A CFO’s job is wrought with difficulties and struggles. For instance, CFO.com found that around 56% of CFOs have a hard time balancing cost-cutting and future growth. Also, a report by EY found that around 63% of CFOs find it contentious to balance their companies' short-term and long-term goals. And none of this is to mention how more than 8 out of 10 CFOs grapple with today’s talent crunch.
Fortunately, whether your current CFO is struggling with some of their responsibilities or you have decided to promote a member of your finance team, a good CFO coach can improve your financial leader's performance and ensure they are firing on all cylinders.
However, finding the right coach is largely about understanding your needs and determining the gap you are trying to fill.
When looking for a CFO coach, there are two things you want to look at:
Now, the coach’s job is to fill the gap between the needs of the organization and the coachee’s capabilities.
You want to start with your organization's short and long-term goals.
These goals can differ depending on the stage your company is at and the industry you’re competing within.
For instance, a more mature company might be making a lot of acquisitions. So, it needs a CFO who is comfortable with M&A deals, understands capital structures, knows different ways to raise funds, and has ample experience integrating different organizations together.
From an industry perspective, a company in the manufacturing sector might need a CFO who can help improve its margins, optimize its operations, and install the checks and balances necessary to preserve capital.
When assessing your CFO or candidate, there are two main areas to gauge:
From a technical perspective, your CFO doesn’t need to be proficient in every facet of the job. Instead, they need to excel at the things that align best with the company’s needs and goals.
Technical capabilities are everything the CFO does functionally to support the finance department. This includes the work they do themselves as well as the oversight of the work they delegate. The CFO doesn’t have to be the subject matter expert, but they need sufficient technical expertise to understand the company needs and the best way to satisfy them.
Behavioral capabilities involve all of the relational aspects of being a CFO. This includes maintaining a motivated finance team, collaborating effectively with other executives, relating positively to the board of directors, and more. In many respects, these are the most critical capabilities for any CFO, as deficits here will present endless challenges regardless of how technically sound the CFO may be.
Identifying gaps here will tell you where your CFO might need some help.
Now that you understand your CFO’s needs, you are in a better place to find a coach to fill those needs.
And that starts with picking the right type of coaching.
There are three types of coaching:
Some CFOs may have an immediate or impending need to learn technical skills where they currently have no proficiency.
A CFO coach can help the CFO with behavioral skills, such as communication, emotional intelligence, leadership, and time management.
The coach can show them how to effectively learn these skills through experience. For instance, if your new CFO has trouble when presenting to the board, the coach can work with them to build confidence and through repetitions, developing the muscle and finding comfort on that stage.
A CFO coach is more than a technical powerhouse, they are trained behavioral experts who understand the nuances of managing the complex emotions and team dynamics within the office of the CFO.
A CFO might go through a specific situation or circumstance that is novel to them. So, while they might have the technical skills needed to get the job done, they are unsure how to apply them.
In this case, you should find a coach who has the experience of leading through a similar situation multiple times.
For instance, the company may have a need to explore inorganic growth opportunities, but the CFO has no M&A experience. Or, your company is purchasing a new building, and your CFO has no experience with such a purchase, then you want to find a coach who can help guide them.
The coach can review the bank’s term sheet with them and fully understand the covenants, as well as show them how to negotiate with banks and present financial information the way the banks will want to see them.
Numerous online resources distinguish between coaching and mentoring.
But, according to Darrell Borne, a CFO coach with more than two decades of experience, the difference can be best summarized as follows:
“For me, coaching is just coaching a skill set. It’s teaching someone a skill set.
If you're doing treasury management, this is what treasury management is.
Mentoring would be more along the lines of customizing the coaching approach to the reality of the company, where they're at, what they're trying to do, and what they may want to do in the future.
So, you can teach the basics, but to actually make it so that it's actionable and value-creating for them, you have to do the mentoring side of things, which is more specifically oriented to what they are trying to achieve from a corporate perspective.”
In essence, according to Borne, every coaching engagement needs to have an element of mentoring within it to make it actionable. Even if the required coaching is technical, it must be tailored to the company’s unique circumstances.
However, when the CFO needs situational coaching, then there will be more mentorship involved as opposed to pure technical coaching.
What you don’t want is a CFO coach with little practical experience, especially if you need them to act as a mentor. An experienced coach can bring their expertise into the interaction, making the coaching more relevant and actionable.
Coaching exists on a continuum that stretches from directive and telling the coachee what to do all the way to inquisitive and letting the coachee figure things out for themselves.
For example, any time a coach brings up a topic for discussion, they will approach the coaching process in one of two ways:
It is worth remembering that in many cases, a coach can’t presume to know the right answer because they lack a lot of the necessary context. Instead, the coach knows how to find the right answer in ways that the coachee needs guidance.
However, a natural question to ask at this juncture is when does a coach let the CFO find the answers on their own, and when are they more directive?
Two factors determine the coach’s style:
Let’s explore each of these factors independently.
A coach could have one of two mindsets.
If they are approaching matters as a coach, they will care about the coachee’s personal growth. In this case, they might be fine being patient, asking the CFO the right questions, and helping them find the answers for themselves.
Alternatively, the coach might be approaching matters as a consultant. In this case, they are trying to diagnose and solve a problem. In this case, the CFO’s growth comes second to resolving the issue at hand.
Whether a coach acts more as a mentor or a consultant depends on several factors, such as the company’s sense of urgency. The more urgent the situation, the more likely the coach will act as a consultant rather than a mentor.
According to Darrell Borne, people develop their proficiency in any given field in 4 stages:
Accordingly, whether a coach directs the CFO or lets them figure things out independently depends on the CFO’s proficiency in the matter.
For instance, if the coach is helping the CFO with the company’s tax strategy, the coach will start by gauging the CFO’s current competence in this subject. The more competent the CFO, the more likely the coach will let them find the answers for themselves. However, if this is the first time the CFO has ever put a tax strategy in place, then the coach will be more directive in their approach.
To recap, the coach you will need depends on the gap you are trying to fill and your company’s unique circumstances. And, in most cases, finding a coach with actual on-the-ground experience is irreplaceable.
Now, let’s answer some of the questions we get time and again.
When it comes to technical coaching, the answer is online is completely fine. Put differently, so long as the CFO and their coach can share information online, they don’t need to be within each others’ immediate vicinity.
For instance, if the coach is helping your CFO with financial planning and analysis, or FP&A for short, then the CFO must be able to share their models, which is very doable with today’s technology.
When it comes to behavioral coaching, it can still be mostly done online. For example, the coach can carry out the behavioral assessment online, run the CFO through hypothetical behavioral situations, and teach them how to benefit from their strengths and learn from their weaknesses.
For instance, if the CFO is outgoing, the coach could show them when it would be appropriate to lean into that trait and when it would be appropriate to curb that instinct.
The one case where you might need a coach near you is when the CFO is struggling from a leadership perspective and you need a 360-degree analysis of their behavior. In that case, the coach will talk to their subordinates and the other members of the executive team to get a better feel for where the problem might be coming from. The coach may even observe them in action to get a better feel for the situation.
But a 360 degree analysis is rarely needed, and a KPI assessment along with a behavioral assessment are usually enough to highlight a CFO’s strengths and weaknesses.
The answer to this question depends on what type of coaching your CFO needs.
If your CFO needs technical coaching, specifically something related to accounting and controllership, it makes sense to get a coach with a CPA and who is well-versed on the FASB’s.
However, if the CFO needs behavioral or situational coaching, experience trumps qualifications.
Here are a few things that will matter more than the degrees the coach has:
This is why you always need to start with understanding the type of coaching your CFO needs.
In some cases, a coach’s network can prove valuable.
For example, if the CFO is going through a technical problem in the IT area, then it might help for the coach to have technical people who can help. Alternatively, if a company wants to set up and roll out an ESOP, which stands for Employee Stock Ownership Plan, then the CFO could benefit if their coach has access to legal experts who can help with that operation.
Having talked about the coach, their experience, and their credentials, we need to talk about the chemistry between them and your CFO.
According to Darrell Borne, the CFO coach mentioned earlier, chemistry is critical during the coaching process. Here is what he had to say about the subject:
“I think you and your coach really have to get along. You're going to spend a lot of time trusting this person to help coach you in what you're doing, and if you don't feel comfortable with their style, their communication, or the way they do things, then you might want to find another coach.
A coach has to be adaptive to the needs of their candidate because each candidate is going to be a little bit different. And I think the more you can do that, the more you can actually be supportive in what they're trying to achieve.
So I think that that's clearly a very important element.”
When it comes to cost, you want to strike a balance.
On the one hand, you don’t want to be pennywise and pound-foolish. When it comes to coaching, you get what you pay for, and if you try to save too much and cut corners, you might cause more harm than good.
After all, you want someone who is experienced and who can produce the results you are looking for, and this comes with a price tag.
Conversely, a good coach shouldn’t cost so much that their ROI is almost non-existent. Anytime you hire a coach, the ROI on your investment should be several multiples over.
In almost every coaching engagement we have been a part of, the company that brought us in needed to train a finance professional to lead the office of the CFO. These companies bring us in because they want to promote internally rather than hiring someone from outside.
As a result, these companies can calculate the ROI of coaching by comparing the overall costs of training this employee versus hiring someone from the outside.
In other cases, when the CFO is already leading the finance team but might be underperforming in some areas, the ROI can be calculated by comparing their overall performance before and after the coaching period.
For example, if the CFO isn’t contributing strategically as much as the executive team would like, then the ROI can be calculated by looking at both the increase of the CFO’s contribution over time as well as the quality of their contributions.
Even though you want to measure the return on your coaching investment, you need to remember that the speed of that return may differ on a case-by-case basis.
In some cases, the return may be immediate. For example, if the company is prioritizing treasury management, a technical skill, then your CFO’s improvement in that area may become apparent within the first month of coaching.
The amount of progress you can see within any technical pillar depends on what your company is trying to achieve within said pillar, how comfortable and proficientthe CFO is with said pillar before any coaching, and what results they are trying to achieve in the near and far future.
Alternatively, if your CFO needs help becoming a better leader for their team, and they’ve never shouldered this kind of responsibility before, that progress won’t happen overnight. It might take months for the CFO to make noticeable progress within that pillar. A big reason is that leadership is one of those things that need experiential learning, which takes time.
As a result, how quickly you can expect to see the coaching pay off depends on what is being coached and what results you are expecting.
That said, the most important thing for creating value is clarifying expectations upfront with the organization, the CFO, and the coach so that everybody knows where the ship is going.
Simply, everybody must know:
That being said, coaching is only half of the equation, and no amount of coaching will suffice if you don’t have your CFO set up for success.
To ensure your CFO has the highest chance of succeeding in their role, you need to support them and surround them with the right team that shores up their weaknesses and saves their time.
After all, you can’t expect your CFO to also act as a financial analyst. It will be time-consuming and distract them from their more strategic role.
Finding the right coach starts with identifying the gap between the company's goals and the CFO’s current capabilities. Once that gap is understood, it becomes easier to determine the required type of coaching and the appropriate style to accompany it.
And remember, the chemistry between the CFO and their coach is far more critical than whether the coaching is done online or what credentials the coach has. Also, the coach’s network can prove helpful, so ask about that.
When it comes to cost, you should maximize the ROI of your investment, which usually means paying a little extra for a good coach rather than opting for the cheapest choice.
If you are considering getting a CFO coach and want help finding the best fit for your organization and CFO, do not hesitate to reach out for a free consultation. We would be happy to help in whatever way we can.
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