Succeeding in Your First Year as CFO

The world we operate in today is far more volatile and complex than previously — it's hard to plan one week in advance never mind one year, as one former CFO said. Russell Reynolds Associates’ Global Leadership Monitor found that leaders feel less prepared to address every major external issue we measure compared to six months ago.

While the CFO role often shifts alongside long-term macroeconomic trends, as Howard Averill former CFO of Time Warner said, in the past decade, we’ve seen a fundamental shift in the strategic and operational rigor required to be a CFO, and finance fundamentals have become table stakes.¹ With mounting pressure to deliver as a strategic partner, transitioning into the CFO role has become an increasingly difficult task. What’s more, the majority of newly appointed public company CFOs are doing it for the first time.²

To better understand how to succeed in the first year as CFO, Russell Reynolds Associates interviewed eight former CFOs from our cadre of CFO Mentors—renowned best-in-class executives and strategic partners.

As noted by our interviewees, without the proper onboarding and mentorship, first-time CFOs can often face a myriad of common pitfalls, including arriving with preconceived notions about the organization and strategy, being too quick to act, falling back into their previous role, not building the right team for impact and, most often, not showing up as a strategic executive.

Read on as we delve into how to ensure a smooth transition as a first-time CFO, including:

Pre-transition: How to tactically and mentally prepare

All best-in-class CFOs we interviewed agreed: that the CFO role starts the day they accept the new role, not the day they are officially appointed.

As new CFOs, their approach to tactically and mentally preparing for the role will differ based on whether they have been promoted internally or hired externally. As an internal candidate, they have the benefit of organizational knowledge and existing relationships; as an external candidate, they must prioritize understanding the company’s strategic direction and operational nuances.

While the ideal timing for the CFO successor to be decided is one year before the transition for internal promotions and three months for external appointments, this often isn’t the case. Given that these processes are never perfect, it’s critical to concentrate on a well-thought-out, high-impact development plan that will ensure that they start on the right foot as CFO. The following three-pronged approach can ensure success from the get-go.

First 90 days: Thinking fast and slow

Most of our interviewees were familiar with the concept of a 90-day plan, and shared two opposing schools of thought on the practice: Create and execute, or be more conservative in their decision-making in the first 90 days.

The best practice is to create a finance function strategy once the new CFO understands the organization. The specific path CFOs choose—create quickly or wait until they have all the information—depends on their time-to-appointment, the CEO’s strategy, and their familiarity with the organization.

Internal CFO appointments should be able to get off to a quick start, given their existing organizational awareness. Through prior conversations with the CEO, CHRO, other C-suite members, and independent mentors, the priorities and strategy should become clear.

Alternatively, if they have the luxury of time, a slower-paced approach pays off for many first-time CFOs. One interviewee went as far as saying don’t make any transformational decisions in the finance function until they are a year into the role. It takes time to understand the business, industry, stakeholders, and strategy—especially if they are coming from outside the organization.

To ensure the CFO is being viewed as a strategic partner, conducting a listening tour in which they start to build partnerships with colleagues both within and outside the finance function was a staple for our interviewees. Understanding their stakeholders, ensuring that they understand their position as CFO, and discussing their finance team needs are all fundamental to building trust and a collaborative relationship in which the CFO is viewed as a business partner, rather than just the finance expert.

Chris Kreidler, former Sysco CFO, would approach every stakeholder with the same question: “What do you think is—and isn’t—working with the finance team?” The range of answers he received helped him form a point of view on where the finance team stood and his leadership strategy.

The First Year: From finance fundamentals to strategic executive

Whether the CFO develops the strategy for the finance function within 90 days or sometime within the first year, CFOs cited the following as the most important building blocks to have in place within the first year.

While all are important building blocks, Kevin Ozan, former CFO of McDonald's, stressed the importance of being able to pivot. Business changes, performance issues, unexpected crises—you can never predict when these might arise. And when they do, you must respond quickly. This is why it's important to get your talent right and delegate.

Taking flight: No one gets to the top by themselves

As a first-time CFO, the role will be more challenging than anything a first-time CFO has encountered in their career previously. To help mitigate this, CFOs shared the partners who were most critical in their development:

Your CEO –  Getting the CFO/CEO relationship right is crucial. One way to build the relationship quickly and understand the business is to travel with the CEO, having them vouch for the CFO in introductions with the right people can help expedite their onramp time.

An external CFO mentor – While an audit committee chair or board member can be a beneficial thought partner, they likely aren’t someone a CFO can turn to and say, “I haven’t encountered this situation before – Where do I start?” Finding an objective mentor who understands the role and can share lessons learned is an invaluable resource.

Network of peers – It can be lonely at the top. One CFO said, “Truth checks itself at the door of the CFO.” As CFO, it’s important to develop a network of peers who you can trust to be honest with you. This network doesn’t have to consist of just CFOs—in fact, a more diverse group can help accelerate their understanding of their peers at work. Secondly, looking for CFOs who are also going through the same transition can create the opportunity for a sounding board. Both communities can provide a safe space for trading lessons learned.

A creative outlet – Whether it’s a podcast, newsletter, or book, finding something that challenges CFOs to think outside of their role and organization has proven to be a spark in igniting creativity. Bob Shanks, former CFO of Ford Motor Company, reads science fiction like Dune in his spare time. Escaping from the role and using another part of one’s brain allows leaders to think creatively about their organization and strategy.

Contributors

Our insights would not be possible without our esteemed participants' generous time and input.

Howard Averill – Former CFO for Time Warner and current Audit Committee Chair for Campbell Soup
George Davis – Former CFO for Intel and current Board Member at WW Grainger
Jeff Epstein – Audit Committee Chair at Twillio and Okta and former CFO for Oracle
Chris Kreidler  – Former CFO for Sysco and current Board Member at TRUEBLUE and Alyasra Foods
Maria Henry – Former CFO for Kimberly-Clarke and current Board Member at Nextera Energy, Nike and General Mills
David Meline – Former CFO for Moderna and current Board Member at HP, Pacific Biosciences of California and ABB
Kevin Ozan – Former CFO for McDonalds and current Board Member at McKesson, The Hershey Company and Cineworld Group
Bob Shanks – Former CFO for Ford Motor Company and current Audit Committee Chair at Garrett Motion

Authors

Symon Elliot leads Russell Reynolds Associates' Global CFO Mentorship Program. He is based in London.
Jenna Fisher co-leads Russell Reynolds Associates' Global Financial Officers Practice. She is based in Palo Alto.
Jim Lawson co-leads Russell Reynolds Associates' Global Financial Officers Practice. He is based in New York.
Catherine Schroeder leads Knowledge for Russell Reynolds Associates’ Financial Officers Practice. She is based in Toronto.

References

_{¹The Evolving Academy Finance Landscape | Russell Reynolds Associates
²Global CFO Turnover Index | Russell Reynolds Associates}