Benefits and Compensation

Talking to Your CFO—Critical Skill

HR tends to avoid CFOs and knows little about them, says consultant Karl J. Ahlrichs, SPHR. CFOs are often reclusive and cautious, but you are not going to be successful if you can’t sell ideas to the CFO.

Why is the relationship with the CFO so important?

  • CFOs often have the final approval of HR/compensation projects.
  • They are a trusted advisor to the president.
  • They are often directly responsible for human resources and related areas like compensation and training.

Ahlrichs, a consultant with Gregory & Appel in Indianapolis, offered his take on CFOs at SHRM’s Annual Convention and Exhibition held recently in Chicago.

Alhrichs says the C-Suite lines up like this:

  • CEO does “the vision thing.”
  • COO makes it happen.
  • CIO runs the metrics.
  • CFO is “Dr. No.”

Who Is the CFO?

Ahlrichs offers three examples to help HR understand CFOs:

  • The CFO is the only person in the C-Suite who brings lunch, because it’s efficient, says Ahlrichs.
  • If you ask the CFO whether the glass is half full or half empty, the CFO says, “It’s twice as big as needed.”
  • If you ask the CFO where he or she is going on vacation, the CFO will say “305.” (That’s the efficient way to say Disney; it’s Central Florida’s area code.)

According to Ahlrichs, CFOs are:

  • 90% male.
  • On the job 4-–6 years.
  • Fired from last job—personality conflict with the CEO—and will probably be fired from their current job.
  • Under pressure from every angle—new regulations, slow economy, tight banking.
  • Embarrassed by Enron, Worldcom, Conseco, etc.

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Today … CFOs Are Feeling the Heat

Before Sarbanes-Oxley, CFOs were generalist business partners, Ahlrichs says, but new regulations are forcing CFOs to spend more time on compliance issues, leaving little time for strategy and new ideas.

In addition, new external pressures are forcing accountability on the organization.

Ahlrichs offers seven reasons it stinks to be a CFO in 2013:

  • New accounting rules—FASB, stock options.
  • Healthcare costs are out of control.
  • Every action is scrutinized for ethical lapses.
  • Managing technology dollars is tough.
  • Forecasting cash flow is tougher.
  • Data “stovepipes” are slowing commerce.
  • Frustration with people issues.

What the CEO Thinks About the CFO

“In which skills and qualities does your CFO excel?”

  • Financial expertise
  • Personal integrity
  • Strategic vision
  • Line experience
  • Industry experience

“Which skills and qualities does your CFO lack?”

  • People development skills
  • Communication skills
  • Leadership
  • Strategic vision
  • Interpersonal skills

(from a CFO Magazine Survey of 500 CEOs)

Key Point: HR Can Help

All of the CEO’s gripes about CFOs are about issues that are part of HR’s core competencies, Ahlrichs points out.

Ahlrichs offers the following characteristics of CFOs:

  • Very high Learning Index
  • High technical skills
  • High independence

But …

  • Low Sociability
  • Low Enterprisingness
  • Low Assertiveness
  • Low Decisiveness

Refine your picture of your CEO with two questions:

  • How much information does he or she want?
  • How much of a relationship does he or she want?

Information questions:

  • How much do you want me to keep you up to date on details?
  • How important is it that I help you gather, synthesize, and understand data?
  • To what extent do you want me to inform you about trends and new technologies?

Relationship questions:

  • To what extent do you want me to advise you?
  • How important are a mutually beneficial relationship and joint long-term goals?

You’ll find that most CFOs are either transaction-oriented or information-oriented, Ahlrichs says.

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Transaction-Oriented CFOs

Transaction-oriented CFOs are low information, low relationship. Most CFOs are this type. They think:

  • Price, Price, Price
  • Speed, Speed, Speed
  • Accuracy, Accuracy, Accuracy

“I just want good, fast, and cheap.”

“We need it tomorrow by 4 p.m.”

“The specs are .…”

“I want to go out for competitive bid. ”

“I faxed you my order.”

Information-Oriented CFOs

Information-oriented CFOS are high information, low relationship. They:

  • Want you to keep them informed
  • Don’t necessarily want to be your friend
  • Love info on trends, big picture issues

“Here’s my e-mail. Keep me posted.”

“I need to stay up to date.”

“What’s the latest….?”

“Give me the information; I’ll make the decision.”

“My e-mail address is….”

Key Learnings

Treat CFOs as they want to be treated, Ahlrichs says. Most never want to be a partner. You do have a valuable, free gift for them—not wasting their time.

In tomorrow’s Advisor, Ahlrichs’ specific tips for selling ideas to the CFO, plus an introduction to the all-in-one guide, Employee Compensation in [Your State].


2 thoughts on “Talking to Your CFO—Critical Skill”

  1. Who is “Alrich”? Extreme and ofensive generalization of what a CFO is and does. With that outlook you will not be very successful communicating with CFOs (or anyone else, for that matter!)

  2. Excellent comment Brian & Nick. One of my crdeos is The paperwork must match the process. ALSO, regarding labor. We got to the point where we told our Plant Manager; I don’t care how many temps you use, how much overtime you work, whatever. As long as you maintain quality and throughput you have 6% of sales for Production(value-added) labor. No more chasing variances and feeding the software BEAST.Guess what: Our throughput immediately went up and our Production Labor as a % of sales went down.

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