitas/impact or they are not good at building cross-functional relationship and influence.”

My own contribution in the debate over why Finance professionals don’t realise the power of these skills is that there are two reasons, both of which I want to address briefly here.

Firstly, senior Finance managers and CFOs don’t believe they have anything to learn. They are often so ingrained as accountants, so left-brained, so analytical, that they see everything in terms of technical ‘how to’ knowledge. So, no one tells the Finance business partners to go and develop those skills.

That is changing. A whole bunch of great people are stressing the importance of these ‘soft’ skills nowadays. Just listen to the Strength in the Numbers Show with Andrew Codd some time, and hear experienced Finance people time after time talking about this kind of thing.

It isn’t helped by the second reason, which is that calling them ‘soft’ skills makes it sound like they’re wishy washy, nice-to-have, optional things that people can’t really teach you. Andrew Jenkins, CEO at PDX Consulting calls these skills the “vital links to high-performance, growth mindset and future business success” in has article, Are soft skills the elephant in the room?

But, as with business acumen, that’s not really true. I have this fundamental belief that if something can be done, it can also be done well. If it can be done well, it can be done better. And if it can be done better, then there must be ways of learning to do it better.

So, let’s just list some of the main skills we’re talking about:

• Coaching
  
• Building relationships
  
• Communication
  
• Listening and questioning
  
• Presentation
  
• Influencing
  
• Negotiation
  
• Personal organisation
  
• Leadership
  

We haven’t the space to go into detail about any of these, but doing all of them well will make an enormous difference to your ability as a Chief Financial Officer and as a Finance business partner.

All of these are based on what I have called “personal effectiveness”. And to unpack this more, read, An Introduction to Personal Effectiveness for CFOs and Finance Professionals,

Ready to plot your course as a Finance business partner and future CFO?

So, I hope that you’ve now got a much clearer idea what skills you can develop to build your career as a Finance business partner or CFO. Hopefully, this has got you thinking.

And feel free to get in touch with me to let me know what you think of this way of looking at things!

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