Overview:

A recent report by Boston Consulting Group (BCG) outlines a powerful 90-day plan for new CFOs to establish credibility, set a vision, and lay the foundation for long-term success. It emphasizes the evolving role of the CFO from a data provider to a strategic value creator and outlines a structured approach for new incumbents to establish a strong foundation for a successful tenure.

Become a New Strategic CFO:

• Evolving Role of the CFO: The traditional image of the CFO as purely a “numbers person” is outdated. Today’s CFOs are strategic leaders with a broad mandate to drive performance and create value across the entire organization.
• The Importance of the First 90 Days: This period is a unique opportunity for new CFOs to gain knowledge, build relationships, and set a vision that will guide their priorities and actions for the rest of their tenure. Prioritization and careful planning are crucial over speed of execution during this initial phase.
• The Broad and Challenging Nature of the CFO Role: The role encompasses shaping the company’s agenda, engaging with stakeholders (investors, capital markets, business partners), ensuring financial performance, and overseeing core finance functions like audit, regulatory compliance, and risk management. This broad scope presents challenges and can lead to short tenures if not managed effectively.
• Laying the Foundation for Success: A successful and sustained tenure requires a structured approach during the first 90 days, focusing on assessing financial health, meeting key stakeholders, assessing the finance function, defining a clear vision, and building relationships with C-suite and the board.
• Creating Value as a CFO: Four key roles through which CFOs create value:
  • Co-creator of Strategy,
  • Effective Business Partner,
  • Trusted Finance Custodian,
  • Best-in-Class Finance Operator.

Why New Strategic CFO?

• The Modern CFO as a Strategist and Value Creator: “Gone are the days when the CFO was a numbers person who supplied other leaders with data to inform strategic decisions. Today’s CFOs are strategists and value creators in their own right, with broad mandates and continuous responsibilities to drive strong performance.” The “CFO’s true mission today is to be the ultimate owner and champion of value creation for the company.”
• High Turnover Rate Among CFOs: A significant challenge highlighted is the relatively short tenure of many CFOs. “A BCG analysis found that nearly 10% of CFOs at top companies leave their role within a year after they start the job. And more than 50% have left by the end of the fifth year.” This underscores the need for effective onboarding and a focused approach in the early stages.

Early Assessments as New CFO

• Prioritizing Planning Over Speed in the First 90 Days: The authors strongly advocate for a deliberate approach: “Simply put, new CFOs should prioritize careful planning over speed of execution when taking the helm.”
• Essential Initial Assessments: Before diving into complex initiatives, new CFOs must assess fundamental financial health in three areas:
  • Cash Flow: Ensuring no immediate liquidity issues.
  • Accounting Practices: Confirming no regulatory or accounting problems with the auditing firm.
  • Audit Issues: Reviewing audit practices, internal controls, and cybersecurity with the audit committee.
• Stakeholder Engagement is Paramount: Building relationships is crucial. “It is also essential to meet the key stakeholders.” This includes direct reports (within two weeks) and peers and external stakeholders (within four weeks) to understand their concerns and desired changes.
• The Value of an External Mentor: Seeking guidance from an external mentor, knowledgeable about the company or industry, can be invaluable for navigating the role. As one CFO noted, “It was lonely at the top, and much of what I was doing was new to me.”
• Comprehensive Assessment of the Finance Function: New CFOs must objectively evaluate the finance function’s strengths, weaknesses, and its perception within the organization. Key aspects to assess include:
  • Interaction and partnering with business units.
  • Value delivered by the finance function.
  • Whether business leaders consult finance before or after decisions.
  • Perception of the finance function as inefficient or bureaucratic.
• Benchmarking Finance Function Performance: Comparing the finance function’s performance, head count, and costs against peers of similar size and complexity is recommended using tools like the BCG CFO Excellence Index. This helps identify gaps and potential improvement areas.

How to Manage Early Days as New Strategic CFO

• Defining a Clear and Aspirational Vision: The first 90 days should culminate in defining a vision for the future finance function. This vision should be “not only aspirational but also achievable over a clear time frame” and guide the CFO’s objectives and the type of finance function they intend to build. It should encompass the key value-creating roles and consider key enablers like digital tools and organizational structure.
• Aligning Priorities with Organizational Strategy and Performance: The CFO’s priorities must be shaped by the company’s strategic goals and current financial performance. Different situations (turnaround, stagnation, high growth) demand different focuses for the CFO.
• Building C-Suite and Board Relationships Early: Demonstrating an understanding of the business and industry trends is key to establishing credibility. Working collaboratively with the CEO and board to align on strategy and objectives is a “pivotal moment.”

Results of Early Days

• Crafting a Compelling Investor Story: The CFO plays a critical role in investor relations. Understanding the investor profile and expectations is a priority to effectively communicate the company’s “equity story, dividend strategy, and total societal impact.”
• Developing a Multi-Year Roadmap: The 90-day planning phase should lead to a roadmap for realizing the vision, outlining priorities for the first year and the subsequent two to four years. This roadmap should link initiatives to value targets and include “quick wins” to demonstrate early impact.
• The Human Element in Transformation: Realizing the vision depends on the people within the finance organization. It’s crucial to ensure people feel like “co-owners of the vision” and align career paths and incentives with roadmap milestones. Effective communication is essential for driving change.

Conclusion:

The first 90 days as a CFO are a critical period for laying the groundwork for long-term success. This involves a structured process of understanding the organization, assessing the finance function, building key relationships, and defining a clear vision and roadmap. By prioritizing planning, stakeholder engagement, and a strategic approach to value creation, new CFOs can navigate the complexities of the role and establish themselves as impactful leaders.

Frequently Asked Questions (FAQ)

What is the evolving role of the CFO today compared to the past?

• In the past, the CFO was primarily a “numbers person” who provided data to other leaders for decision-making. Today, the CFO has a much broader mandate, acting as a strategist and value creator. They are deeply involved in shaping the company’s agenda, engaging with investors, ensuring financial performance, partnering with business units, and overseeing core finance responsibilities like audit, regulatory compliance, and risk management. The mission of modern and strategic CFO is to be a champion of value creation for the entire company.

Why are the first 90 days crucial for a new CFO?

• The first 90 days offer a unique opportunity for a new CFO to gain in-depth knowledge of the organization, build critical relationships, and assess its financial health and the performance of the finance function. This period allows the CFO to develop a guiding vision for the future and set a prioritized agenda for the remainder of their first year. Prioritizing careful planning and understanding over rapid execution during this initial phase is key to establishing a foundation for a successful and sustained tenure.

What are the initial steps a new strategic CFO should take upon assuming the role?

• As an initial step, a new CFO should immediately assess the company’s financial health by checking for any urgent issues related to cash flow (liquidity), accounting practices (regulatory issues), and audit issues (internal controls, cybersecurity). Addressing these upfront prevents them from derailing other priorities. It is also essential to quickly meet with key stakeholders, including direct reports, peers, investors, and external partners like auditors and tax firms, to understand their concerns and expectations.

How should a new CFO approach assessing the finance function’s current performance?

• A new CFO needs to develop an objective understanding of the finance function’s organization, strengths, and weaknesses. This involves assessing how the finance function is perceived within the broader organization (e.g., the level of business partnering, value delivered, and efficiency). It’s crucial to benchmark the finance function’s performance against peers in terms of effectiveness (using frameworks like the CFO Excellence Index) and efficiency (headcount and costs relative to sales). Additionally, understanding the talent, capabilities, and skills within the function, as well as interacting with people at all levels, provides a holistic view.

What is the significance of defining a vision for the finance function, and what should it encompass?

• Defining a clear vision is essential for new CFOs to succeed beyond their initial period. The vision outlines the objectives they aim to achieve and the type of finance function they want to build. It should be aspirational yet achievable and reflect the main roles CFOs assume to create value (Co-creator of Strategy, Effective Business Partner, Trusted Finance Custodian, Best-in-Class Finance Operator). The vision should consider key enablers (e.g., technology, agile teams, performance measures) and align with evolving workplace norms, such as digital collaboration and agile working. A well-communicated vision inspires and unites the finance function and reinforces its value proposition to the organization.

How does a company’s current business performance influence a new strategic CFO’s priorities?

• A company’s current business performance significantly shapes the new CFO’s priorities. In a turnaround or restructuring situation, the focus will be on investment management, cost reduction, and efficiency. For a stable but stagnating company, the CFO must support the search for and pursuit of new growth opportunities. In a high-growth, competitive environment, the CFO’s priorities will include arranging new financing, optimizing the capital structure, managing investor relations, and forming partnerships with lenders.

Why is building relationships with the C-suite and board crucial in the first 90 days?

• Building strong relationships with other C-suite executives and the board of directors is paramount in the first 90 days, even more so than immediately delivering value. New CFOs need buy-in from these stakeholders to effectively lead the finance function and influence the company’s strategic direction. Establishing credibility by demonstrating an understanding of the business and industry trends is essential. Collaborative engagement with the CEO and board to align on strategy and co-develop plans sets the tone for future interactions and helps the new CFO showcase their unique value proposition.

What is involved in developing a roadmap to realize the vision for the finance function?

• Developing a roadmap involves outlining the prioritized initiatives needed to move from the current state to the defined future vision for the finance function. This roadmap should detail priorities for the first year and potentially the subsequent two to four years. It’s important to link each initiative to a value target and include “quick wins” to demonstrate positive impact early on. The roadmap should consider potential roadblocks (e.g., organizational fragmentation, outdated IT) and include plans to address them. Crucially, involving the finance leadership team in developing the roadmap fosters buy-in, and aligning career paths and incentives with its milestones helps motivate people throughout the organization to execute the vision.

At NeoForm Business Partners, we empower finance leaders to navigate these challenges with confidence. How are you shaping your first 90 days as a leader? Check out our Neo Services or Contact us please for further details.

Download full report from BCG website or NeoForm LinkedIn page.