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Managing transitions: CFO regrets

Managing transitions: CFO regrets

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Published by: Deloitte University Press on May 20, 2013
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05/20/2013

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CFO Transitions
Managing transitions:CFO regrets
 
Managing transitions:CFO regrets
By Dr. Ajit Kambil
B
ased
on historical averages, nearly one inve CFOs in the Fortune 1000 may changethis year.
1
In our study—
Taking the reins: Managing CFO transitions
—we ound CFOshad to manage three key resources to success-ully navigate through their rst year:
Time
—Both their own and their sta’s
Talent
—Having the right people toexecute initiatives
Relationships
—Both internal and externalto the company When we asked CFOs who had navigateda transition beyond one year, “What onething would you have done dierently?”, weound two key considerations. First, mostCFOs wished they had moved aster to get theright talent in place. Secondly, some CFOswished they had conducted better culturaldue diligence.
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Get the right talent in place
During our interviews, CFOs indicated thatrecruiting and aligning talent to priorities isone o the most important tasks—sometimes
the
most important task—they ace in the rst180 days on the job. Ultimately, it’s the talentin the nance organization that executes theCFO’s agenda—either successully or unsuc-cessully. Tus, new CFOs have to quickly assess talent, recruit new “A” players to llkey gaps, and re-recruit the current team totheir agenda.Assessment ofen takes the orm o directconversations and observations. Te CFO atone company got a quick read on his directreports and other sta by asking pointed
CFO Insights
2
 
questions: What are you working on and why is it important? How do you measure successin your area? How do you assess your people?When one CFO didn’t receive answers rom adirect report that were both strategic and valu-able to the company, it was clear that a changewas necessary. Within his rst eight weeks, hehad a new “A” player on board or that job.Another CFO said it was important toobserve people in action beore reaching a verdict on their capabilities: “Sometimes it’sthe quiet ones who actually got things done.He likes to work with individuals to rame aset o desired accomplishments or the rstew months (about 90 days)—and watch how they operate. He said that this gives him a truermeasure o his people’s capabilities.Tis so-called observation approach ismore easible when a CFO is coming into astable nance organization without a burningplatorm or change. A number o CFOs notedthe importance o the old Reagan maxim—trust but veriy—in talent management as they observed their direct reports and the next layero talent during their rst 90 days. Tis wastypically used to identiy the “A, “B,” and “C”players.Great talent not only makes the nanceorganization more likely to succeed, but alsohelps CFOs conserve their time. Many CFOsencounter a talent conundrum when they take the reins. Tey may need “A” talent in aparticular role, such as the treasurer, but cur-rently have congenial “B” talent in the role.Tis orces them to choose between eitherbringing in a new person or trying to developthe “B” into an “A.” Many CFOs we interviewedregretully chose the latter—and ound that ittook time away rom other critical things they had to do. Tus, getting “A” players in key rolesquickly is vital to conserve the CFOs’ time orother initiatives and tasks.Not managing the undamental trade-o between talent and time can lead to regret. OneCFO noted, “You have to take some peopleout ast and make at least a ew changes in therst three to six months. For me it was easy,because I had some ‘C’ players. But even i youhave all ‘A’ and ‘B’ players, I think you still haveto do it. You need to make sure it’s your teamand that your people are aligned with you.I’m always amazed with leaders who accept‘C’ and ‘C-minus’ players. My eeling is that i you don’t get rid o these people, you’ll regretit.” And this indeed was the primary regret weheard in our interviews.When they’re looking or new talent, CFOsmost ofen turn to executive recruiters orormer colleagues or candidates and reerrals.Bringing in new recruits could be an impor-tant trigger or raising the bar on perormanceand reshaping expectations within the nanceorganization. In addition to new sta, re-recruiting the existing sta and earning theirallegiance is also important. Te internalre-recruiting o peers, especially those whocompeted or the CFO role, can be a challenge.One eective approach to managing this is ora CFO to initiate direct conversations with thepeople who were passed over within a week ortwo afer his or her appointment is announced.For the CFOs we interviewed who did this, theconversations opened by acknowledging thatthe other’s aspirations were not met, ollowedby a direct request or commitment to the new CFO, the team, and the agenda. Naturally,
During our interviews, CFOs indicated that recruitingand aligning talent to priorities is one o the mostimportant tasks—sometimes
the
most important task—they ace in the rst 180 days on the job.
Managing transitions: CFO regrets
CFO Transitions
3

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