CFO

5 Start-Up CFO Myths: Debunked

In my series on the new CFO, I already tried to establish the idea that the new CFOs are masters of capital allocation within the organization and possibly they are masters of capital raising from the financial markets. But despite having this great article series out and having everyone read it, I still get these weird mixed messages when it comes to the role of Finance.

Lunchbreak. Time for debunking some myths on what CFOs do. Warning: some terrible forms of humour included.

Myth 1: CFOs are managing “the numbers”

That is complete nonsense. The time where CFOs set random budgets and conspired with COOs on weird policies to enforce financial control are long gone. You don’t slim down a fat kid by using an axe. You change diets and behaviour. And you do so by setting inspiring goals and doing that thinspiration magic and by educating the kid. It’s the same with an organization. A CFO manages people. The only way to get a impact focused travel spending, tool spending, benefits spending, consulting spending and so on is by knowing how things work (step 1), knowing what mindset and understanding of the subject matter is needed to think that the way it works is the way it should work (step 2), transferring that mindset to the people that have to operate under this mindset (step 3).

We had a good example on this lately. We argue about a chair. A 450 per day rental chair on a 1 day event. Did we need this chair? It is obvious, that a 450 per day chair is rip off. It is cheaper to buy a sofa and bring it to the venue. The next question is: does having the chair benefit the company directly? We would not expect more lead generation if we put people into a chair vs. having people standing with their bodies and minds open to be approached. But the argument about the chair and the comfort it gives to the person on that vanue got so emotional and large that one thing became clear. If it takes the chair to make the sales person happy and if we take the chair from that person, that person will not perform, then the investment in the chair makes sense.

There are only two reasons why a CFO is to be sceptical here. First of all, why did we hire a person that is so emotional about chairs that he can black mail us on the chair. If we scale this up to 1000 people attending 10 venues a year, that is a few million per year on renting chairs on venues. If that really is the issue, the goal is selling human resources on filtering and checking mindsets during the hiring process. The other route is to ask why the individual is choosing comfort over his possible commission. And instilling the idea that if we are going to spend millions on chairs every year, this is going to hurt the system and other benefits. It might also mean instilling a theory of greatness of endurance that is creating fame and whatnot.

So while a CEO or chief champion in the company is selling a dream, individualism, maximum ROI on personal expectations and pleasures., and a COO tries to ensure basic governance, structure and process as a quasi bad guy. It is the CFO that has to ensure that the alignment of minds is shaping that pushes everyone into the same direction as to make spending decisions possible that are maximizing total return to shareholders given the total heads in the count.

CFOs manage the minds, or in economic terms, the expected value of each good the company may provide its employees and stakeholders, and the relative value of each of these goods. It is a people management job.

Because that is what it takes to get to the numbers you need to outperform.

Myth 2: CFOs are anti-social, non-chatty individuals

It is true that CFOs are a bit unchatty. They share the information priviledge of the CEO in almost all aspects. And yes, that is why people try to leverage them. People want to be leveraged by them. And why they are overall unchatty and calm about most things. Because interpretation and understandings from anything they say might be used against them, might cause havoc on the company. It is just that you never say anything newsworthy that stems from priviledged information. And yes, that is why it is easier to be scoff and remote and distant. It also hides the fact that the CFEo as in the previous section has to love everyone a bit more than anyone else to get to the level of empathy and understanding that is needed to manage you from the distance. Since the CFO cannot be your best buddy and share the startegic ancles of the business on a sunday brunch, but he still needs to get under your skin and find out how to improve your performance to make the numbers work.

And yes, that is why he is digging his nose into how your department improves in process efficiency, what human resources says about the culture and vibe in your department and around you, how much gossip there is on your behaviour and development and how prudently you are choosing your actions, words and overall your spending. This is where the numbers have to start speaking to him. The anomalies, the patterns, the choices around all the things that you can control will tell this person who you are. Sounds freakish? Yes. Is this what a CFO does? No. But that is what a good finance function that wants to control the finanicals of a company wants to be all about. It has to find the tiny behavioural patterns that reflect in things you do not talk about but can measure to understand the trajectory of positions and balances in the financial statements.

Does that sound anti-social to you? Well, once the pattern is identified, since the CFO still cannot speak to you and you wouldn’t listen to him, he needs to find a social network of transmission that gets the message to you without causing a stir or setting you up. It could be a policy. It could be a inquiry on a spending you did. Many ways. But it is highly diplomatic and undercover and still has to have effect if there is to be any control in the end. Because none of the other executives will care about it to get you to blow your departments metrics up a bit less.

Myth 3: CFOs are completely uncreative and blunt folks

Also completely off. If CFOs have to be anything then it is be outspokenly diplomatic and outspokenly creative influencers. The binary system of a yes and no of most decision makers in a company just doens’t exist in most contexts of a financial executive. Because the power is already in his hands. And the use of this power creates resistance and emotional turmoil and ultimately lower performance in anyone that falls into realm of direct control, the CFO has to be very creative.

To investors or market analysts, the CFO may never talk negative or dirty. But always positive and nuanced. Revenue outlook can be a good bloothbath – killing it on every metric -, outlandishly good – top of market performance -, amazing – we did it this month, we performed very well – , stunning – oh somehow we made it this time, don’t expect it again – , flamboyant – I feel ashamed I have to highlight this tiny up – , great – please do not kill me – , good – we are doomed, don’t hurt us yet – , positive – give it to me, kill me, I know I deserve it -, above target – I should get a new job -. to on target – I found a new job Nobody would ever say the word dim, cloudy, dovish, dangerous, moronic, shitfesty, doomed, etc.

There also never is a no on a new spending idea. Unless you really hate this person and want him to be gone. But even then, a great initiative says the very same. An interesting approach is a clear no, but lacks the personal attack. An I can see where this is going, let’s try this equals a “everyone else sucks., you suck, but maybe you don’t make me hate myself for saying yes to this”. There is no positive answer without negative connotation on any spending initiative, because all decisions are based on unproven hypothesis. If it was proven to work, it would be a process and someone else would lose budget for it. So, don’t get too excited on a yes ever. It is always a no. But it has to be done. A CFO has to be schizophrenic. Knowing the complexity of humans with disaligned interests interacting on an initiave will at bast give you a smile of the kind “Let’s see who is going to get a nose punch in this clownshow.” CFOs are pessimistic, but creatively sensational and optimistic. Not really the character of an admin. But of your classical genre-breaking fictional writer.

Myth 4: CFOs are admins

A good CFO knows he is not an admin. So that is not really hurting him. It is totally fine. It is part of the job description to get heat. After all, it is the only part of any organization that follows highest standards on transparency, accuracy and timeliness of information and activity flow. Most people cannot handle it anyway.

But what makes the CFO sad when he hears such insults is the fact that he is also the one that has to have people who are capable of working at highest levels of accuracy and self-control and ethics work in one of the most boring, uncreative, underappreciated and administrive areas in any company. He has to build the most robust and ehtical team that endures being blamed and frowned upon, but still smiles on a daily basis, do what it does at lowest cost. And people will have to do work that is as boring and repetitive as assembly line work.

So yes, cut the finance and admin team some slack. Don’t call them admin all day. Just because nobody can attribute your contribution to the company success based on your daily work whether you are in marketing, sales, development, or strategy, doesn’t mean you are any non administrating something. You are just not called upon your mistakes as easily.

Myth 5: CFOs are shabby bean counters in suits

It is true that we see all the beans in the company. Every single one of them. Really. If we would work in facility management, we would be the people cleaning toilet floors and getting the highest reviews on employee happiness. In other words, we know where things stink. If we would be in a relationship, we are the people that know all the worst about our partners and still sell them to our parents. Grandparents. Bosses. To everyone.

It is because we know it all, that we consider ourselves the biggest champions of the whole world. We know we are alone with that feeling and thought. But think about it.

Hope the read was entertaining. Maybe more on this another time. Lunch break is over. 

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