Challenging your CEO and Board

Overview

As a CFO, one of the key elements to your role is the ability to challenge your CEO and Board when appropriate.  Your unique perspective covering finance and risk management is an essential component of running a successful business, and you are responsible for ensuring that this is embedded across your company.

You are also the conscience of the owner who puts the brakes on things where needed, challenges what people are doing and brings a sense of reality to ideas.  This requires you to be constantly scrutinizing what is happening within your business and to be fully involved in the decision-making process.

Main difficulties

Challenging your CEO and Board can be very difficult at times, in particular when everybody is super-excited about a new business opportunity.  CFOs are constantly referring to how hard they find it to perform this vital element of the role.

CEOs can be interesting characters – typically unpredictable, emotionally-fuelled and full of ambition.  They will most likely develop big new ideas at a rapid pace and will be keen to charge forward, often without properly considering the necessary factors and potential consequences.

Likewise, the Board will often hold certain views based upon their own individual perspectives.  This may require somebody to either put the brakes on a potential activity, or to significantly change it.

You can often feel like the person who is spoiling the party and this can sometimes create an unfair reputation of the CFO role as being the blocker.  In particular, given that you will also constantly be pushing back on budgets, proposed expenditure and future financing requirements.

The personalities of your CEO and Board will have a big impact on how challenging it will be for you to deliver this component of your role.  For example, if your CEO is an ex-CFO and ex-auditor, then they may already possess a strong appreciation of these perspectives.  However, if they are a super-ambitious first-time CEO with no previous experience of finance or risk management, then things may be significantly more difficult!

Key skills required

CFOs need to possess a number of key skills in order to effectively deliver this element of your role, including:

1. Relationship-building: You will need to possess strong relationships with your CEO and Board, built upon the foundations of trust, integrity and respect.  Your opinion must be fully valued by your team and be supported by strong commercial awareness to justify the relevance of your views.
2. Judgement: Challenging your leadership requires you to be able to assess situations, read people’s minds and determine how best to deal with a situation.  You need to pick your moments to have the right conversation and know the best time to encourage, support, nurture and challenge your team – and also when to back down!  CEOs notoriously experience much higher highs and lower lows than most employees, therefore good timing and judgement is essential!
3. Charisma – At the right moment, you will need to convey your full personality and influencing skills to persuade your senior leadership team to embrace your views.  Robust negotiating skills may also be helpful when dealing with these difficult conversations.  Your approach to these discussions may be completely different for each individual person and needs to be tailored accordingly.
4. Communication – As always, strong communication is essential towards delivering this tricky requirement.  You will need to structure your message carefully to obtain people’s buy-in and also know when to stop.

Assess your skills

Participants should now perform the following activities:

1. Write down the personality traits of each person on your Board, including your CEO;
2. Determine their likely attitudes towards finance and risk management;
3. Consider how you may vary your approach towards challenging each of their views;
4. Assess your skills gaps within the above skills: relationship-building, judgement, charisma and communication;
5. Write down some difficult situations that you have recently been involved in;
6. Assess how well you dealt with them and what you could have done differently; and
7. Identify people who you believe are very good at challenging others and identify positive elements of their approach.

Conclusion

Challenging your CEO and Board is an incredibly different element of your role and is something that many CFOs struggle with.  It forms one of your big new areas of responsibility as you step up in your first CFO role and is often-underestimated within both your job description and key objectives.

It can take many years to master this art and this should form a key element of your career development plan.  Participants should focus on your main skills required to perform this effectively and you should constantly self-assess how well you are dealing with your tricky conversations.