The CFO’s first hundred days: A McKinsey Global Survey
Chief financial officers around the world describe their first hundred days
on the job as a time when most received guidance, but many had difficulty
devoting enough time to their top priorities.
New chief financial officers may not be spending their time where it’s most
needed, according to a new McKinsey survey of CFOs.1 Finance chiefs,
globally and across industries, report spending most of the first hundred days
on budgeting, management reporting, and financial reporting. By contrast, they
think that the most crucial activities during that time are understanding the
drivers of the business, providing input into corporate strategy, and building
the finance team.
Why are there such differences between what they do and what they regard as
important? A possible answer was suggested by one CFO’s response to a question
about what, in hindsight, respondents would have done more or less of. This CFO
pointed out, “There is no simple answer to this. One cannot put the clock back.
Every day the situation changes, and the responses and actions will have to be
tuned to the situation. CFO[s] must be able to assess the business needs and
Fortunately for new CFOs, as they respond to their fluid situations most have
strong support from the CEO. More than three-quarters of the respondents say
that they received explicit guidance from the CEO in the first hundred days on
the job, and 46 percent say that the CEO was a mentor. CFOs also are more likely
to name the CEO than anyone else as having been helpful in making big decisions
early on. Almost twice as many CFOs credit the CEO with playing that role as
credit their finance staffs.
A majority of CEOs strongly support the CFO’s involvement in strategy; more than
half of our CFOs say that the CEO expects them to challenge the company’s
strategy, though CEOs see other activities as more important. Nearly 90 percent
of CEOs encourage the CFO to be an active member of the senior-management team.
This is good news for CFOs, given the ongoing evolution of their role, the
increasing visibility of their statutory responsibilities, and their
considerable interest in corporate-wide strategic initiatives. Indeed, nearly
three-quarters of the CFOs reported that they would like to be involved in
strategy, and those who wished they had spent more time with the CEO say that
they wanted to talk about strategy more than anything else.
Finally, relatively few CFOs say that the finance staff would explicitly
articulate its expectations to a new CFO. However, when staff members did
provide explicit guidance, the CFOs say, their priorities differed from those of
CFOs and CEOs. This makes a CFO’s communications with the finance team all the
more crucial. A CFO is likelier to communicate with the team ad hoc and in
person than in any other way.
Alignment of expectations
Nearly four-fifths of the CFOs report that the CEO provided explicit guidance
about expectations of the new CFO; CFOs at private companies were significantly
more likely to report getting such guidance than those at public ones. CFOs
overall say that the activities the CEO most often describes as important are
being an active member of the senior-management team, contributing to the
company’s performance, and ensuring that the finance organization is efficient
(Exhibit 1). Furthermore, more than two-thirds of CFOs say that the CEO expected
them to improve the quality of the finance organization, and more than half that
the CEO expected them to challenge the company’s strategy.
CFOs say that members of the finance function were much less likely to give
explicit guidance about their expectations but that those who did had
expectations strikingly different from those of the CEO. The finance function
staff, for example, was less than half as likely as the CEO to see the CFO as an
active member of the management team, contributing to the performance of the
company or challenging its strategy. CFOs say that finance staffers were most
likely to expect the CFO to play a more traditional role: ensuring the finance
CFOs seem to think they generally received enough advice during the first
hundred days. Business unit heads are the only group that a majority of CFOs
wish they had spent more time with during that period (Exhibit 2). Several
respondents commented that they would like a better understanding of the needs
and priorities of this group. CFOs of private companies are significantly less
likely to say that business unit heads gave explicit guidance on their
expectations of the CFO role—and also the most likely to want more time with
these managers during the first hundred days.
Notably, while relatively few CFOs were involved in strategic initiatives so
early in their tenure (Exhibit 3), those who were are more likely to say that
they are satisfied with their performance during that time. A large majority of
CFOs say that they would now like to be engaged in corporate-wide strategic
initiatives, as opposed to more traditional CFO activities.
Aside from understanding the company’s business drivers, CFOs generally report
that their most critical activities during the first hundred days were
functional, such as providing input into the business strategy, and
organizational, such as setting up the core finance team and upgrading
capabilities (Exhibit 4).
Only half of the CFOs responding to this survey recall being required to come up
with a formal plan of action during the first hundred days. The priorities of
those who did have a plan were the inverse of those without one: providing input
to business strategy was the most crucial of their top three priorities, while
understanding the company’s business drivers came in third. Setting up the core
finance team was the second most crucial priority for both groups. Not
surprisingly, CFOs hired during or just after a turnaround were more likely to
have been required to create a formal plan of action than those hired in other
CFOs overall showed little propensity to make fundamental staffing changes
during the first hundred days (Exhibit 5), though CFOs of private companies were
more likely to do so than their counterparts at public ones. (CFOs of private
companies are also significantly more likely to have fewer than 50 people
employed in the finance organization.) CFOs who planned fundamental changes in
financial accounting and reporting or financial planning, budgeting, and
analysis (FP&A) were significantly more likely than not to have had formal plans
to do so.
Overall, FP&A and accounting are two out of the three areas that demand most of
a new CFO’s time, as well as the areas where CFOs made the most fundamental
changes (Exhibit 6). CFOs hired during or after a turnaround are more likely to
report that redesigning the finance organization was crucial.
Most CFOs tell us they communicated widely during the first hundred days,
holding regular in-person meetings with the core finance team and the broader
finance staff and (in many cases) making themselves available for ad hoc
discussions as well. Interestingly, CFOs who report being satisfied with their
performance during the first hundred days are far more likely than those who are
not satisfied to report having held in-person meetings with both the core
finance team and the broader finance staff. They also report having more
communications overall. CFOs at large companies2 tend to report
communicating across every channel (except broadcast e-mail) more than CFOs at
smaller companies do.3 CFOs hired at companies during or just after a
turnaround are much more likely to report having used ad hoc
communications—probably a result of the fast pace and high uncertainty common in
such situations. These CFOs are also more likely to have held in-person meetings
with the finance staff.
Relatively few CFOs—just over a quarter—report not having enough resources and
support to make the transition a success. However, that figure rises to a third
among CFOs of public companies. CFOs who wanted more help most often said they
would have liked three things: better access to internal information, more time
with the CEO or the board, and the ability to bring new people into the finance
organization. Also, more than 60 percent of CFOs overall report that they would
have liked to spend more time with business unit heads.
Of the two-thirds of respondents who were external candidates for the CFO role,
a majority report that the major challenges during the first hundred days were
building credibility and understanding processes.
About the Contributors
Contributors to the development and analysis of the survey include Susan
Cocker, a consultant in McKinsey’s London office; Anders Rasmussen,
an associate principal in the Copenhagen office; and Kevin Zander, a
consultant in the Hamburg office.
1The McKinsey Quarterly conducted the survey in October
2007 and received responses from 164 current or former CFOs across industries,
geographies, revenue categories, and ownership structures.
2CFOs at companies with revenues greater than $1 billion.
3CFOs at companies with revenues less than $1 billion.
Copyright © 1992-2007 McKinsey & Company
Sue Edwards is a Leadership and Business coach who specializes in working
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