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10 Habits practiced by Effective CFOs

If you have come across successful CFOs, you will find that they live by a set of principles that govern their interactions and behaviours.  There are habits that they develop over the years that make them effective CFOs in the long run. In this article, we have discussed habits to be developed by effective Chief Financial Officers.

Who are Chief Financial Officers?

Chief Financial Officers or CFOs are officers of the company that are responsible for managing the finances of the company, including financial planning, record keeping, and financial reporting. The CFOs duties include tracking the cash flow and financial planning and also analyzing the financial strengths and weaknesses of the company, and proposing corrective measures.

Today the role of CFOs have evolved from focusing on compliance and quality control to business planning and process changes.  The CFOs have played a critical role in influencing company strategy.

Habits of Effective CFOs

The following are some of the habits of highly effective Chief Financial Officers:

• Maintaining your core values above all

One should always stay true to the core values of the organization. Unwavering compliance with what your company stands for is a leadership trait that helps the team move forward and provides a sense of security, and ultimately allows people to make right decisions toward achieving the vision and the goals of the company.

• Always ready to learn from others

One should embrace proven industry best practices with vigour but at the same time not stifle innovation. Unearthing solutions to business problems is not an easy task, and it could be time-consuming as well as expensive. There are examples where other companies and leaders have found out the way to solve problems, and there is no requirement of reinventing the wheel.

This goes for well-defined processes that are structured and repetitive. Employing best practices makes it simple to justify the work.

There are some complex questions like outsourcing and organization structure that need in-depth analysis. In such cases complete adoption of best practice might not be a great choice. In this case best practices means those ideas and philosophies that have delivered success for those who leveraged them.

• Developing a global mindset

Every situation has its own uniqueness, and in this age of hyper-globalization, no one can operate in a silo. The importance of having a global mindset is crucial to balancing competition, avoiding cross-cultural mishaps and combining agility with accuracy with respect to how you deal with a situation. As per industry research, 48% of the businesses consider developing global capabilities as a top priority in their leaders.

 It is also significant to have a curiosity-driven attitude towards learning about the cultural riches of other nations. What is best is to adapt, value, and learn from those with different backgrounds and preferences. Those that have the wisdom to leverage the best of globalization would create value for the organization and be valued in return.

• Prioritizing tasks

With time a person marches forward on corporate set up and work becomes never-ending, and the stakes are also higher. There are people who make the best use of time available to them and achieve more than others. So how do they do that? The answer is by prioritizing tasks. Some very crucial points to know regarding this is not procrastinating, knowing when to say no, and seeking help when needed. 

This will help you to stay disciplined and helps you to plan each day in advance as opposed to overworking to achieve everything that ultimately causes chaos and stress. 

• Taking ownership and encouraging ownership

High-performing teams encourage every member to take ownership of their tasks. This is a basic principle of teamwork where everyone makes his or her contribution to achieve one goal, and the underlying principle to that is empowerment. Leaders who achieve more empower their teams to take ownership of their actions and have checks and balances in place to make sure that nothing goes off the track.

A sense of ownership drives performers to be pro-active and take on new tasks without waiting to be asked, and when individuals become leaders with the right attitude, they encourage their teams to follow this principle. As a leader of the pack, it is essential to identify owners in a team with clearly defined roles and responsibilities and accountability. It is equally critical to link results to performance, rewards, and recognition.

• Taking risks and managing them

Taking calculated risks is a trait of successful leadership, and this requires stepping out of the comfort zone. As you would know, rewards come in direct proportion to the risks involved. When we are living in a highly competitive environment, pushing the envelope for your team and your organization is a business need. The key is to take risks after weighing all subtlety of the challenge.

Managing risks requires you to ask the right questions, consulting experts, and being aware of your limitations. Ensuring that risk management is integrated well into your operating practices will help you in being effective.

• Adapting to change

There are CFOs that react to change by looking to stabilize the environment as most CEOs are pioneers of change, but this may lead to frustration on both sides. Adapting to change if the CFO is a part of the vetting process, then he or she will not just be on board with the new idea but also be able to guide the creative process in a manner that ensures success.

As a result, the CFO develops a better understanding of company goals and is more comfortable in contributing their ideas on how to take the company to the next level. You can address change but adapting to it.

• Be an operational CFO

To be an effective CFO in an organization, they should partner with the operations and sales functions of the company. They should look to build relationships with it and help them in being successful. Effective CFOs don’t function in a vacuum, but they build bridges.

• Simplify

Simplifying doesn’t come easily to many CFOs. Inundating the business owners with pages of data is easier than distilling the data down to its essence. The key is to identify what key drivers move your business and focus on those drivers.

Effective CFOs minimize the reporting to effectively bring about financial^[1] results of the organization. They focus the attention of the company towards the key levers.

• Be a problem solver

Effective CFOs are problem solvers and not just a problem identifier. They come up with a solution to challenges facing every company in today’s time. 

Conclusion

Its leaders who overcome odds, take bold but calculated risks, inspire people that are considered as actual braves. Developing the above mentioned habits can lay the path towards becoming effective CFOs in an organization.

Read our article:Why CFO should move away from numbers?