The Chief Financial Officer (CFO) plays a pivotal role in steering an organisation toward its strategic objectives. As the financial landscape evolves, so do the demands placed on CFOs. For CEOs and Boards, assessing whether their CFO aligns with the organisation’s future needs is critical. Here are the 10 most common signs that finance leadership change should be considered.
1. Strategic Misalignment
If your CFO’s priorities and skill set are not aligned with your organisation’s strategic vision—be it growth, restructuring, or entering new markets—a replacement may be warranted. A CFO must be a key partner in shaping and executing strategy, not just a financial steward.
2. Lack of Adaptability
The business environment is rapidly changing, with advancements in technology, shifting market dynamics, and evolving regulations. A CFO who resists change or fails to embrace innovation may hinder the company’s ability to compete effectively.
3. Inexperience at Driving Growth
If your company is pursuing aggressive growth targets, your CFO should have a proven track record of scaling businesses, raising capital, and managing complexities associated with expansion. A lack of expertise in these areas can be a significant liability.
4. Failure to Build a High-Performing Finance Team
A CFO’s role extends way beyond pure financial reporting; they are also responsible for building and leading a strong finance function. If the finance team is underperforming or plagued by high turnover, it may indicate issues with leadership.
5. Ineffective Communication Skills
The CFO is often the face of the company to investors, analysts, and other external stakeholders. If your CFO struggles to communicate effectively or fails to inspire confidence – both internally and externally, it can damage relationships and erode trust.
6. Poor Stakeholder Management
A strong CFO must navigate the expectations of diverse stakeholders, including shareholders, lenders, regulators, and employees. If your CFO lacks the political acumen or interpersonal skills to manage these relationships, it may lead to friction or missed opportunities.
7. Failure to Leverage Data
Modern CFOs must be data-driven leaders who use analytics to inform decision-making. If your CFO is not leveraging financial and operational data to provide actionable insights, your company risks falling behind competitors who do.
8. Compliance and Governance Issues
Any missteps in financial compliance, reporting accuracy, or adherence to governance standards can have severe legal and reputational consequences. If your CFO has overseen such lapses, it’s a clear sign for change.
9. Cultural Misfit
Cultural alignment is critical for any senior leader. A CFO whose values, leadership style, or work ethic clashes with the broader organisational culture may create friction and undermine team cohesion.
10. Stagnation
Tenure alone does not guarantee effectiveness. If your CFO has been in the role for a significant period and the company’s financial performance or innovation has plateaued, fresh leadership may be needed to inject new energy and ideas.
Making The Transition
Changing your CFO is a significant decision with far-reaching implications. When considering this move, ensure you:
- Conduct a thorough evaluation of the CFO’s performance and alignment with strategic goals.
- Engage executive search professionals to identify candidates who bring the right mix of skills, experience, and cultural fit.
- Communicate the transition plan clearly to internal and external stakeholders to maintain confidence and stability.
A CFO is more than a financial leader; they are a strategic partner who plays a critical role in the success of the organisation. By considering the above 10 factors, CEOs and boards can ensure that they have the right financial leadership to navigate their current and future challenges.
To find out more about how Savannah can help with your finance leadership needs contact Richard Ashton.
