It goes without saying that a CFO should have proven success and appropriate experience in a mid- to high-level financial role within a VC-backed company. But there are several other seemingly ‘soft’ skills and traits that shouldn’t be underestimated.
The role has undergone a large-scale transformation over the last decade. Thanks to the infectious nature of the modern dynamic start-up culture, CFOs are expected to take a leadership role in functions of the business beyond the financials, acting as the right hand of the CEO and strategically steering the company through the challenges of rapid scale. As Kevin Deeley, CFO of Quill, said: “The role of CFO has changed markedly in the last few years – and for the better. Gone are the days when it was all about counting paper clips and getting VAT returns filed on time: today the finance leader is a confidant to the CEO and a key member of the senior decision-making team.”
But this outdated view of finance professionals as being black-and-white thinkers, rigid and often separate from the rest of the team is a hangover from the days of big business ruling the world. Now, the start-up is king, and a CFO must be agile if they’re to be successful. They have to consider the grey areas, be willing to modify their assumptions and strategies if necessary, and be prepared to get involved with the various aspects of the business and take on roles and tasks that don’t necessarily fit snugly within their vertical. In today’s businesses, they’re the only person, other than the CEO, with access to a bird’s-eye view of the company as a whole: in order to successfully strategise for scale, it’s imperative that they possess detailed knowledge of the internal processes of each team.
However, the most important characteristic of a CFO in a founder-led, VC-backed firm is a high level of emotional intelligence, or EQ. Traditionally, when the CFO was viewed as the black-and-white thinker, the CEO would have been expected to possess this trait: the ability to be aware of the emotions of oneself and others and manage them in order to achieve the best possible outcome. But with the advent of tech firms led by their founders, the relationship has, to a large degree, been inverted.
Now many CEOs are, first and foremost, technologically minded creatives and inventors. They’re highly intelligent, they think differently than the majority of people, and they have short attention spans, often leaping from one engaging idea to the next. They are, by nature, disruptive thinkers who create equally disruptive products and companies, but they’re not necessarily effective or comfortable communicators. When we’re searching for a CFO to complement the CEO and their way of thinking, this is the most important element to consider: are they different enough from one another to make this work?
A CFO in a founder-led business must be able to manage upwards: it’s their responsibility to get the best out of the CEO, and to manage the stake-holders. They have to know which battles to fight and when the best time is to fight them, as well as which ones to leave well alone. “CFOs have to understand what they really have permission to change,” Ajit Kambil, Ph.D. and Global Research Director for Deloitte’s CFO Program, told the Wall Street Journal, “That may sound like the same thing [as what the CEO wants to change], but it’s not. Many times a CEO will tell the new CFO, “We want to change this and that and that,” but once the CFO gets to work on making changes, there’s push-back. Often, the true message from CEOs is that, at a high level, they want to change the organisation, but at a nuts-and-bolts, tactical level, they really don’t want to change this, that, or that.”
A study published in November 2014 in the Journal of Organizational Behaviour proved that emotional intelligence is equally important, if not more so, as IQ to a person’s career: the higher their EQ, the more money they’re likely to earn. For today’s CFO’s, having this skill translates into reading the CEO’s mood ahead of key company events, managing the board and investors, successfully implementing a change in process and procedure into a long-standing team, and knowing without asking when the founder is calling on their skills as a strategist, a number-cruncher, or simply as a confidant.
Post produced in partnership with John Watkins, Managing Partner at Altima.