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Four Essential Skills FP&A Pros Need to Become CFO

Feb 18, 2015

Jim Kaitz, President and CEO, AFP

To say the world is a different place than it was even five years ago is a vast understatement. Global political unrest and financial upheaval have set an unprecedented need for clear, focused and decisive leadership in business, particularly in the finance function.

Today’s FP&A professionals who want to be tomorrow’s CFOs only have to look across the landscape of their business to see what’s in store for them. Four key characteristics (along with a little luck and good timing) could help land the smartest and most attuned FP&A pros in the CFO’s seat. The best finance people are:

  • Deeply analytical
  • Highly strategic
  • Imbued with a rich understanding of the business
  • Expert at communications and collaboration

A closer look at each of these traits further illustrates their importance.

Analysis

First, let’s focus on the “A” in FP&A. “Thinking about the ‘new breed’ of CFO, the analytical piece is a big differentiator and a reason I was chosen for this role over other candidates,” Ned Sizer, financial chief of Hightail (a file-sharing services company) said in an interview with CFO magazine.

It’s not unusual for the new generation of finance chiefs to spend nearly half their day engaged in data analysis. For example, Sizer estimates that he commits about 40% of his time to looking at the data that will help his company “drive competitive advantage.”

The finance executives I speak to around the world tell me similar stories. Some even farm out a few of the daily “traditional” finance tasks to staff and contractors so they can spend even more time on the analysis side.

Strategy

Many finance executives today see their role as less of a “scorekeeper” and more of a strategic business partner. Focused less on the day-to-day financial function and more on big-picture strategy, today’s leading CFOs conduct finely tuned data analysis, push the sales function and take the lead on executing the company’s business model and strategy.

Understanding the business

Owning the business model is clearly a vastly important piece of the CFO puzzle. Having a broad understanding of the business, its competitors and marketplace, as well as its strategic goals gives leading CFOs the insight and confidence to execute company objectives—both in the short and long term.

For example, CFOs must have a deep understanding of their role in helping take their companies public. But, perhaps most important, finance professionals need to have a profound understanding of sometimes very complex needs, such as:

  • Building a solid business model
  • Targeting new vertical or geographic markets that may have higher costs than their traditional markets
  • Acquiring a new business with volatile customer churn

Communications and collaboration

Good FP&A means being able to tell a story. Great FP&A means being able to tell the right story—clearly, concisely and effectively enough to enable leadership to make the right decisions. The ultimate goal is to propel the organization forward, far out in front of its competitors.

Going hand-in-hand with understanding the business, collaboration means taking pieces of information from across departmental lines and synthesizing them into a cohesive narrative that will help drive better decision-making.

While having the strategic and analytical skills as well as the vision, communication and collaborative acumen to run a finance department are all highly valuable for today’s CFO, a great finance chief also has the basics covered. The “F” comes first in FP&A for a reason. Without basic finance skills, getting even a good FP&A pro to the CFO suite is akin to asking a wingless bird to take flight.

Today’s finance pros have a number of options to achieve true excellence in business planning, modeling, budgeting and forecasting. Training and development will help ensure a mastery of core job performance competencies and help provide the skills to offer advanced financial analysis.

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