Effective interaction with the board of directors is both a key responsibility for CFOs and an opportunity to demonstrate their strategic value to their organization.
“Developing an effective rapport with board members has other benefits as well, from highlighting the strengths of the finance team to building a network that may help CFOs land a board seat of their own,” notes Deborah DeHaas, vice chairman, and national managing partner, the Center for Board Effectiveness at Deloitte.
Detailed below are a number of communication skills and practices that have become a vital part of the CFO skillset.
Preparation, clarity, and brevity
CFOs intent on elevating their board presentations from adequate to exemplary would do well to focus on a few core elements. First, prepare well. Beware the temptation to overwhelm board members with too much information, and make sure that what is provided is organized clearly.
Understand what board members really need to know. As a simple research initiative, read the charters of all the board committees, as well as the charter of the board itself. That can often provide a sound road map in terms of the minimum information required.
It’s also important to consider what gets to the board ahead of time, i.e., the pre-read documents. This information should be comprehensive but not exhaustive, and should not duplicate the materials distributed at the board meeting. “
Assume that board members will read everything that’s sent to them, and present information clearly, concisely, and confidently,” says Sandy Cockrell III, national managing partner of the U.S. CFO Program, Deloitte LLP.
"Assume that board members will read everything that’s sent to them, and present information clearly, concisely, and confidently"
Second, CFOs should be very cognizant of time during presentations. Include an executive summary of handouts, and devote only one-third of your time to the presentation, to leave plenty of time for questions and discussion without running over.
“Don’t be that person who always takes 30 minutes to cover a presentation that was scheduled for 20 minutes,” says Charles Holley, independent senior advisor to Deloitte LLP and CFO-in-Residence of the CFO Program. “If you do that, a CFO’s credibility with the board could suffer greatly,” he notes.
Third, don’t assume that board members will remember what was covered at the previous meeting. Plan to provide a concise summary, as needed, to provide the context for new commentary and presentations.
Because time is so tight during board meetings, CFOs can help themselves immensely by looking for ways to create time for direct personal interaction with board members apart from board meetings.
It is now becoming more common to schedule a dinner or a more informal event the night before the meeting, which allows attendees to take a deeper dive on important issues. It can also be a great way for CFOs to bring along key members of their finance teams, to provide them with valuable exposure to board members, and vice versa.
Not only could that help establish a deeper appreciation of the finance team on the part of the board, but it can also prove helpful in succession planning, an increasingly important topic on boards’ agendas.
“At many companies, directors are proactively working with the CEO and other leaders to see more talent in front of the board and to identify opportunities to meet next-generation leaders in the company,” adds DeHaas.
“If your CEO is supportive, that individual is probably your best advocate in helping you find an external board position”
Whether or not CFOs arrange dinners, site visits, or other in-person interactions with board members that could involve members of the finance team, it’s important to provide top talent with opportunities to get involved with the board.
As CFOs spend more time working with multiple board committees, straining their already full schedules, they might consider providing opportunities for others inside the finance organization to manage and lead a number of board interactions and activities.
“Depending on the company, a CFO might ask the controller or the head of internal audit to help drive and manage a number of those communications,” says DeHaas.
For CFOs, expanding board opportunities
In the wake of the Sarbanes-Oxley Act, “many organizations satisfied the requirement to place additional finance expertise on the board by looking to bankers or investment advisors,” notes Holley. “But now, I think companies are realizing the heavy compliance and accounting requirements require the kind of real life, hands-on experience that CFOs bring.”
That can create more opportunities for CFOs interested in landing a board seat; but, as Mr. Holley cautions, “Be careful what you wish for. You have to make sure you have the time. Boards now tend to meet more often than in the past, so it’s important to make sure that the CFO’s already busy schedule can make room for board commitments in terms of responsibilities and time,” he adds.
While CFOs now make more viable board members, the number of board seats that become available in any given year is small. One way to increase one’s chances is to gain some initial experience by sitting on the boards of non-profit groups, particularly larger organizations. One of the most effective ways, however, may be to solicit some help from the CEO.
“If your CEO is supportive, that individual is probably your best advocate in helping you find an external board position,” says Cockrell.
While the time demands of a board role can be intense, CFOs with board experience often say it is well worth pursuing. Serving on an external board crystallizes for the finance executive what it is to be a strategist because in that role they are sitting on the other side of the table.
For CFOs familiar with Deloitte’s Four Faces of the CFO framework, serving on a board can galvanize their transition from the Steward and Operator roles to the Strategist and Catalyst orientations.
“It’s sometimes said that serving on a board is more valuable than getting an MBA,” Cockrell says. “In fact, a number of CFOs say that serving on a board is one of the most important things that they’ve done for their career.”
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