Only 22% of CFOs rated personally effective

Under a quarter of CFOs are personally effective and most spend too long on finance tasks, wasting the equivalent of one day a week when they could be supporting the business in other areas, according to Gartner

The consultancy said only 22% of CFOs achieve a high degree of personal effectiveness, while just a limited set of activities and successful relationships outside the finance department are the biggest contributors to a CFO’s ability to make an impact.

The research was based on more than 100 CFO interviews and it assessed their personal performance and effectiveness across 231 attributes to reveal what the most effective CFOs do differently with their time, relationships and teams.

Peter Nagy, research vice president in the Gartner Finance practice, said: ‘CFOs tell us they have more demands than ever, but the surprise in this research is just how few activities differentiate the most successful operators from the rest of the pack.

‘The most important relationships that drive high performance in the CFO role are found in the boardroom and where the customers are, not in the finance department.’

Of the one full day a week spent on ineffective activities, Gartner said the largest misallocation came from how much time CFOs spent working within their own departments.

Nagy said: ‘CFOs want to reinvent their departments, keep their talent pipelines full and provide services more efficiently to internal business partners, so it’s not surprising that most respondents noted that managing these activities were a huge demand on their time.

‘However, none of these activities, even if mastered, ultimately impacted how effective a CFO was in their overall job performance.’

Gartner found that there was no correlation between an organisation’s size or industry in how effectively their CFO performed. Within the finance department, a CFO taking personal ownership of finance talent acquisition, mergers and acquisitions strategy, cost management or digital transformation also had no material impact in how effective the CFO was rated in overall job performance.

Instead, Gartner said effective CFOs focused on three areas. The first was challenging their CEOs to achieve better decision-making outcomes. CFOs reported that they were underinvested in time allocated to both overall corporate and finance strategy, potentially negatively impacting their ability to play this role effectively.

Secondly, personally effective CFOs spent more time with external customers than their peers. CFOs who exhibit strong customer relationships were also deeply connected with their sales leaders and played an active role in owning pricing strategy.

Finally, the most effective CFOs were plugged into business unit performance, either via direct reports, maintaining strong relationships with business unit general managers and/or a deep involvement with business unit performance metrics.

Nagy said: ‘While it may be discouraging that just one in five CFOs currently meet the Gartner standard for a high level of personal effectiveness, the good news is that just focusing on a few key relationships outside of finance can drive significant gains in this area.

‘The key for CFOs is to be mindful about where they invest their time and with whom, and then develop strategies for protecting those time investments from their many other day-to-day demands.’

Gartner determined CFO personal effectiveness based on how closely a CFO’s organisation aligned to efficient growth behaviours, such as positive risk taking to drive long-term growth, as well as the CFO’s ability to meet CEO expectations around revenue growth, margin expansion, return on invested capital and balance sheet health.

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