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Bold Leadership: 5 Moves CFOs Should Make to Succeed in 2024

Bold Leadership: 5 Moves CFOs Should Make to Succeed in 2024

How to set realistic financial expectations, build flexibility in the annual plan, and invest in your company to win in the long-term.

The year has only just begun, and already CFOs are confronting many challenges, including an economic environment marked by slower growth, heightened focus on efficiency, constrained customer budgets, changing valuations, a complex fundraising environment, and reductions in force.

So how are CFOs feeling? A poll of finance executives in The Circle revealed that 51% felt cautiously optimistic about their 2024 plan, while 30% said they felt neutral. 

With cautious optimism in the air, we recently convened The Circle community for a discussion on how CFOs can achieve their plan in 2024, balance board expectations, and remain agile to re-strategize as necessary, particularly in the early part of the year.

The conversation was led by three CFOs-turned-board members and advisors from The Circle community: Sandy Smith (ex-Segment), Lee Kirkpatrick (ex-Twilio), and Rob Krolik (ex-Yelp). Here are five moves they said CFOs should make to succeed in 2024.

1. Set Realistic Board Expectations

At the board level, it is critical to manage financial expectations and avoid surprises. First and foremost, the CFO’s role is to be the steady hand in the boardroom and provide the facts

While some companies might have missed their plans in 2023 and are resetting expectations lower, others might have operated by setting a high-stretch financial target and were happy they got close. However, Lee Kirkpatrick believes that it’s time for CFOs to set realistic expectations and  beat them in order to get back to a “culture of winning.”

Balancing growth and profitability remains top-of-mind for finance leaders. The clearest way for a company to evaluate its growth trajectory is to look at industry comps. Those figures can provide the right context in a down year (if the industry is also down), or it can highlight where a company may be ahead or behind the pack.

“You want to grow in-line with, or ideally ahead of, your industry growth rates. If your industry is growing faster than you, you have a problem.” –Rob Krolik, former CFO @ Yelp

2. Build Flexibility Into the Annual Plan

Rob Krolik said he likes to build an annual plan that he is at least 80% confident that the business can achieve. Then, he and the management team agree on predetermined places where they will either increase or cut spending as the company either meets or misses budget milestones throughout the year. This early executive team buy-in to the plan and its contingencies are key because “the communication has been done upfront and everyone knows what to expect in each scenario,” said Rob.

If the company is ahead of plan, for example, the management team could hire more employees or increase bonus incentives. And if the company is behind plan, the management team could take measures like not replacing departing employees or freezing headcounts.  

If things do not go according to the financial plan, get the news out early to the management team and board. Then move fast to make the necessary adjustments and reset.

3. Hold CXO Peers Accountable

One of the biggest driving forces behind hitting the 2024 financial plan is holding your CXO peers accountable. While a financial plan is certainly managed and tracked by finance, it should be collectively “owned” by every team in the company. A CFO should be the conductor versus the individual violinist. 

The VIPs stressed how important it is to get the other members of the executive team to view themselves as co-owners of the plan. A few helpful tactics were provided by our VIPs: 

  • Push your plan out to your peers often so everyone is aligned around the business goals.
  • Set up clear dashboards as early as possible so that everyone knows which leader is responsible for tracking which metrics. 
  • Use dashboard data to show team leaders an independent view of how their department is doing. 
  • In management meetings, give your CXO peers the floor to share updates on what they own, so they can present their results.

Lastly, don’t brush missed targets and metrics under the rug; have tough conversations with executive peers as soon as possible and work together to find ways to improve.  

“This year is all about accountability. Focus on collective commitment to your plan, accurate measurement and reporting, and then really hold your fellow leaders accountable.” Lee Kirkpatrick, former CFO @ Twilio

4. Continue to Invest in the Long-Term Business Vision

While some CFOs might be laser-focused on the challenges immediately in front of them, our VIPs stressed the importance of continuing to do what is needed to win in the long run. 

When there is short-term pain — like needing more cash today — it is hard to explain to the board and investors why it is still important to be investing in the future. To help quantify this, Sandy Smith recommended using an order of magnitude to show the percentage of investments that are being made in the future as compared to the present. “If you can show your board that you have allocated a specific percentage of your budget — say, 10% or 20% — to the long-term, it shows them that you have eyes on the future but it’s in a well-defined and smaller box,” said Sandy. 

5. Invest in Morale

The truth is that many teams are tired from last year, and they have begun 2024 feeling on edge. The goal, the VIPs said, is to shift employees into “calm execution” mode. Sales kickoffs are great moments to boost morale with your team to keep them focused.

Employees might want their CEOs to be aspirational, but they need their finance leader to share a more balanced view of the company’s future. And, no, it’s not going to go back to the great heyday of growth at all costs any time soon. This year is about striking the right balance between growth and efficiency, while also keeping employees inspired and aligned to the broader mission.

“Build your employees up while still being pragmatic. Make sure you take the time to tell them that you are going to tackle this year together, get the job done well, and you will build a stronger company as a result.” –Sandy Smith, former CFO @ Segment

This balance can include investing in employees and making adjustments to their compensation to retain top talent. Despite an organization not hitting its numbers, some companies have lowered their bonus gates if, say, 70% of the figure has been attained. 

Reductions in force are sometimes necessary to survive in tough times, but it’s critical to “cut once and cut deep” to avoid the extremely detrimental cultural impacts of ongoing layoffs. 

The Takeaway:

As CFOs face numerous challenges this year, the role only becomes more critical to the success of the business. Set realistic financial expectations, build flexibility in the annual plan, and invest in top-performing employees to win in the long-term.

Apply to join The Circle to participate in conversations like this one within a private leadership community of CXOs.

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