There are some common CFO 'Types' defined by McKinsey, which have been in use for a while now. The reality is that the role has changed fundamentally, driven by business priorities and speed of change. So we've taken a fresh look at discovering what type of CFO you are, not just in terms of your priorities but how you make decisions, priority setting, innovation adoption and management style.
THE FOUR TYPES OF CFO:
So as a reminder here are the 4 McKinsey CFO types. These are very much built around job role and current business objective. Most serial CFO's will have had to adopt a couple of these roles during their career. Maybe you'll recognise elements of your job in here.
1. The Cost-Cutter
Quintessential “numbers people,” these types are a throwback to the old model of CFO: Their primary concern isn’t the growth of the company’s revenues; instead, it’s only on one side of the equation: expenditures. Content to stay in their lane and execute traditional responsibilities around financial reporting, auditing and compliance. The cost-cutter is focused only on one-side of the equation in addition to responsibilities such as planning, treasury and capital structure.
2. The Scorecard CFO
Numbers, metrics, projections. These are the native language of the scorecard CFO they tend to focus on cost management, to promote the use of performance scorecards, and to work to standardise data and systems. They are often hired externally, and many have previous experience as CFO's. Scorecard CFO's, by virtue of their way to measure their way toward success, get along well with virtually all kinds of CEO's. However they're at risk taking on the CEO's pet projects.
3. The Finance Functionalist
These CFO's, rise through the ranks of their organisation. They pair their hard-won institutional knowledge with a strong core of financial knowledge—a powerful combination. They are most common in companies who lack a strong financial department. Typically have advanced accounting degrees or experience in auditing.
4. The Growth Guru
These CFO's are often external hires, and come into the organisation with a good understanding of best practices culled from their 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.
Do these help?
Depending on the market, industry and the pace of change no one description above will fit a business. The emphasis on the four types above will move through periods when growth, funding acquisition will need managing, whilst there may also be periods of cost cutting and measuring to ensure profitability
A more helpful approach is to look at the style you adopt to manage and communicate with your team and the wider company to assess where you can improve your approach. I am sure many of you have undergone some kind of Myers Briggs type indicator test. This is designed to identify best fit in terms of career routes, how you like to manage and communicate and how you tackle decision making processes.
Definitely leads from the front. Driving a new vision of the future and prepared to take risk and find the most efficient way of getting somewhere. They seek out competence and expertise around them but aren't always great at listening.
Good at building and maintaining large networks of personal and professional relationships? They'll always have a 'mate' who they can ask or call on for a favour. They dislike process and always has the loudest voice at the table. Highly motivated but hates public humiliation and criticism.
Respect and value logic, order, procedure, and process? Seeks clarity as well as logical and proven decision-making criteria, even if you have to ask the tough questions to get there? Likes to see established track records of success to justify trying something different? Value competence and evidence of track record in people. Less of a fan of change and suffers fools badly.
An outside the box thinker? Who always believe things can be better? Often asking the question: “Why do people never seem to fully understand my ideas?” A perfectionist, who can lose sight of the objective and can need help to get things finished. They'll never think it's good enough. Need help to form ideas as they aren't always great at articulating them.
The people person
Always concerned about the relational health and harmony of the group? Are you completely committed to protecting values and principles? Do you innately understand how certain actions, behaviours, or initiatives will affect people? These people need to be coaxed to share their ideas and be given time and space to share their thoughts. They look to trust and believe in someone over pure capability.
There are so many ways we can categorise people all of limited value. As in most cases people tend not to fit exactly into one mould. It's how you recognise and address your own tendencies can help you to manage, interactions, avoid clashes and deliver change. Indeed recognising the strengths and weaknesses of how others in your team approach their role is equally as valuable as understanding your own.
CFO's tend to come out as Guardian type, good at process, executing tasks, meeting commitments and conversely, less good at the empathetic elements of listening, understanding others perspectives and nurturing others. They value competence in others, with stress on attention to detail.
Whatever style of CFO you may be the challenges remain the same; meeting profit targets, managing data, delivering growth, improving efficiencies and meeting regulatory and compliance demands.
Whilst the core of a person maybe typified, there are ways you can learn to value other approaches. Allow quieter personalities a voice at the table and temper some of the extremes in others, will help you to get more from your team. As a CFO you will be interacting with connectors in sales, pioneers on the board and creatives in R&D. Being aware of your own tendencies means you'll have more empathy with others. Building teams with a mix of styles is the only sure way of avoiding extremes.
Want to learn more:
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21st May 12 noon