The first 90 days is a critical time for any CFO taking on a new role. While a new CFO wants to hit the ground running, there are many challenges to take on during the transition process.
These include learning a new organization, working with a new boss, managing a new team, and implementing change in a new culture. This topic was the focus of the NYC Chapter of the CFO Leadership Council at its April 2017 event.
Led by moderator Nick Christiano, Jr., National Managing Partner, Healthcare, at Tatum Partners – the panel discussed their experiences and learnings in onboarding as a new CFO, managing a new team, working with a new CEO, and getting productive quickly. The panel included Ben Golden, CFO at Novantas, Sam Judd, CFO, COO, and Business Head, John Miller, CFO at Gravitas, and Randy Zeno, CEO at Urban Therapy.
Here’s what they had to say.
Interacting with the Board and Investors in the First 90 Days
This depends on type of company and role. In larger, pubic companies, this may not be feasible. Worst case, a new CFO should have contact with the head of the audit committee. Getting engaged with the board is more viable in VC- or PE-backed companies.
A key opportunity in small, private companies is meeting with board members during the interview process. This gives the incoming CFO an opportunity to understand board member expectations, and issues that need to be addressed. This can be valuable input to use in developing the 90-day plan.
Gaining Confidence in the Financials
Integrity as a new CFO is critical. The CFO must get comfortable with the financials quickly, whether it’s a public or private company. That means getting auditors involved if the CFO suspects issues. A CFO must be confident in the results being produced. This includes the historic actuals as well as forward-looking forecasts.
If a new CFO finds issues in the financials, the recommended approach is to reveal these quickly. Being transparent with the board and CEO is critical in the first 90 days. This can be painful, but it’s critical to be transparent about issues that are uncovered. This can come back to bite the CFO in many ways.
How Important Is Industry Expertise?
CFO skills are usually transferrable across industries. But some industries do have nuances a CFO needs to understand – e.g., Biotech, Government, Defense, CPG, High Technology. This is especially true in revenue forecasting. Industry experience can be helpful in understanding how the sales pipeline evolves and how real the pipeline is. The first 90 days is a critical time to dig in and truly understand the sales process and sales forecast.
In the hiring process, CEOs are looking for general CFO/Finance skills, as well as industry expertise. So if you’re applying for a CFO position, it helps to tailor your resume to highlight skills that would apply to a target company. Worst case, your resume can be more generalized and the cover letter and emails can be tailored to highlight specific experience. Look for ways to transfer skillsets and experience.
Assessing and Managing a New Team
The new CFO should get to know the Finance team in the interview process and continue the assessment during the first 90 days. The recommendation from the panel was to keep the existing team in place during the transition period. If you’re a new CFO, that means leveraging the team’s knowledge and assessing their responsibility and skills. Don’t make changes in the team until after 90 days. Don’t be hard core, but do be open-minded, learn, and assess the situation.
Make any exits on your own timeline vs. theirs. Try to ensure a smooth transition in staff, where a change is necessary. If there’s a toxic situation, become a shield for the team while you’re enacting change. As new a CFO, you can have a lot of pressure to get things done quickly. Go slowly. Take time to assess the talent and situation. Make the team part of the change process, and demonstrate leadership.
Making Changes at the Right Pace
Onboarding starts before the new CFO starts the job. Initial interviews provide an opportunity for light due diligence. After an offer is received, that’s an opportunity for deeper due diligence – this should allow the new CFO to start assessing the situation.
While setting priorities as a new CFO, get a sense of the organization’s capacity and appetite for change. Identify 3 top priorities. Take lots of notes. Interview the Finance team and the executive team. Get input from all perspectives. Don’t jump to make changes too quickly without understanding the full impact.
How Should the CFO’s First 90 Days Be Remembered?
Results are key. The new CFO must identify 3 top priorities, show results quickly, and get a win. Getting aligned with the CEO and the board is also important in the first 90 days. Gaining confidence from key stakeholders is critical.
As a new CFO, keep your messages to management simple. Highlight accomplishments. Earn credibility. One of your top goals should be a P&L item. Find a way to pay for yourself – through increased revenue or enacting new cost controls. This builds trust with the CEO.
How EPM Software Can Help
This was a great panel discussion with useful tips for CFOs in transition, as well as those thinking about making a change in the future or those looking to become a first-time CFO. Assessing the Finance staff, processes, and systems that are in place is clearly critical during the first 90 days.
When it comes to financial systems, embarking on an ERP system replacement can be a long, expensive project that often disrupts the business. New CFOs will have a better chance of getting a “quick win” by identifying Finance processes that are currently supported by spreadsheets and email, and can quickly be improved by implementing a purpose-built software application.
Prime candidates for quick improvement can include travel and expense management, purchasing, budgeting, planning, forecasting, and financial and management reporting. Today’s modern, cloud-based applications for processes such as these can be deployed quickly, typically in 3 months or less.
Planful has worked with many companies to help them improve their planning, consolidation, and reporting processes by replacing spreadsheets and email, or legacy applications their organizations have outgrown, with a scalable, cloud-based platform that can support future growth. These systems can be deployed quickly, at a fraction of the price of on-premises systems. They can also help organizations automate and accelerate processes such as financial budgeting, quarterly forecasting, financial close and consolidation, and financial and management reporting.
To learn more, check out our white paper titled “Building the Business Case for Cloud-Based Planning and Reporting.”