16. Your First 90 days as a CFO and 2021 Predictions for Finance with Jack McCullough, President of The CFO Leadership Council

Join Hannah Munro, Managing Director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real world advice and guidance on how to transform your processes, people, and data. Welcome to CFO 4.0, the future of finance.

And also, we'll talk about a really important topic, which is obviously the first 90 days as a CFO and what does that look like. So let's... Let's start off with that, shall we? Shall we talk about when a new CFO is starting a new role, what is it that they should be thinking about in those first 90 days?

So you should be trying to extend your influences across the company with the CEO, with the board of directors, and even with customers and suppliers and such. So that's, to me, that's what it's all about, establishing those three things. And, you know, one thing I like to share with people is 90 days is approximately the length of a semester. in college.

And there's a reason that schools do that. And that 90 days, as it turns out, is a great time to learn and master a subject. So it's difficult to do because CFOs are very action oriented. They're high achievers, but the extent you can, don't put a lot of pressure on yourself to accomplish things in the first 90 days.

Think a little bit longer term and view the first 90 days as a learning opportunity. And then after that, you can apply your knowledge that you've taken in from the 90 days and build upon the relationships that you've formed and whatnot. Now, I'm not saying do nothing.

You can't just sit back and just take notes and learn and then on day 91 and suddenly turn the switch on. But you'll never get a better learning opportunity than your first three months on a new job. So take advantage of that. If you're going to be there five years, it's just a blip.

I don't know if that saying is known overseas or not, but you should take advantage of that opportunity to learn it. So understand your business model. Talk with engineers. You know, understand if, you know, if they're our engineers, whoever it is that builds and designs the company, find out what goes into that.

If your company has a customer support focus, you know, get to know the customer support. Find out what the problems that your customer is actually facing. In fact, did you ever see the movie The Intern?

So you may recall the scene at the beginning when Jules was talking to somebody, I think her company sold like bridesmaids dresses or something like that. And what was the experience like? So find out from your customer's perspective, what your company is all about, what it is that you do well, what you can do better.

And more and more CFOs are actually going on visits to customers. All of the elite CFOs I talked to do this. And there might be a little bit of resistance initially, and that's understandable, but you know, you're the CFO, insist on it. Go on a couple of sales calls and you know, it'll help you, you know, learn the business a little bit better.

And as it turns out, CFOs on sales calls actually perform really, really well. And the reason for that is they walk in with a certain credibility and trust that a rank and file salesperson simply doesn't have. People believe all about CFOs. So, you know, when people when CFOs talk, people are inclined to believe them.

And it's also very flattering to a potential customer that an executive is on a sales call. It's like, oh, I must be really important to this company if they're sending the CFO out to meet me. So, you know, do those sorts of things, get involved in everything that you can and suck up as much knowledge of the overall business as possible.

I'd be really interested to know how many cfos actually go out and speak to customers and i 100 agree with you i think it's it's something that a lot of them don't do even when they're shifting into that strategic role they haven't actually understood the thoughts about the customers and uh yeah i must admit i've never seen a cfo on a sales school so i love

that tip that's a great idea

And then later on, you'd maybe get some CFOs to help close the process.

It turned out they were pretty good at that sort of thing, that if you have a critical account, and to use an American football analogy, if you're at the one yard line and you just need to get over the goal line, you just bring the CFO in and he or she might be really good at helping that. And now they're involved a lot.

In fact, one of the best CFOs I know she's made it a point when she's in a new role, she calls the CFOs at the 10 biggest customers and she's not selling, she's just relationship building.

And, you know, when I spoke to her, that was invaluable to her at the beginning of this crisis, because, you know, she's trying to figure out what's the financial model for the next nine months and six months, whatever it might be.

And the salespeople would say something, but, you know, then she could actually call the CFO and whom she had a previous relationship with and say, hey, it's looking like you're going to do this. Is this realistic? How can we help you be successful? And continuing to build a relationship in a different way. And it paid dividends for her.

There aren't a lot of CFOs that have that type of foresight, but she's really good at that sort of thing. So she's all about the relationships.

And it's nice for finance to be involved at that beginning stage and not just be seen as the people that are chasing the money. They're actually actively involved in their customer journey, as it were. So that's a really good insight. So we've already said you can sit down with your customers. You've got to spend time with your teams and knowing everything.

I love it. That's a tool. order in three months, isn't it?

You want to be a trusted advisor to this person. It doesn't mean you have to be golfing buddies or, you know, drink beer after work together. I mean, if it works out that way, it's fine. But in a professional setting, you know, make sure they, you know, that they understand you have their back, you understand their challenges and you can go to them.

And by the way, don't be a yes man or yes woman. Challenge them a little bit. You know, you're new. It's kind of the honeymoon period. You can get a little bit aggressive. It's like, okay, why do you do that? And if the answer is something like, well, we've always done it this way. You know, that's way wrong answer.

So the other thing, you know, get to know other people too. You know, establish relationships obviously with the finance and accounting team. If it's reasonable, you know, have a one-on-one meeting with all of your direct reports. You know, there are big companies I realize where you might have 80 direct reports and that's kind of tough to do.

But, you know, if you have a manageable number, do that. But get to know them all to the extent that you can. Have one-on-one meetings with board members as well. That's a critical thing. Again, not everybody's going to talk to the CFOs at their biggest customers, but if you have the opportunity and the inclination, do that. It'll pay some long-term dividends.

Don't forget your service providers because they're really invaluable too. Talk to your auditors. Find out what's good, what's not good from their perspective.

get to know your you know your corporate counsel assuming you have an outside firm but these are people that can really make your transition into leading the company more successful and they have a different perspective than an employee might so it's um it's that time and one thing the best leader i ever worked for i worked at kpmg in boston i don't know if you

knew that or not but um the managing partner we had about 900 people in the office and the managing partner guy named pat canning Phenomenal leader and, you know, just a better memory than my own, apparently. But I believe he knew everybody on a first name basis.

And, you know, that it would be weird with him would be in an elevator and he'd just start talking to somebody that got on a different floor. And, you know, hey, Mike, hey, Jane, whatever it might be. He recognized everybody, which is phenomenal. And like with me, I reported to him. So, you know, occasionally he'd ask me how my sons are by name.

um you know he knew my wife by name despite never having met her or my kids so you know get to know people a little bit and let them know that you care about them as people not just as employees too so but relationships are critical they're going to drive your success in the company

And they're the ones that are successful and they actually orientate their plans around what the CEO's trying to do. Because that's always the challenge, isn't it? Is that you've got to make sure that as a finance person, you're an enabler. Not an yes man, like exactly what you said, but you're helping the CEO to achieve what it is that they want to. And that's

And the fact is there are a stunning amount of really good controllers too. So, and, you know, maybe a president with the controller can, is enough, but if the company needs a CFO and values what he or she can bring to the table, you know, great things can happen. So, but one other thing, I'm sorry, go

or at least not as just a numbers person. So don't go in and talk about accounting and inventory turns and, you know, count receivable aging, at least initially. I mean, at some point, you know, if you've got a problem, you might have to talk to the CEO about it, but talk about things that are important to him or her.

Talk about your strategy and how you can help him or her execute the strategy and evolve the business a little bit.

The fact is, you know, all of us, our main job, whatever it is that we do our main job fundamentally is to make our bosses look good right and to make them successful and you know the controller his or her main job is to make the cfo look successful and the cfo's job is to make the ceo look successful and that's kind of the way it is so um you know i

believe there is confucius said seek first to understand then to be understood i think that probably applies and the other thing you know there is a lot of um a body of science behind this CEOs tend to have decent sized egos and you know, so sort of take that knowledge and I'm not saying they're, you know, out of control, but they've accomplished a lot.

They're confident. So take that knowledge and use it to your advantage. You know, don't, don't step on the ego, but they like to hear compliments and, you know, just, Use that to your advantage that, hey, this is fantastic. I wonder if you're open to doing something like this.

I know this might be, you know, you've got a great system, but just make sure you're not damaging an ego if you're challenging him or her a little bit. But do challenge them. Again, don't be a yes person.

then follow it with a compliment so that that's

Yeah. You know, I'm famously have said gap is crap and whatnot. I'm not a big fan of gap because I just don't think a rules-based system is meaningful in the modern world. You need something. That said, you do have to understand GAAP and its implications because it is the law of the land.

You should walk in if the company is public and even if it's not, you're the CFO with a deep understanding of financial statements on a GAAP basis. But more importantly, understand and identify KPIs, key performance indicators.

These are the things that are actually meaningful outside the world of finance and accounting that'll help your CEO, your board, your investors, your sales and marketing people, whomever, better understand their business. And they're very empowering if you can identify the right KPIs. So I would say, you know, take time. Sometimes the companies have them, sometimes they don't.

But I've seen the use of KPIs change the image of a CFO completely. You know, if you go to a room full of non-CPAs or chartered accountants in your country and you start talking about GAAP, you're going to lose the audience in about five minutes.

But if you talk about KPIs and more importantly, not just the numbers, but the story behind them, you can bring so much value to your team. So it's like, okay, you know, for example, great, you know, revenue was up 4% in North America. It was up 13% in Asia and it was down 2% in Europe.

okay that's great information but the real information is why what happened that made asia go up 13 and why why did europe fall two percent and you know what can we learn from both of those sets of experiences if anything to you know make us all go 13 you know what are the mistakes that were made in europe or maybe they weren't any you know maybe it was

the summer and you know europe shuts down a lot in july and august and and in china they don't so you know it could be something like that but Insights beyond the numbers. Learn what they are and share them generously.

And then if your company has it, understand things at the business unit level, not just the total enterprise, but which divisions are doing well, which products are successful, which ones are kind of loss leaders, and get that type of understanding. So get a feel for the numbers, but don't be a boring accountant in your approach to doing it and sharing your insights.

Yeah. So I think what you're saying there is when you're putting numbers outside of the finance team, you need to talk in terminology that you know that they understand and they appreciate right so to try and help your your position of being seen as more than a finance person so insight versus um information i think is what you're saying there

And I loved the idea of the fact that actually you need to get the numbers right because, you know, it's all well and good being seen as that strategic leader, but actually you need to get hold of those numbers and, you know, you need to do the basics so that you can focus your time on the strategic side. So brilliant. So what else 90 days?

Is there anything else that we should be adding to that list?

But now is your best chance to really make an impact because you're sort of, you're almost like an upside consultant. And the reasons consultants can work bring such value to an organization is they don't have bias. And as a CFO, you also don't have bias early in your tenure. A couple of years in, you are beginning to have bias.

So, you know, assess the technology. Are you investing in the right things? Are they the things that are going to make your company competitive? And I don't mean just in finance and accounting, but overall. Invest in the technology. Understand what the best practices are in your industry. See if you can be a little bit forward-looking in that. Make sure it's right.

Also understand your culture because there is nothing more important to a company than its own culture. Make sure the employees are happy. If they're not, you know, try to figure out why they're not happy and what you can do about it. And if they are, you know, see if you can spread that throughout. There was a famous Harvard Business School professor.

He was viewed as, you know, the guru on strategy. And he famously said, culture eats strategy for lunch. He actually is not sure that he said it. That quote's been attributed to me. I'm not 100% sure if I actually am the one who said it, but apparently he said it once and he got stuck with it. He might have been quoting somebody else, but it is true.

You can have a great strategy and a great product, but if your company culture is terrible, it's not really going to matter because motivated employees are what drives greatness. Do the internal assessment of technology. operations in the company culture. And I think that's a lot for 90 days. I sort of had four buckets.

you know again a college semester you're taking four or five classes so turns out academics actually know what they're doing

the lion king

And, you know, this is a guy who is, you know, trying to overthrow governments and, you know, backstabbing his wife and his brother and his father. And, but they thought that that was like typical American business and it made them distrustful of Americans for some time. So, but yeah, so you just, you know, our pop culture, sometimes it's good, sometimes not so much.

We talked very much about getting hold of the numbers, so becoming that source of insight, not just information, for the rest of the organization and making sure that the way that you're discussing it and you're putting across those numbers is more KPI than GAAP. which is great.

And the other thing we obviously we talked about is get your team sorted, you know, get to know your team, get to make sure that the culture is on board. And, you know, you can't go wrong. If you've got a great team, you can literally achieve anything. That's one of the things I genuinely do believe.

If you've got a good team around you, there's nothing you can't achieve. So is there anything else on that that we've missed in terms of the sort of the pillars of the first 90 days?

But, you know, do think of them as part of your team. Do think of your outside counsel as part of the team, too. And just build meaningful trusting relationships with them.

So I love the fact that you talked about getting to know at all levels, all stakeholders and making sure that you're really on board with that, you know, with the whole team. both inside and outside of the organization. So I thought that was a really good shout out as well.

And I'd love to know what, you know, what do you think 2021 one's going to bring for either the role of the finance team or shifts that we're going to see in that finance role.

In fact, I just thought, like probably a lot of people, I thought it was hysterical. And I believe it's true. The first person who got a vaccine was named William Shakespeare. I mean, did you hear

It'll get to the rank and file. And in the second half of the year, I think we're going to be poised for some historically explosive economic growth. You know, there's just a lot of pent-up demand. Companies are going to be coming out of it. People are going to feel good. You know, think about even just in your personal life, right?

You probably have two, three weeks of vacation that you're going to want to take, and you're going to sprint frivolously and that sort of thing. So the economy is going to start to explode in the third or maybe the fourth quarter of 2021.

But specifically with the CFO, you know, what I'm seeing is – The respect that CFOs are garnering right now is, as best I can tell, unprecedented. They're the ones that, you know, people are going to and are leading their organizations through the crisis hand in hand with the CEO.

But again, with the trust factor, like CFOs are just, again, they walk into the room and people believe them. You know, they say what they mean and they mean what they say. as the saying goes.

So I think you're going to see that ascension continue and you're going to see that they're going to take on an even greater role in terms of strategy and perhaps more importantly, communications. More and more, public company CFOs are a lot more visible than they were a year ago.

Wall Street, as we say in the United States, they definitely still want to talk to the CEO, but they do want to get more face time with CFOs because unvarnished truth, no spin. no marketing, this is what it is. And that's important. Employees trust them. They've just got some credibility.

And the other thing is the evolution of the CFO role continuing to be more forward-looking than it was historically, that's going to continue. I've sort of referred to this as the golden age of FP&A financial planning. And it really is becoming a much more forward-looking role. And the reason is they've always been involved in the planning process.

But now there's just a lot more pressure on them, A, to do it a lot more quickly than ever before. And by the way, you've got to get it right.

know i mean you you make a mistake you might be killing your company and that probably wasn't the case a year and a half ago you know you might grow 12 instead of 14 or something like that but there's more pressure they're better skilled at it and you know candidly there's just more technology available out there to to do predictive analytics and financial planning

and that sort of thing so i think you're going to be seeing that historically cfos have been you know, public accounting, controller, CFO, not all of them, but that's been the most common path. I think you're going to see a lot more CFOs get their jobs through the FP&A process as opposed to controller, a lot from investment banking too.

And the other thing is more and more you're going to be CFOs, going to see CFOs promoted to the CEO role just because this is a financial crisis and, you know, the ones who are out there doing it are doing fantastic work at it. So.

I'd be interested to see if you're seeing the same trends that we're seeing over here, which is finance teams as a whole actually... working more remotely you know shifting to more of and i i think it's going to continue so this whole work from anywhere not work from home but work from anywhere and how that would work within the finance team i think that's an

interesting shift as well um and it could be a real game changer for you know for employee satisfaction particularly in finance that ability to shift and to change. And I think with the technology that's now available, that's more of an option than it was, say, a couple of years ago.

And I think the COVID piece is certainly giving a lot of the leaders that I speak to over here more confidence in their team working from home and being able to allow them to, and the productivity levels working for them as well.

They've got cutting-edge knowledge. They'll work really hard. Candidly, they tend to work a little bit cheaper than their parents might. So Generation Z is going to be bigger in the United States than the baby boom generation. They just started graduating in, depending upon who you believe, in 2018 and 2019. They're going to insist on flexible work arrangements.

And we didn't volunteer for it, but the last several months we've had a great experiment on how effective they can be. Turns out they can be pretty effective. But, you know, you'll miss things too, right? I mean, there's mentoring, which is easier in person.

And I don't know about you, Hannah, but, you know, I'm going to guess you've always had a lot of friends at work.

And I, you know, when I was working, I had an hour commute each way and, you know, it wasn't uncommon that I, you know, it didn't happen all the time. Every once in a while, I'd have a two and a half hour commute, just if traffic was truly awful, you know, only a few times a year, but, you know, that pretty much was miserable, so.

So the ability to shift not just where you work, but your work patterns and the hours that you work to cope with alternative childcare and everything else.

So I think it's going to be interesting to see whether whether employers are going to take this as an opportunity to create a USP and whether that then drives it as, like you say, the first ones are always the trailblazers and then it becomes the norm. So it'd be interesting to see what happens in the next year.

And a big selling point when they're recruiting people was it's right near public transportation. So you don't have to park. And, you know, that actually helped us get, you know, young people because in downtown Boston, it's not uncommon to pay 30, 35 dollars a day to park. That's a lot of money. And, you know, that can add up.

But that's not a selling point anymore. You know, the flexible schedules are the selling point. it's kind of cool that you can go into boston when you want to and you know if you want to have lunch at a fun restaurant or go for a pop after work you can do it but it's it's not the selling point that it was just a year ago so

And I will say 2022 will be the biggest year of economic growth of our careers. So it's a little, it's not going to happen in 2021 just, you know, cause the first six months are still going to be a bit of a drag. So, but yeah, but I feel, It just has to. There's pent up demand. Everybody's going to be hiring.

You know, like during any economic crisis, a lot of people lost their jobs and they're starting small businesses. Some of them are going to end up being phenomenal, employ a lot of people. So I'm very bullish. I'm nervous about the next six months, but I'm bullish medium to long term. So,

And I think we've all learned a lot in the last six months. And I really agree with your principle about CFOs shifting into CEO roles. And I think a lot of that has been driven by their awareness of their brand as CFOs. And again, I might bring you back on to talk about that one, Jack, about that positioning piece.

I think it's critical is that they're seen, like you said, not just as that numbers person, but as that strategic leader. And that falls so nicely into the CEO role at a time of crisis.

I wouldn't mind a little less excitement during my last couple of years in the workforce. You know, I mean, yeah, it's been exciting and it's been the greatest year for learning, you know, maybe since my first year out of college. And, you know, that's all really good. But, I don't know, a boring year or two wouldn't break my heart. Let me put it that way. So.