This is the second in a series about how CFOs can better manage relationships with CEOs, boards, finance teams and third parties.

Whether you work at a privately held startup or a publicly held enterprise, as a CFO you will gain considerable exposure and benefits from interacting with your board of directors, both individually and collectively.

CFOs are in a unique position when it comes to board relationships, both as contributors to key committees (Audit, Compensation, Risk Management/Compliance, Crisis Management, Cybersecurity, etc.) as well as generally being viewed by the board as an independent and transparent voice within the C-suite. CFOs are often asked to weigh in with their perspectives about the pros and the cons of moving in new strategic directions and quantifying the implications of those moves.

Cultivating strong relationships with board members is important not just in getting your job done as a CFO but also in terms of your long-term career advancement. These relationships can become invaluable networks that open interesting opportunities as your experience grows.

So how do you do make and grow relationships at the board level?

The primary opportunity for a CFO to grow their board relationships is at Board or committee meetings. The Audit Committee Chair is typically the key Board liaison for the CFO and a good sounding board for many issues a CFO would consider appropriate to bring to a Board’s attention. Audit committee chairs are often the board’s biggest advocates for value creation, cash protection, and the board’s fiduciary responsibility. They are also looked upon to confirm what the CEO & CFO are bringing forth in meetings. Recognition of a CFO’s good working relationship helps facilitate all the other board relationships!

Let’s look at five ways that a CFO can leverage their role with the board and cultivate board relationships:

  1. Set the agenda.
  2. Know your audience.
  3. Pre-prep your “lieutenants”.
  4. Over prepare.
  5. Be transparent.

Let’s drill into each of these.

Set the Agenda

All board Chairs need to carefully craft the agenda for their board meetings well in advance so that adequate time is given to Committee Chairs and staff to provide their necessary input and recommendations. An experienced CFO, along with the CEO, is able to help the Chair understand the issues and alternatives under evaluation by the Committees as well as any recommendations and corporate governance considerations. They can help the Chair facilitate the decision-making criteria the board will use to make final judgements and decisions.

CFOs are also the prime point people liaising with external auditors, bankers and Wall Street and are able to offer additional insights that can help the Chair frame the context for discussing any strategic moves. These same CFO skills are, of course, equally valuable to Committee Chairs with respect to Committee agenda setting (Audit, Compensation, Risk Management/Compliance, Crisis Management, Cybersecurity, etc.).

Know Your Audience

As all negotiators know well, knowing your audience is an essential “ticket to play” if you want to communicate well and maximize your potential for success. Boards are generally a group of very successful businesspeople with a mix of backgrounds and skills. CFOs need to understand their priorities, biases, objectives, and experience/backgrounds. You need to be able to be able to communicate the important and relevant details in a way that is understandable to all. Keep presentations focused & simple. Tell the business story – don’t just read the slides and recite numbers! Providing presentations and pre-read information in advance helps ensure the board members can engage properly and showcases the work you have done.

Pre-Prep Your “Lieutenants”

In Board and Committee meetings there are often significant decisions that need to be made that require significant analysis. Arguments in favor and against a particular board decision are discussed, whether it be to pursue an acquisition, take on new investors, expand into a new market, or go public. Because these are often critical strategic turning points for the company, a skilled CEO and his CFO will often “presell” recommendations with key board members in advance of the board or committee meeting. This is where the CFO can become invaluable to the board Chair. By providing essential data, helping to frame the issues and presenting the pros and cons and criteria for decision making, the CFO can partner with the CEO in this important preselling process prior to the board meeting. The same is true of CFOs working with Committee Chairs.

A situation that many of you will be familiar with is how a CFO interacts with the Audit Committee Chair. As CFO you should plan on meeting regularly, including pre-meetings with the audit chair outside of the normal Audit and Board Meetings. During these meetings you should discuss the business, any important key accounting/audit/business issues, or opportunities as well as any areas that you are considering for the upcoming Audit Committee meeting. This will enable you and the Audit Chair to be aligned and understanding of the content and all decisions that need to be made. This is very important as very often many if not most of the board members will defer to the Audit Committee Chair for their thoughts and then concur with them whether it be a Board or Committee meeting decision! Building trust and credibility with the Audit Chair is critical for every CFO. Successful CFOs know that developing a strong relationship with their Audit Chair should be their “priority number one.”

Over Prepare

A third area where CFOs can “wow” the board and establish even stronger levels of trust and credibility is how and what they choose to present at both the board and Committee meetings. It is essential that the CFO comes completely prepared for the meeting. That means conducting necessary research to validate any facts being shared, vetting presentation materials and key talking points with the Chair and other key influencers before the meeting, adequately rehearsing the “pitch” and most importantly, anticipating potential questions from the audience. This doesn’t mean sending the Board everything – it means providing them what’s important (see Know your Audience) and making sure you have the knowledge and access to the information if needed. Accurately assessing the right level of detail to report out, what data/issues need external validation, and how deeply to delve into issues during discussion, are important CFO judgement calls. “Keep it simple” still rules but having hip pocket slides to support your recommendations is also key. And pre-prep responses to potential questions in advance of the meeting and bounce these off the CEO or your Committee Chair before particularly key meetings.

Be Transparent

A fifth way CFOs can establish strong board relationships is when things go wrong. Over time all CFOs get put in uncomfortable situations when things at a company don’t go as planned.

Bad situations are when the CFO’s behavior is under the closest scrutiny by the board. The “voice” of the CFO becomes more heard and visible as the company’s independent watch dog. So, if the board asks you a question and you can’t easily answer it or quickly answer it, my recommendation is to let the board know that you will get back to them within 24 hours with the information. As the CFO it is critical that you never fake an answer to a board member’s question. One false step here can literally cost you the board trust you have worked so hard to build. Be transparent, always.

One last thought – on the CFO’s participation in Board and Committee meetings, I have found the most effective way to participate in Board meetings is to know when to lead a conversation and when to simply participate and speak up when necessary. Over time this sends the message to the Board that you are thoughtful and when you speak it’s important for them to pay attention – it helps build “Gravitas”.

All CFOs can improve and strengthen their board relationships. Just make it a priority and your career will benefit.