The New CFO Skill Set & Career Path with Dan Wells of GrowCFO
“I think we need to recognize that the CFO role can mean a lot of different things in different businesses. It really depends on the type of business, their strategy and the type of skills they want the CFO to lead on.”
There are three major questions young finance professionals wonder about: What is the most efficient route to CFO? What skills do you need to claim your seat in the boardroom? Should you work your way up to the role, or strive for a consulting experience to get ready?
Dan Wells has been asked these questions many times. After almost 20 years working both as an external advisor and as a finance leader in companies, he founded GrowCFO, a community dedicated to supporting finance leaders throughout their professional journey.
In this episode of the CFO Yeah! podcast, we sit down with Dan to discuss how the role of the modern-day CFO has changed over the past years. He shares a lot of tips on the best route to CFO, the skill sets young professionals need to work on, and the main challenges they need to overcome early on in their careers.
Listen to the full episode on Apple, Spotify, or RSS. This article will give you the main insights and what you can retain from Dan's experience!
Table of contents
From accountant to entrepreneur: Dan’s professional journey
My career has lasted for about 20 years now. I started out as an auditor in London, working for Deloitte and I spent 15 years there. I've worked with lots of different businesses, both in an audit capacity and within transaction services, corporate finance, and private equity.
I've worked in finance functions as well. So I've worked both as an advisor and in companies. Some were fairly large businesses, well known brands, such as Vodafone. Then, as my career progressed, I focused a lot more on startups, scale ups and high growth businesses.
Six years ago, KPMG offered me the role of equity partner in their London office, where I quickly progressed into running their technology industry group. I ran that group for around 4 years.
In 2019 I founded GrowCFO, having been approached by lots of finance leaders to help address a gap in the market. And ever since I've been the CEO of the business — it’s been about two and a half years now.
The various routes to CFO
A lot of people ask me if a consulting background at Deloitte is good preparation for someone who eventually wants to be a CFO. The audit qualification, the chartered accountancy exams, they certainly help give you a good introduction to the finance world! So, I can completely understand why it can be good preparation for it.
But at the same time, there are a lot of other routes to CFO as well. I see a lot of people coming from the audit background. And they may come from a more ‘consulting strategy’ background such as M&A, which can be very helpful if you are working in a dynamic business that's gonna do fundraising acquisitions and a future exit strategy.
So I think in summary, it does prepare people very well for a CFO role. But I think we need to recognize that the CFO role can mean a lot of different things in different businesses. So, it really depends on the type of business, their strategy and the type of skills they want the CFO to lead on.
Then beyond audit and consulting, there’s also the route through the company, working your way up. I think it's an interesting one. When I look at it, there are some fantastic finance leaders out there who have pretty much ticked all of the different roles in the finance function in their career. Certainly that gives them a really good appreciation of what the finance function needs to do. And it means they're very strong around things like budgeting, closing the books, governance, compliance, and so on. It can help them a lot in that respect. Besides, they really understand the impact that a finance function can make.
Bridging the CFO gap in the market
I believe the reason we’re seeing a lot more people coming straight into the CFO role from practice, whether that's from a senior audit background, or M&A strategy consulting, is because people who work their way through the finance function don't always get the exposure to the different types of things that you get in the CFO role.
When you look at the CFO being the co-pilot to the CEO and delivering the business plan, there's a lot of knowledge in there around fundraising, implementing change and getting involved in strategic decisions — being that external voice. And there's a lot of things in there which you're not really exposed to in junior finance roles. So, I think that's why at the moment, we've got people coming from those different backgrounds becoming CFOs.
It's quite apparent actually in GrowCFO, we have about 400 people that have completed our competency framework. That's something where people address themselves as either beginner, intermediate, or advanced against 45 different skills. And we do see that the results really vary depending on the backgrounds of the individual's concerned. There are definitely trends depending on whether they've worked their way into a finance function or whether they've come through in practice.
Providing support to future finance leaders with GrowCFO
I've always really enjoyed working with people. I found when I was at KPMG that I spent most of my time working closely with CFOs and CEOs.
And I was constantly getting approached by CFOs telling me that I could solve their problems either by introducing them to other people who had been there and done it, or by providing training and finding mentors to help them through their own career. It really struck me that so many people were asking me this, that clearly there was a gap in the market around it.
Our mission with GrowCFO is to make sure that the next generation of finance leaders feels supported throughout their journey. So, we want to make sure that people have got access to materials to help them solve their challenges. We want to make sure that it's easy for them to grow with a peer group network and to meet mentors. Besides that, we provide training programs that help future CFOs and existing CFOs.
The new challenges faced by modern CFOs
I think the biggest challenge for a modern-day CFO is the breadth of the role. Today, a CFO not only has to lead a finance function and deal with the huge number of complex finance matters that exist in most dynamic businesses, but they need to wear lots of operational hats as well: HR, legal, real estate procurement, etc.
And most of these things, the CFO has never done before. When you look at these activities in a larger business, each of those would be individual career paths alone! But the CFO suddenly has to combine them all into one and lead those different areas and be accountable at board level. This is very challenging. When I look at how the CFO role has evolved over the past 50 or 60 years, that is something that has changed significantly in recent decades.
I think one of the other big challenges happens in the boardroom, because boardroom dynamics can be quite difficult. If you've raised lots of capital, chances are you've got various investors on the board. And there are a lot of people who might not know the business in the level of detail of the leadership team. This can be quite hard to manage.
If you go back, finance teams were reporting the numbers but not really interacting with the business. Whereas a modern-day CFO, as a strategic business partner, is constantly talking to people across the company. I'm always getting asked in our community, what is the best way for a CFO to really get to know the business. How can they properly understand the commercials behind it? The answer of course, is to go and talk to the teams and work closely with them.
The importance of leveraging tech in the finance function
Technology is, of course, fundamental nowadays. First, because it allows you to automate tasks. You can free up time, set up better reporting systems… The really interesting thing about technology is that it allows the finance function to properly focus on creating value within the business. It does so by automating a lot of the operational tasks, the compliance and the data side of the business.
Now, the other thing that technology brings is scalability to business processes. A lot of finance leaders out there are working in high-growth businesses. And those businesses need scalable processes very early on, which are not going to break as the company starts to get more customers or expand geographically.
But beyond operations and processes, successful leverage of technology also relies on digital culture.
Technology vs culture
When you look at technology predictions, they’re always based upon the capability of technology and how it’ll evolve. But the thing that a lot of people miss is when they become culturally accepted.
The fact is, most finance leaders have grown up using spreadsheets. And I believe they’re still the biggest source of accounting and bookkeeping use in the world, despite the amazing systems that are out there for all types of companies. There are still millions of very young companies that simply do it all in Excel.
We surveyed our community a year ago and asked CFOs how many are still using spreadsheets for cash flow management. The answer was 92%, and I think that shows the point. Even though there are lots of cash flow management tools out there, at the moment, the majority of finance leaders don't feel comfortable using them. I think Excel is gonna be around for quite a long time. At some point it's going to change, but it's just a question of when.
The 3 biggest challenges of young finance leaders
We ask everybody in our programs their three biggest personal challenges. Most of them are either finance leaders or direct reports, so they're relatively senior but still early on in their careers as leaders.
The first challenge is confidence and imposter syndrome, for 61% of them. It’s quite a big deal, operating at board level, being held accountable for delivering the financial plan. That can be pretty daunting for a lot of people. And the finance leader is often one of the younger people in the boardroom, especially in their first few roles.
The second challenge, for 45% of our respondents, is feeling overwhelmed with tasks. They’re too busy doing things like financial processes, reporting compliance…
Thirdly, about 30% of them are really struggling to get more involved in strategy. And this is partly because most people don't know how! If you've come from a background, which is outside of strategic consulting, chances are that you've never done that. It's rare that finance leaders have received good training on strategy — they don’t know what tools to use.
Another challenge which was also important for finance leaders was influencing and obtaining people's buy-in. Lots of them struggle to make the input they wish in board meetings. And then, another one was about being concerned that they’re seen as a barrier. saying no to things like budgetary spend or new investment projects rather than helping to drive value in the company.
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