[The first article in a four-part series about how CFOs can better manage relationships with CEOs, boards, finance teams and third parties.]

As all experienced CFOs know, probably their most important professional relationships are with their CEO and with their board of directors. These key members of the leadership team set the vision, timeline, and direction for growth at a company and must agree on the operational, financial and strategic path to get there. Let’s start with the CFO-CEO relationship.

Developing the CFO-CEO Relationship

Based on my 30 plus year’ experience working with CEOs in both private and public tech and software companies, I believe there are at least two fundamental requirements to building strong and effective CFO – CEO relationships; first, creating trust and second, establishing a strong level of credibility. I believe that without these two foundational constructs, even the smartest CFO simply cannot succeed over the long term. Achieving these in practice is not necessarily either quick or simple. Like all relationships, you must approach each of these imperatives with a clear eye on who you are working with. You need to understand how they view the company and the competitive landscape in front of them. And you need to be aware of how they prefer to operate within that.

Building Trust with Your CEO

So, what works when building a relationship of trust between you as a CFO and your CEO? Here are six recommendations based on my own experience.

  • Listen well. Relationships can’t be successfully developed if you don’t know and understand your CEO’s “hot buttons” and priorities. Take the time and detailed attention necessary to understand the nuances of their personality and leadership style. Pay heed to their reactions to different situations and people. Observe carefully.
  • Communicate frequently. This is the familiar “managing up” tip, so important to building a relationship. Make sure you keep the conversation flowing with your CEO but make sure to “pick your spots” in terms of never wasting their time. Bring them overlooked/buried opportunities for revenue growth or cost containment, new ideas about future risk mitigation, technology, and systems enhancements which advance the company longer term.
  • Be prepared when you interact with your CEO. Do your research, and provide support for and analytics behind every “fact” or premise that you voice in the discussion. It’s also very important to know in advance of the meeting what you expect as an outcome of the meeting and always close the loop on action items and accountabilities.
  • Bring solutions (instead of issues) to your CEO. Put yourself in the CEO’s “shoes” and bring possible resolutions to a problem or issue. Understand the implications of implementing a solution and bring that knowledge to the discussion.
  • “Stay calm and carry on.” CFOs who maintain an unbiased, independent, and calm demeanor are highly valued by CEOs. A CEO typically relies on the CFO to be the voice of reason and sanity, especially in the most difficult situations. Being able to look at all sides (benefits and costs) of each potential path for the company is mandatory for the CFO when laying out the pros and cons of making critical moves.
  • Respect the chain of command. Never try an “end-run” around your CEO with the board. This can be a fatal move. Instead, work to better understand your CEO’s relationship with the board. And be explicit in asking your CEO how he or she wants you to interact with the board. If a board member calls you, always make sure you give your CEO a heads up about the conversation.

Building Credibility: A CFO’s Best Weapon

The second key to developing a deep and strong trusting relationship with your CEO as a CFO is building credibility. This is probably the C-Suite role where credibility is most critical. Mistakes, overlooked details, even typos can be confidence-killers when it comes to the CFO working with a leadership team. Attention to detail is critical!

Here’s what I believe helps build credibility and “gravitas” as a CFO, especially when I am the new player on the scene at a company:

  • Consistently and repeatedly demonstrate financial competence. While this may seem somewhat self-evident, showing frequent, consistent, ongoing “value added” as a CFO helps cement your reputation for credibility. Show your expertise in financial matters and your business acumen in the application of that expertise.
  • Only talk when you really have something to say. This is another one of my favorites. There is no reason to repeat someone else’s great idea or talk for the sake of being heard. Just pick your moments and make an impact in substantive, material, and priority areas. Make sure to support your recommendations with solid analytics and data.
  • Keep it simple. Building credibility requires that your audience understands what you have just presented. If it is too complicated or filled with finance jargon, that isn’t going to happen. Don’t overcomplicate your story. Keep the storyline simple and use just enough evidence to establish credibility.
  • Admit mistakes immediately. Taking responsibility early and immediately for any issues helps reinforce your credibility with the C-suite and your CEO as well as demonstrating a positive example to your team. Call a spade a spade, come up with a plan for addressing the issue, and move on.

Let me give two examples about how trust & credibility with the CEO at two different technology software companies enabled me to experience great career opportunities.

CEO Delegates Execution of Company Sale to the CFO

My first story is one where I was the new CFO (of many different departments) at a large multi-national, fast-growing public company. Initially, as the new C-Suite player, I didn’t have much “earned” credibility with the management team so I launched a “campaign” to demonstrate how I as CFO could contribute positive and incremental value to many areas around the organization. As the company grew revenue from just over $150 million to a projected $300+ million over three years, and the number of employees more than doubled, I focused not only on finance, Investor Relations, M&A, IT, and systems, but also how my team could help operations cross-functionally throughout the organization. During this time, I selected and successfully implemented new financial systems and other applications to provide increased customer service both to my internal and external customers and changed the finance team from a transactionally-based group to a more strategic collaborative group helping decision making throughout the organization.  Planning and successfully executing these cross-company initiatives helped me work closely with our CEO to build trust and credibility.

In my third year, the company was approached by a buyer willing to pay a 100% premium on the stock price. Because of my CEO’s trust in me, he asked me, as CFO, to take the lead post-price agreement sale (aided of course by our lawyers) to finalize the negotiations with our buyer and get the deal done. This included keeping my CEO constantly informed as well as regular reporting back to our board while he continued to focus on the day-to-day operations of the company.

Stepping into a CEO’s Shoes to Take a Company Public

Another career story around earned trust is with a CEO I worked with not once, but twice. I was first her CFO at a company that was growing fast but still burning cash. During a two-year period, we were on the path to going public (or so we thought), filed the S-1 and prepped for the investor roadshow, acquired a company, constantly raising cash and at the same time transitioning from a perpetual license to recurring revenue SaaS company. In the end, we didn’t go public and we had to sell the company. These ongoing challenges and necessary points of connection between myself and the CEO deepened our relationship over time and led to a strong level of trust between us.

Several years later, the CEO and I had built such a strong bond that she, now CEO at another company, brought me back in as a consultant to help advise her interim CFO and executive team as they once again pursued the path to going public. This time, we succeeded (on the NASDAQ) but unlike our first attempt, where she as the CEO personally lead the negotiations with the bankers, this time she turned this role over to me – “You know what to do, just take care of it”.

To Conclude:

I like to summarize the CFO’s relationship with the CEO as “being their best friend who they can talk to – while still being their biggest critic.” You need to build the trust and credibility so that the two of you can have the tough conversations that are inevitable in leading a successful organization.