McKinsey defines four kinds of CFO. Not all of them, in the modern world, are particularly helpful, but they’re definitely out there. You may have come across a few of them in your own rise to CFO. You may even be one of them.
Here are the four kinds of CFO commonly found in business. Do you recognise yourself in any of these?
Quintessential “numbers people,” this is the old model CFO. Their primary concern isn’t the growth of the company’s revenues; instead, they look at one thing and one thing only: expenditure. These CFOs are happy to stay in their lane and stick to traditional responsibilities: financial reporting, auditing and compliance. As a result, decision making is based on a very narrow view of the business – context isn’t taken into account.
The Scorecard CFO
Numbers, metrics, projections: these are the languages spoken by the scorecard CFO. They tend to focus on cost management, promote the use of performance scorecards, and work to standardise data and systems. They are usually experienced external hires. Scorecard CFO’s, with their drive to measure their way toward success, get along well with virtually all kinds of CEO’s. However, they’re at risk when taking on the CEO’s pet projects.
The Finance Functionalist
These CFO’s usually rise through the ranks of their organisation. They pair their hard-won institutional knowledge with a strong core of financial expertise—a powerful combination. They are most common in companies who lack a strong financial department. They typically have advanced accounting degrees or experience in auditing, but they’re perhaps a little too anchored to traditional accounting methods.
The Growth Guru
These CFO’s are often external hires and come into the organisation with a good understanding of best practices culled from an experience that spans multiple firms. They may bring to the table valuable experience in mergers and acquisitions, and they likely have a background in one of three careers; investment banking, consulting, or private equity.
Depending on the market, industry and the pace of change, one of these types of CFO will never truly fit a business. A more helpful approach is to look at the style you adopt to manage and communicate with your team and the rest of the company to assess where you can improve your strategy. We will explore that in our blog, The five new model CFOs – look out for it next week.
This blog is by Charlotte Taylor, director at Formulate. Formulate’s event are on the following dates, Thursday, 31st October, Central London – Book, Thursday, 28th November, Central London – Book, Thursday, 12th December, Birmingham – Book, Save your place now!