The Winning Agenda for a New CFO's First 100 Days: From Assessment to Vision
The CFO role is increasingly broad, yet nearly 10% of top-company CFOs leave within a year. Boston Consulting Group analysis indicates that new CFOs should focus on planning rather than speed in their first 90 days, laying the groundwork for long-term success by assessing the finance function, defining the vision, setting priorities, building relationships, crafting the investor story, and developing a roadmap.
This article is a contributed piece by Hardik Sheth, a partner and associate director at Boston Consulting Group. The views expressed are solely those of the author.
Today, the CFO's role extends far beyond managing numbers; they are entrusted with a broader mission, which exposes them to the risk of taking on too much too early—advancing multiple areas of improvement simultaneously can lead to scattered focus and difficulty in effectively creating value.
This broad mandate, combining a forward-looking strategic role with a backward-looking reporting role, appears to be impacting CFO tenure. According to an analysis by Boston Consulting Group (the author's firm), nearly 10% of CFOs at top companies depart within a year, and over 50% leave within five years.
Faced with these pressures, how can new CFOs lay the foundation for a successful and enduring tenure? In short, they should prioritize careful planning over speed of execution. This means using the first 90 days in the role to gain a deep understanding of the finance function, establish a vision to guide improvement efforts, and develop a roadmap to achieve that vision.
1. Assess the performance of the finance function
New CFOs must gain an objective understanding of the finance function's strengths and weaknesses to set the agenda for the remainder of the first year and benchmark its performance against peers. For example, BCG's CFO Excellence Index evaluates the finance function's performance across nine areas relative to peers in the same industry and others.
Such an assessment helps identify challenges and sources of competitive advantage. By revealing performance gaps between the finance function and peers—some of which may be in the top quartile—the analysis can point to potential improvement opportunities.
CFOs should also benchmark the finance function against peers based on headcount and cost. This benchmarking can identify areas where the function lags in cost-effectiveness.
Analyzing BCG's CFO Excellence Index database, we find that total costs for the best finance functions typically range from 0.3% to 1.0% of sales.
2. Define the CFO's vision
To succeed in the first year and beyond, new CFOs must clarify their objectives and the type of finance function they aim to build under their leadership. Developing a vision helps CFOs think through the role their finance function should play within the organization.
The vision should not only be forward-looking but also achievable within a defined timeframe. It determines the scope of value the CFO wishes to drive as the company sets its strategy and subsequently in business and financial operations.
The vision also helps establish how the finance function operates, the degree of empowerment, collaboration models, and career paths for finance talent. It should also reflect the CFO's expectations for their own leadership style.
Additionally, the vision should consider the key enablers the CFO plans to establish to ensure the finance function operates efficiently. These enablers may include digital tools, agile teams, golden-standard performance metrics for specific roles, or a flatter organizational structure.
3. Determine priorities for executing the strategy
New CFOs must decide the finance function's top priorities, focusing on initiatives that can create the most value for the organization. These priorities form the foundation of the future vision for the finance function, and their impact will extend well beyond the first year.
As a first step in setting priorities, new CFOs should collaborate with other C-suite executives and board members to align on expectations and desired outcomes. Often, CFOs are brought in to achieve specific goals—for example, modernizing the finance function or introducing new ideas and ways of working.
These expectations and desired outcomes should be key considerations in shaping the finance function's agenda.
4. Lay the foundation for relationships
In the first 90 days, building strong relationships is more important than delivering value. CFOs need the support of other C-suite leaders and the board to successfully run their function.
New CFOs must quickly demonstrate their understanding of business and industry trends. Once credibility is established, CFOs should work with the CEO and the board to align on the company's overall strategy and jointly develop a plan to achieve its goals.
5. Craft a compelling story for investors
As strategic leaders and financial stewards, CFOs play a key role in investor relations, making it a priority to gain a deep understanding of the company's investor profile and related expectations within the first 90 days.
New CFOs must listen carefully to investors to understand how they view the company and identify the key fundamentals driving performance. These insights will help communicate the company's equity story, dividend strategy, and overall social impact to investors in a compelling and reassuring manner.
6. Develop a roadmap for the vision
To move from the current state to the vision of the future finance function, new CFOs need to develop a transformation roadmap. The roadmap should outline priorities for the first year of transformation, as well as plans for the following two to four years. Collaborating with the finance leadership team to develop the roadmap will ensure buy-in and make implementation a team effort.
Each initiative in the roadmap should be linked to a value target, and CFOs must continuously monitor value delivery within the planned timeline. The roadmap should also include several quick-win initiatives to demonstrate value and positive impact in the first year. Selecting the right finance talent to implement these initiatives is crucial.
Today's CFOs are themselves strategists and value creators, bearing broad responsibilities and the ongoing duty to drive superior performance. Given the breadth of the role, a new CFO's agenda should be shaped by the organization's strategic priorities and financial performance. The first 90 days in the role offer a unique opportunity to acquire this knowledge and apply it to setting a vision for the future.