Case Study 1 - Becoming a more Operations-Focused CFO
THE CHALLENGE that led to CFO coaching
A female CFO at a $75 million PE company in the healthcare arena, initially appointed in “a battlefield promotion” from Controller at the suggestion of the departing CFO, was delivering solid results from an Accounting perspective. Yet FP&A was virtually nonexistent, and the PE partners lacked the necessary insights at a time when performance was flat. While the Accounting team was getting the job done, Stephanie* needed to expand both her vision and theirs for where performance could rise, and what was driving the variances. The CEO wanted Stephanie to become a more operations-focused CFO, yet she struggled with concerns that C-level peers would resist her inserting herself in new areas where she lacked subject-matter expertise. Moreover, as Stephanie’s team lacked illuminating analytics to offer value to PE partners, she played “a very minor role at Board meetings”. She’d become marginalized in vital conversations in which a CFO should actively participate, or in fact lead.
Still, the CEO respected Stephanie for her smarts, hard work, and leadership / team player qualities. He believed it was more important to keep a steady hand at the helm of the evolving finance team than to rock the boat with additional changes in the C-suite while he was dealing with larger issues in sales, ops and I/T. The CEO expected Stephanie would rise to the occasion, as she had proven herself capable of doing when she rapidly reduced DSO from 70 to 50, and he was willing to invest in her transformation.
THE APPROACH
This 9-month CFO coaching process began with a 360 review from 18 participants, underscoring how much Stephanie’ C-level colleagues respected her and how they longed for the kind of clear vision and strategic direction she could offer as a result of having been at the firm longer than many of them. Insights from analysis of the 360 data combined with targeted coaching in response to specific feedback emboldened Stephanie to become much more engaged in operations. The coaching framework soon equipped her with specific tools including clusters of powerful questions she could apply with great versatility to identify key obstacles, to create appropriate dialogue in cases where others were reluctant to engage, to model the way by asking the seemingly simple questions that actually turn out to be pivotal, and to generate momentum for making decisions.
While Stephanie worked on stepping fully into the power of a CFO – dissecting and disarming the limiting beliefs that had held her back from exerting the full scope of authority of her role with both colleagues and PE partners – she also began to be consciously mindful of two speech patterns that could undermine her credibility. She implemented specific new practices, focused on actions to start and others to stop, and deployed structures to keep her mindful of new habits.
Stephanie also realized she needed to invest in developing members of her FP&A team, and to redirect the funds being paid to a consultant to hire more experienced FP&A resources who could quickly create a vision, a strategy as well speedy execution. Using NEXT’s Leadership Matrix, Perspectives Wheel, Co-Active Strategies and other tools, Stephanie was able to process through the changes she needed to integrate into her thinking and actions. She also confronted her own underlying reluctance to address certain issues, and triangulated toward a clearer vision for expectations for her group.
“Stephanie is much more engaged in operations, and has emerged as a leader among her C-level colleagues. She’s found her voice, and is asserting her authority as a CFO with greater impact. Our PE partners see a significant difference. She’s really grown into the role and deserves the employment contract we offered. I’d pay for this CFO coaching virtually out of my own pocket.” − Sponsor / CEO
At the halfway point of the engagement Stephanie had another breakthrough, as she found the wherewithal to shape a newer aspect of her identity – that of an Operations CFO capable of developing an FP&A strategy herself, rather than having it be a side-line she delegated to her future Director. She embraced the need to become the driving force that created a vision and brought it to life, and to re-prioritize how she allocated her time to make that a reality. Meanwhile, in the near term she used an Accordion consultant to start defining more effective KPI metrics to demonstrate near-term progress.
THE OUTCOMES of CFO coaching
Stephanie’ C-level colleagues and their teams welcomed her new contributions, and as they invited her into their lanes she found herself having to juggle many new ops-related opportunities. Her CEO described her as significantly more connected to operations decisions, including a planned Salesforce implementation, vetting capital projects with greater rigor, and demanding clearer demonstrations of ROI on many programs. Once she managed to re-conceptualize her role and see the impact she was quickly having, Stephanie had a clearer framework for assertively saying no to some nebulous spending initiatives, bonus proposals, and investment scenarios from operations with fuzzy long-term ROIs. She also sharpened the criteria for saying “yes”.
She began to ask more searing questions, while consistently maintaining her steady and gentle manner. She set up bi-weekly meetings with one of her 3 PE ops partners to foster better communications and avoid surprises. Stephanie managed to find a good balance between unwavering support for her CEO, while successfully navigating some changing dynamics on the executive team. She grew in stature, both inside and outside the firm.
“I feel like a completely different person, and I interact with our PE partners at a very different level. That’s making a huge difference for us all. My former concerns about seemingly intruding into operations were replaced with fulfillment about the value I’m adding. I see how colleagues welcome the increased level of collaboration, and even desire the increased accountability my team is working to bring as we develop more visual KPIs.” − Client / CFO
Stephanie developed a clear vision statement and began to leverage specific examples offered by NEXT related to analytics, concepts, graphics, BDPs (best demonstrated practices) and action plans that could move the needle. She began to focus on the predictive value of PROCESS metrics and using those as leading indicators, rather than the previous over-reliance on lagging indicators from accounting. The quality of insights related to lost or shifting revenue began to improve, and by the end of the engagement she was implementing a broader vision to meet the PE firm’s analytic needs.
Meanwhile, Stephanie and the C-level team identified $3 million in cost reductions that included a RIF, and she exerted her authority to keep spending down. As an outcome of CFO coaching, she increasingly modeled the way for peers by showing how she was doing more with less, and worked to increase a culture of accountability and commitment at every level of the company. Her PE partners noticed the value she was adding and her CEO and PE firm offered Stephanie an employment contract, along with a salary increase.
(*) Names changed to maintain client and sponsor confidentiality. Tailored solutions and services for CFOs, Executives and VPs. See what others say.
