What kind of CFO are you?

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?

  1. The Cost-Cutter

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.  

  1. 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.

  1. 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.

  1. 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 – BookThursday, 28th November, Central London – BookThursday, 12th December, Birmingham – BookSave your place now!

2 thoughts on “What kind of CFO are you?”

  1. From the point of view of the scope of the company or business, the financial function is not just talking about costs, income, accounts receivable, debt, profit / loss, accounting or M&A, more than that, which is a supporting function for the company’s business activities that are sustainable and have the ability to liquidity which is very good, so that when a company experiences a crisis the income is still able to maintain its business activities.

    Speaking of costs, as long as experience from time to time costs always move up never shows a decrease, while income always fluctuates and tends to show a decrease, as a result there is a tendency to lead to a negative gap.

    When the abyss leads to zero / BEP, management panic starts to stand out, showing a lack of preparedness to face a crisis, the shortcut is to reduce resources that may lead to asset / company sales, but they always never learn from the case, similar events will occur over and over from each crisis to the next.

    So from the 4 categories mentioned above, it actually originates from the same group, and it is not surprising because the recruitment system is still in the same pattern, including at this time in the digital era which is said to have used a more pathetic profile system and looks like a random pattern of jackpot games .
    Like someone looking for BMW parts at Toyota repair shop.

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