How to Become a World Class CFO: Your 9 Step Guide

06/14/2024 15:30:00 +0800


Your Guide to the Skills & Qualifications You Need to Make It as a first-rate CFO
 Discover the building blocks of a successful CFO career.
Learn the hard and soft skills that can make CFOs indispensable allies to CEOs and influential figures in the boardroom.
Understand what it takes to be a world-class CFO

Gone are the days when finance professionals could hide behind spreadsheets. Today, the role of the Chief Financial Officer (CFO) requires more than just financial acumen - it demands leadership, strategic planning, and communication skills that deliver value, gravitas and influence. Aspiring CFOs must navigate a complex landscape, and if they want to be world class, they must learn to have an impact not only on financial outcomes but also on organisational culture and innovation.

 This guide outlines essential steps for those on the CFO career path or those current finance leaders who wish to uplevel from good CFO to world-class CFO. It details the strategic thinking, leadership qualities, and forward-looking mindset necessary to make it to the C-suite.
Step 1: Obtain a Robust Educational Foundation
For those eyeing the CFO position, a robust educational foundation in finance, accounting, business, or a related field is crucial. This base provides the technical skills and knowledge necessary to navigate the complexities of financial management and strategic decision-making in a corporate environment.

Do you need an Advanced Degree?
Beginning with an undergraduate degree in finance or accounting sets the stage, but pursuing an advanced degree like an MBA or a master's degree in finance can significantly deepen understanding of strategic financial planning, financial statements, and executive leadership. Such degrees offer a curriculum rich in opportunities to build business acumen and essential skills for managing financial risks and making strategic decisions.

However they are not essential, and they are often more valuable when undertaken later in your career than straight after a bachelor's degree, when the student has little real world experience to contextualise what they are learning.

Internships and Practical Experience
Practical experience through internships in finance departments provides hands-on experience with financial operations, cash flow management, and regulatory compliance. These opportunities are a great way to practise applying academic learning to real-world scenarios, developing a strong foundation in financial reporting, and observing effective financial management strategies.

Step 2: Acquire Professional Certifications

Beyond degrees, acquiring professional certifications such as a CPA (Certified Public Accountant) or a CA (Chartered Accountant) are beneficial. These not only validate an individual's expertise in financial analysis and accounting principles but also enhance their credibility.

Continued education through certifications demonstrates a commitment to maintaining and updating necessary skills within the finance function.

Step 3: Gain Relevant Financial Experience

Securing foundational education is just the first step. Aspiring CFOs must then gain extensive financial experience, moving from theoretical knowledge to practical expertise in managing a company's finances.

Starting in Entry-Level Financial Positions
Early career roles like financial analyst or junior accountant are gateways to understanding the day-to-day financial operations and responsibilities of a CFO. These positions provide exposure to financial statements, budgeting, and the basics of financial analysis, crucial for anyone on the CFO career path.

Advancing to Leadership Roles
An aspiring CFO must extend their experience beyond the entry-level - advancing into roles such as finance manager or controller where strategic financial management is key. These positions involve oversight of the finance team, strategic planning, and direct involvement in financial decision-making, offering a broader scope of the business operations and deeper insight into the company's strategic vision.

Industry Diversification
A well-rounded CFO will likely have experience across various sectors. Each industry - from technology to manufacturing - poses unique financial challenges and will provide a different context within which a CFO makes strategic decisions, enriching a CFO's expertise and adaptability in handling complex financial scenarios.

Step 4: Develop Strategic Thinking and Analytical Skills

For aspiring CFOs, developing strategic thinking and analytical skills is not just about crunching numbers; it's about foreseeing financial outcomes, understanding market dynamics, and aligning these insights with the broader business strategy. This skill set is vital for making informed decisions that drive the organisation's long-term success.

Mastering Complex Financial Models
The heart of strategic financial management lies in mastering complex financial models. These models serve as tools to simulate various financial scenarios and predict future financial health of the company. Aspiring CFOs should become proficient in building and interpreting models that consider multiple variables such as cash flow projections, economic conditions, sustainability goals and investment returns. This expertise helps in assessing potential risks and making strategic decisions that optimise financial performance.

Understanding Market Dynamics
A key component of strategic thinking is the ability to analyse and adapt to market dynamics. This requires a keen understanding of how changes in the economic environment, such as fluctuations in interest rates or changes in consumer behaviour, impact the company. CFOs must evaluate external factors and integrate this data into their financial planning and strategy to stay competitive and mitigate potential risks.

Utilising Data Analytics
In today's data-driven business environment, leveraging data analytics is essential for enhancing strategic decision-making. Aspiring CFOs need to harness the power of data analytics to uncover insights from financial data, interpret trends, and make evidence-based decisions. This involves not only understanding the financial numbers but also being able to communicate these insights effectively to other executives and stakeholders to inform broader business strategies.

Scenario Planning and Forecasting
Effective CFOs excel in scenario planning and forecasting - essential for informing strategic thinking and decision making. By analysing various 'what-if' scenarios, they can anticipate financial outcomes and develop strategies that safeguard the company against future uncertainties. This foresight enables the organisation to maintain financial stability and agility, adapting quickly to unforeseen challenges.

Bridging Financial Management and Business Strategy
Ultimately, the role of a CFO is to bridge the gap between financial management and overall business strategy. This involves collaborating with other C-suite executives to ensure that financial strategies support the broader business objectives. It also means steering the company through strategic investments and financial practices that enhance shareholder value and ensure long-term sustainability.

Step 5: Cultivate Leadership Skills
For CFOs, technical financial expertise must be complemented by strong leadership skills. These skills are critical not only in managing and inspiring teams but also in driving the company's strategic initiatives. Developing effective leadership skills involves focusing on empathy, decision-making capabilities, and team management.

Developing Empathy
Empathy is fundamental to leadership. A CFO must understand the perspectives and challenges of their team members to foster a supportive work environment. This emotional intelligence helps in motivating staff, resolving conflicts, and maintaining high morale. Empathy also enhances communication with other C-suite executives and board members, facilitating better understanding and cooperation across departments.

Enhancing Decision-Making Skills
A CFO's role involves complex decision-making that can have significant impacts on the company's future. Developing strong decision-making skills requires a balance of intuition, critical thinking, and analytical insights. CFOs must be adept at assessing situations from various angles, considering both the short-term and long-term implications of their decisions. Training in decision-making processes, problem-solving techniques, and even simulations of high-pressure situations can greatly enhance these skills.

Effective Team Leadership
Leading a team effectively involves more than just directing day-to-day tasks. It requires building a vision, setting clear goals, and inspiring team members to achieve them. CFOs must be skilled in delegating tasks, mentoring emerging leaders, and promoting a culture of innovation and accountability. Practical leadership roles within the company, such as project leader or department head, provide opportunities to practise these skills and lead by example.

Participating in Leadership Training
While some leadership skills can be innate, many are developed through experience and training. Participating in leadership development programs, workshops, or coaching sessions with a specialist CFO Leadership Coach can be extremely beneficial. These programs often cover areas such as strategic communication, negotiation techniques, and team dynamics, all of which are essential for effective leadership in the CFO role.

Curious to understand how specialist CFO coaching could help you?  Book a call with Alena Bennett today and find out how
Fostering a Collaborative Environment
Finally, a successful CFO fosters a collaborative environment that encourages open communication and team cohesion. This involves not only leading the finance team but also working collaboratively with other departments to ensure that financial strategies are integrated smoothly into broader business operations. By promoting a culture that values teamwork and cross-departmental collaboration, CFOs enhance the company's overall performance and alignment towards common goals.
Step 6: Become the Voice of the Investor
For a CFO, effectively representing and communicating the perspectives of investors to the company's internal stakeholders is crucial. This role involves a deep understanding of what investors are looking for in terms of financial performance, strategic direction, and corporate governance, and ensuring these expectations are met or exceeded.

Understanding Investor Expectations
A CFO must first thoroughly understand the concerns and expectations of the company's investors. This involves regular engagement with the investment community, staying abreast of market trends, and analysing shareholder feedback. Understanding these expectations requires not only a grasp of financial metrics like ROI and earnings per share but also an understanding of broader business issues such as sustainability practices and corporate governance.

Championing Investor Perspectives Internally
Once investor expectations are understood, the CFO must articulate these to the company's board members and management teams effectively. This communication is pivotal in ensuring that the financial strategies and business decisions align with investor interests. For example, if investors are focused on long-term growth, the CFO needs to advocate for strategies that invest in innovation and expansion, even if these choices may not offer immediate financial returns.

Read more about the CFO as the voice of value in the 2024 CFO annual report
 Enhancing Shareholder Value

Ultimately, the CFO's responsibility is to enhance shareholder value. This can be achieved through various means such as cost management, exploring new markets, improving operational efficiency, and strategic capital allocation. By focusing on activities that enhance profitability and ensure sustainable growth, a CFO helps to reassure investors of the company's potential for future success.

Regular Reporting and Transparency
Maintaining transparency through regular financial reporting and open communication channels is also essential. These reports should not only provide a clear and honest overview of the company's financial status but also highlight how current strategies reflect the investor's interests. Regular updates via annual reports, earnings calls, and investor meetings help maintain trust and demonstrate the company's commitment to meeting investor expectations.

Upholding Ethical Standards and Safeguarding the Company's Reputation
Investors are increasingly focusing on the triple bottom line - people, planet, and profit. This shift means that CFOs must also prioritise compliance and ethical practices in all operations. It is the CFO's responsibility to ensure that the company adheres to legal standards and ethical norms, safeguarding the company's reputation. This focus on compliance and sustainability helps build trust and loyalty among investors, who are more likely to support companies that demonstrate responsibility towards societal and environmental issues.

Step 7: Communicate and Negotiate with Authority and Gravitas
For the Chief Financial Officer, effective communication and negotiation are not just tools but essential leadership skills that influence corporate strategies and decision-making at the highest levels. Mastering these skills ensures that financial insights and strategies are not only heard but also acted upon by the board and C-suite executives.

Developing a Commanding Communication Style 
A CFO must develop a communication style that commands respect and attention. This involves clarity, confidence, and the ability to convey complex financial information in an understandable way. Whether it's through formal presentations, board meetings, or casual discussions, every interaction should reinforce the CFO's role as a key decision-maker within the company.

Building Influence within the C-Suite
To truly influence corporate strategies, CFOs must build strong relationships with other C-suite executives. This involves regular communication, collaboration, and a willingness to listen to different perspectives. By building rapport and demonstrating an understanding of various departmental needs, from human resources to marketing and supply chain, CFOs can better integrate financial strategy with overall business strategy, leading to more cohesive and effective leadership.

Building Influence within the Boardroom
Building influence in the boardroom involves not only consistently providing accurate and timely financial reports but also demonstrating foresight in financial planning and risk management. By presenting well-prepared and forward-looking insights, CFOs can build trust and assert their influence, ensuring that financial considerations are central to board discussions and decisions.

Building Influence with Investors
A CFO must also excel in clear and persuasive communication, particularly when interacting with investors. This skill is crucial for advancing strategic initiatives and conveying the potential positive outcomes of these plans with optimism and confidence. By effectively articulating the rationale behind strategic decisions and financial forecasts, a CFO can influence investor perceptions and support. This involves not just sharing the facts but also storytelling that connects financial data to a compelling vision of the future. Such persuasive communication ensures that investors feel informed and engaged with the company's strategic direction, thereby fostering a supportive investment environment.

Step 8: Become an Indispensable 2IC to the CEO
In the evolving landscape of corporate leadership, a CFO's role extends beyond finance to becoming an indispensable second-in-command (2IC) to the CEO. The key to this role is not just in managing numbers but in providing substantial support that allows the CEO to focus on legacy-building initiatives like enhancing corporate culture and driving breakthrough product innovation.

Easing the CEO's Burden
A pivotal aspect of the CFO's role as 2IC is to provide peace of mind to the CEO by taking on some of the heavy lifting in the boardroom. This involves stepping up to handle complex financial discussions, strategic negotiations, and critical decision-making processes. By effectively managing these responsibilities, the CFO allows the CEO to allocate more time and energy toward strategic initiatives that shape the company's future and culture.

Providing Strategic Financial Leadership
In the boardroom, the CFO can ease the CEO's burden by leading discussions on financial strategy with authority and insight. This includes presenting financial forecasts, budget strategies, and risk management plans that align with the company's long-term goals. With a strong command of financial details, the CFO ensures that all board decisions are informed by a solid financial perspective, thus safeguarding the company's assets and future.

Acting as a Strategic Advisor
Beyond financial management, the CFO supports the CEO by acting as a strategic advisor. This role involves analysing internal and external environments to advise on potential financial implications of various corporate strategies. By providing this critical analysis, the CFO helps the CEO to navigate complex scenarios and make informed decisions that will impact the company's legacy.

Step 9: Become a Futurist
As the business world evolves, a forward-thinking CFO must embrace the role of a futurist, staying ahead of technological advancements and market trends to keep the company competitive and innovative.

Embracing Advanced Data Analytics
Advanced data analytics are crucial for modern CFOs. By harnessing the power of big data, CFOs can gain deeper insights into customer behaviour, operational efficiency, and market conditions. These insights allow for more accurate forecasting, trend analysis, and strategic planning, all of which are essential for guiding the company towards favourable outcomes.

Leveraging Emerging Technologies
Emerging technologies, especially artificial intelligence (AI), are reshaping how businesses operate and they no longer sit within the exclusive remit of the information technology team. A futurist CFO must understand and leverage these technologies to automate processes, enhance decision-making, and drive innovation. This might involve integrating AI into financial systems for better risk management or using machine learning to identify investment opportunities.

Driving Innovation
Ultimately, a futurist CFO contributes to driving innovation within the company. This involves not only supporting R&D initiatives but also creating a culture that values creative thinking and continuous improvement. By promoting and participating in innovation, CFOs help ensure that the company remains relevant and forward-thinking in its approach.

Ascending to the role of a CFO is not just about climbing the corporate ladder; it's about preparing to handle complex challenges that go beyond the numbers. By fostering key leadership skills, understanding investor expectations, and staying ahead of technological advancements, aspiring CFOs can position themselves as indispensable leaders.

This journey requires hard work, strategic foresight, and a commitment to continuous learning and ethical leadership, ensuring they not only meet but exceed the multifaceted demands of the modern business environment.
Ready to extend your skills and your influence and become the world-class CFO that you know you can be?
Get your CFO of the Future index report and discover your unique CFO Sequence of Success.

Author: Alena Bennett

Alena works with leaders and their teams to connect technical and leadership skills so they can deliver to deadline without killing their people.
She is a mentor, trainer, facilitator and coach. Contact her today on [email protected].
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