A CFO’s guide to stakeholder management

An accomplished chief financial officer will maintain a solid and productive working relationship with key members of the company to add value across all functions of the business

1. Chief executive 

Which cliché would you like? Wingman? Marriage partner? Trusted right hand? The relationship with the chief executive is all of the above – and the chief financial officer might also need a mind-reading superpower.

The relationship between the boss and financial chief is perhaps the most important in any company, and complementary skills are a bonus. Traditionally, the chief financial officer is providing back-up and support to the chief executive, putting the numbers under his or her ideas, reining in the wilder flights of fancy by pointing out the cost implications, and acting as a conduit to other directors.

It’s also about acting as a deputy because a good chief financial officer should be able to manage the day-to-day running of the company.

So the chief financial officer needs to understand the chief executive; to understand the individual’s style, quirks and vision for the company. But this isn’t about taking a passive role; today’s financial chief is as competent as the chief executive, able to think strategically and should be allowed to voice an opinion. Indeed, a big part of the role is helping the chief executive future-proof the company and that isn’t the job for a yes-man or woman.

Instead, it’s about being willing to challenge, even play devil’s advocate. Trust is key; the chief executive needs to know that this is not opposition for opposition’s sake or a hideous C-suite power struggle, but a vital opportunity to see the whole picture and not get carried away with a bright idea.

Part of the chief financial officer’s role is to point out aspects that the chief executive might have missed, but without being adversarial. Part of the chief executive’s role is to listen to the chief financial officer as an equal and respected partner, and be willing to accept that what he wants to hear might not be the same as what he needs to hear.

2. Chief information officer

Digital disruption is one of the key forces shaping our world, which makes the relationship between the chief financial officer and chief information officer among the most critical. It’s all about making good use of each other’s knowledge to drive the company forward.

In some cases, the chief information officer reports to the chief financial officer, but whatever the reporting lines, the information chief has valuable input about the technological threats and opportunities in this brave new world. A good chief financial officer needs to understand how technology will transform operations and be able to evaluate the cost implications of tech investment – and also grasp the implications of not investing in security measures, for example.

Collaboration is the name of the game. This is not necessarily about preventing the chief information officer overspending on a new IT system, though that may be part of the remit. But if the financial chief can’t understand the cost benefits of the new system, it’s up to him or her to keep asking awkward questions.

For the chief information officer, the relationship is often to do with explaining and persuading. The latest must-have gadget usually comes at a price, and it is the chief financial officer’s job to nail that price to measurable and time-limited benefits. A good information chief has to be able to explain those benefits and engage with the financial boss to pin down the costs.

Given the increasing importance of data-driven insights to grow a business, a chief financial officer needs to be able to understand the digital tools that can provide essential data. The chief financial officer’s role is increasingly analytical and the chief information officer is the best ally in this.

Getting to grips with big scary concepts such as blockchain will be a whole lot easier if the financial chief has the kind of relationship with the information chief that allows them to ask dumb questions.

 3. Chief marketing officer

Chief financial officers who think marketing is just for fluffy bunnies are the dinosaurs of the business world. But there can often still be significant cultural differences that prevent the financial chief and the chief marketing officer from forming the best relationship.

Far too often chief financial officers focus solely on the costs rather than the value, while marketing chiefs fail to pin down the metrics that define success. This relationship can fail because the foundations are not in place. It is always worth having a discussion at the outset about how each measures success and being gracious enough to understand this is simply a different view of the world, not a question of right and wrong.

Marketing teams can often be populated with strong and articulate individuals, who are not afraid to present their case directly to the chief executive, so the canny chief financial officer will make sure the relationship is one of partnership.

As a discipline, marketing is undergoing as great a change as any within the business world, as social media increasingly drives the relationship with the customer, and a good financial chief understands this is a business reality, rather than dismissing it as “something teenagers do”. Getting to grips with the many and varied marketing tools is a prerequisite.

But it is here that the marketing and financial chiefs can meet. Marketing tools should offer an insight into customers that any half-decent chief financial officer will welcome with open arms. A good relationship here will cement a customer profile that can be a basic building block of strategic predictive modelling and that’s a core discipline on which any C-suite executive should be focused.

Just because chief financial officers are from Mars and chief marketing officers are from Venus doesn’t mean they can’t have a great relationship.

4. Chief human resources officer 

In a Venn diagram of the C-suite, human resources and finance have one of the biggest overlaps. After all, payroll, hiring and firing are all jobs that need the skills of both departments.

Most people in the C-suite will agree that people are a company’s biggest asset. It has become a motherhood and apple pie kind of statement, and of even more importance given the increasing prevalence of service-oriented businesses. A shortage of talent can be one of the biggest inhibitors of corporate growth, and it’s up to the chief human resources officer to understand why and what needs to change.

If you want a great finance team, you need to harness human resources’ ability to engage and nurture talent; if you want a great company, you need to apply human resources skills to get the best people on board and plan for future succession. No company will grow well without a company-wide strategy to identify gaps in the talent stream and plug them.

But all this fabulous talent comes at a cost, and it is the chief financial officer’s job to analyse and evaluate that cost. It can often seem a brutal job, measuring employees’ worth in numbers, and this sometimes leads to cultural misunderstandings between human resources and finance professionals. But people statistics are as important to success as any other metric.

A collaborative relationship between the chief financial officer and human resources chief can often be one of the most productive for a company, with demonstrable increases in employee productivity or revenue. In many companies there is a welcome sharing of the technology that does the administrative grunt work, freeing up employees for a more analytical role.

As both jobs become more strategic, increased collaboration pays dividends. The division between hard and soft skills is increasingly blurred as both the chief financial officer and chief human resources officer need a broad vision to see the best way forward.

5. Finance team 

Having done enough collaborative partnering, the chief financial officer needs to lead the finance department, as long as they do not confuse leadership with dictatorship.

Unlike relationships with other C-suite officers, the relationship with the finance team requires the direction and protection of the more junior and less experienced members. This is where so-called soft skills will be most needed, often a challenge for chief financial officers who have risen to the top through outstanding number-crunching skills.

Of course, there’s a necessary level of compliance as any finance department has to be able to meet the basic requirements of legality and competence. But for the chief financial officer, there’s an extra layer of development needed to ensure the team grows its skillset on both an individual and group level. It’s all too easy for the finance chief to end up doing everything, since they are hopefully one of the most competent people in the finance department, so they may need to learn the difference between being the best person to do the job and the only person able to do the job.

Departmental goals should be made clear; everyone should understand how the numbers and reports they are so busily producing relate to corporate objectives. Analytical and strategic thinking should be encouraged; the team shouldn’t be afraid to ask questions or point out mistakes. Even bosses might stumble and make a mistake someday, and the finance team must be trusted to catch them.

So how will the chief financial officer know when they’ve done a good job? Often it’s about not screwing up; if there hasn’t been a financial emergency, they’re doing OK. But an even better measure is how often others in the company come to the finance department with questions, confidently expecting the right answers. Then finance is really at the heart of the business.