5

STEP 5: IMPROVE YOUR CHANGE AGENT SKILLS THROUGH SELF-COACHING

You want to get ahead and show others that you can generate tangible results. To get there, you must assess where you are today and compare that to where you want to be. Once you have done that analysis, you will quickly grasp what you need to do between now and then so that you grow out of your job. In this step are four best practices that leaders universally use to obtain measurable results and live up to their self-determined expectations.

After reading this chapter, you should be able to

• explain to others the universal roles that the CFO plays in every organisation.

• use a gap analysis to quickly identify specific actionable steps to take.

• develop a formal action plan for strengthening accountability and ensuring execution.

• assess any gap you may have in your current skills as you move toward becoming a complete CFO.

YOUR NEED FOR SELF-COACHING

Everyone could use a little help.

These words of encouragement apply to the controller and CFO. Most of us know that we could be better at finishing what we start and achieving our goals. The coaching skills you applied to assist others you can now use on yourself. This chapter will cover some daily practices that will help you become even more effective as a catalyst for positive change.

Controller or CFO’s True Role

From a bird’s eye view, the head of the finance function in any organisation universally fulfils four interrelated roles:

1. Leader

2. Strategist

3. Culture shaper

4. Change agent

The first three roles were covered in previous chapters. As you assisted Brian in the exercise examples along the way, you worked on your fourth role.

Concurrent with those high level responsibilities, the CFO also carries out three tactical and very crucial duties in his or her organisation:

1. Team management

2. Corporate oversight

3. Fiscal management

As you fulfil these seven roles daily, you must feel confident relying on four resources that either make your job easier or more difficult. These assets are also universal to every CFO:

• People

• Systems

• Processes

• Rules

Figure 5-1 illustrates how these resources coalesce.

Figure 5-1: CFO’s Universal Role Package

Similar Roles Yet Different Responsibilities

Despite these universal similarities, substantial differences exist in the responsibilities of the controller versus the CFO. At the end of this chapter is information that compares and contrasts the two roles in case one of your goals is to move from a controller to CFO or if you have the CFO or controller title but know that you could do more to serve your organisation’s leadership needs.

BEST PRACTICE: SKILLS GAP ASSESSMENT

Exercise: Where Do You score?

Instructions

Be completely honest and rate your ability in each of these skill areas. If you are unsure of the nature of the skill, read the explanation that follows.

Answer Key

77-88—Congratulations! You are in great shape. Your next step is to coach and mentor others so they can develop these skills too.

66-76— You are employing your skills well. Your next steps are to seek out opportunities that will help you improve the skills on which scored yourself the lowest and obtain honest feedback from the people you serve. Use a gap analysis as your guide.

55-64— You are contributing and making differences in small areas. However, there are larger issues that you need to address. Your next step is to focus on the skills on which scored yourself the lowest and seek out opportunities to practise those skills until you have mastered them. Use a gap analysis as your guide.

44-54—-You are only halfway to being an effective controller or CFO. The next steps you must take are to raise the bar for yourself and consider finding a mentor who will teach you the skills that you lack and challenge you to become more of who you can be. Use a gap analysis as your guide.

Below 44—You have a clear choice: (1) reevaluate your career choice, or (2) find ways to get out from behind your desk and become an agent of change each day, both inside your company and in volunteer situations.

Change Agent’s Skills Explained

Active Listening

• When a person is actively listening, 100% of his or her being is involved.

• Hearing is a physiological reaction, while listening is a mental process.

Objective Observing

• Sitting back without an emotional attachment to what is in front of you and seeing it as a child would

• Observing or watching to see the entire picture and the parts that are not readily evident

Objectivity

• Staying above the problem or issue

• Not taking sides

Clarity

• Seeing the event or issue with fresh eyes

• Using all of your thinking abilities to see things holistically for insights and undiscovered truths

Building Trust

• Inspiring in others confidence in your ability and character

• Making others feel assured that you will not cause harm

Testing Assumptions

• Analysing your own or other peoples’ assumptions surrounding an issue to identify and remove any biases

• Working to remove any paradigms that you use to filter out information that conflicts with your deeply rooted beliefs

Partnering

• Thinking and behaving collaboratively

• Keeping your employer’s best interests in everything you do

Problem Solving

• Looking for solutions that not only stop the problem today but help to prevent it from occurring again tomorrow

• Using a wide variety of tools and insights to get to the core of the problem, while not getting bogged down in the side issues

Integrative Thinking

• Using facilitation tools to develop tailored and thoughtful recommendations for unique situations

• Learning quickly using a variety of methodologies

Selling Ideas

• Being able to convince or persuade someone with your arguments and logic

Professionalism

• Expecting that a person will act at a reliable level of integrity

• Expecting that a person will apply the full extent of his or her knowledge to an issue

Taking a Firm Stance

• Living up to your role as the conscience of your organisation

• Taking a firm stand against something that almost everyone else believes is a good choice

• Clearly stating your convictions and using that consistent stance to persuade others

BEST PRACTICE: GAP ANALYSIS

Gap Analysis Defined

A gap analysis is a visual examination of someone’s current state compared to their desired state. A gap analysis starts with an honest assessment of where the person or organisation is today. It captures a clear vision of the future. The goal of your gap analysis is to demonstrate what is missing and required to reach this vision.

Steps for Preparing a Gap Analysis

In the description that follows, the client is the person who wishes to perform a gap analysis. The facilitator assists the client in doing so. Here, you serve as the facilitator.

1. Ask the client to describe the problem, issue or area on which he or she wants to make progress.

2. Ask the client to describe the reasons that he or she needs to solve this problem and why an action plan is needed for getting there.

3. If the client’s dream is broad, ask him or her to focus on a particular aspect or element of the desired state. If the goal is too broad, the action plan will also be too broad.

4. Ask the client to define his or her deadline for achieving this desired state.

5. Ask the client to describe the current state of affairs as it relates to this end state or dream. Make sure that a balance exists of both assets or positives and the deficient areas. Keep the focus of today’s status or reality on those things that contribute or detract from the desired end state. Work to keep your client honest and grounded.

6. Ask the client to describe what his or her destination will look like. Ask questions such as “What will you have? “What will it look like?” “How will it feel?” and “How will you know you have arrived?” Be sure to carry forward any acquired assets or positives into this future state.

7. Work with the client to fill in the middle section of the gap analysis, called the missing links. In as detailed a manner as possible, identify specific actions or steps that the client must take to go from today to tomorrow. If you completed your gap analysis correctly, these bridges will clearly pop out to both you and the client.

8. Use the information that you filled in as missing links or bridges to create a specific formalised action plan. Set a priority for each of the major action steps, often asking the question, “What must happen before you take this step?”

9. Review and update this gap analysis on a regular basis with the client. Use it to check progress and to see if there were other items in the missing links you or the client overlooked.

Exercise: Brian—part 4

Instructions

Because you serve as Brian’s coach, you will perform a gap analysis of Brian’s skills as they are today. Brian provided you with this information and you will reciprocate by providing the missing links or bridges that Brian needs to cross the gaps.

Brian’s area analysed: Be promoted to CEO or COO

BRIAN TODAY	THE MISSING LINKS	BRIAN IN 2 YEARS
Energetic		Energetic
Risk-taker		Risk-taker
Diplomatic		Diplomatic
Disciplined		Disciplined
Holds self accountable		Holds others accountable
Tenacious and goal-oriented		Tenacious and establishes others’ goals
Works well with peers and employees		Works well with people at all levels
Executes until encounters an obstacle		Executes consistently
Somewhat visionary		Visionary
Loves selected challenges		Accepts all challenges well
Adequate communicator		Leader communication style
Avoids direct confrontation		Direct and assertive
Views problems only in financial terms		Views problems from a strategic holistic level
Great grasp of managing a team		Inspiring and empowering leader
Great grasp of finance, budgets and business		Great grasp of running a business

About Your Friend Brian

Brian optimistically believes that the ultimate solution to saving R & K is to be placed in charge or have more influence over the R & K Enterprise. Brian would then be more successful in removing almost all the challenges. Brian thinks the biggest payoff for the families in allowing Brian to take on such a role would be that they would have something valuable to sell or pass on to their children.

Assume that Ruwan, Kimberley and the associated family members have agreed with Brian’s assessment and are willing to make the changes in leadership that Brian envisions. You can assume that Ruwan and Kimberley will support what Brian suggests so that in the next 24 months Brian will be given the opportunity to take over leadership of the enterprise.

Your Task

Now that you have prepared Brian’s agenda for the next year, it is time to assist Brian in defining where improvements are needed.

As you fill in the middle section of Brian’s gap analysis, place yourself in this situation and ask yourself this question:

What would you do to gain the experience and confidence that is required to fulfil the dream state on the right column of Brian’s gap analysis?

In the End

The gap analysis is a fantastic best practice that every CFO should have in his or her toolkit. By getting into the habit of using it as you set goals and take on projects, you will quickly be able to grasp the items that you need to move from where you are today to where you want to be tomorrow. It is a very powerful and insightful tool which will help you execute your goals and achieve your vision.

Exercise: Apply Your Learning

Create a gap analysis of your situation as it exists today. Be honest. Start with the “You Today” column.
Problem, issue or skill area analysed:__________________________________________________
When is tomorrow?______________________from today.
YOU TODAY	THE MISSING LINKS	YOU TOMORROW

BEST PRACTICE: FORMALISED ACTION PLAN

The biggest payoff from using formalised action plans is the ability to communicate accountability to people.

Obtain Tangible Results With an Action Plan

Action Plan Defined

A tool of great value for consistent execution is the formalised action plan (FAP) (figure 5-2). An action plan is a visual definition or map of what it will take to make significant progress on a specific objective. Use this tool to model and convert your tactics into specific action steps to ensure you achieve all of your goals.

Figure 5-2: A Formalised Action Plan or Initiative

The contents of FAP include the following items:

• Overall strategic objective

• Deliverables

• Due dates

• Major steps

• Detailed steps

• Individual responsibilities

• Anticipated obstacles and challenges

• Performance metrics

• Resources required (financial and nonfinancial)

Every FAP should define each level of change responsibility at the outset.

FAP participants include the following:

• Sponsor—Person who has ultimate accountability for the change, typically pays for the project through the budget

• Advocate—Person who drives, wants or demands the change

• Customers—Person(s) who benefit from the change

• Agents of Change—Persons who carry the responsibility for facilitating the change through to the end

• Accountability Partner—Person—executive or senior leader—who will help to hold the change agent’s feet to the fire; not quite a mentor, the change agent regularly reports back to this person about the progress made toward the plan’s ultimate objective

FAPs are used for

• highlighting overall objectives.

• connecting tasks to the ultimate objective.

• spelling out each participant’s role in the change.

• setting forth expected or desired results.

• keeping track of actual results.

• holding employees to task.

• clarifying expectations.

• identifying risks and obstacles in advance.

Result

Using this FAP, the team was able to remove the problem and establish a new sustainable protocol for dealing with obsolescence in less than five months.

BEST PRACTICE: ACTION PLAN REPORTING AND ACCOUNTABILITY

The Action Plan Reporting and Accountability tool (figure 5-3) complements the FAP because it raises the plan’s visibility and measures its progress. On a regular basis, require the FAP’s sponsor or champion to report on the plan’s status. Requiring that the change team measures the plan’s financial impact ensures that the focus is on results together with the cost of getting those results—a balanced approach to instilling ethical conduct.

Figure 5-3: Action Plan Summary

In the End

A FAP can powerfully help the controller meet obligations and hold others accountable to their commitments. Build the habit of using this best practice for all your projects and major tasks which take time and involve others. Once you get comfortable using the FAP, teach it to others so they can benefit from it as well.

CFO Versus the Controller—How the Roles Vary

The CFO and the controller usually are the personnel most intimately involved in meeting an organisation’s fiscal or financial goals and objectives. The responsibilities of the CFO are broader and extend far beyond just the finance department.

Typically more externally oriented, a CFO is concerned with organisation-wide and marketplace issues. As an executive with a deep understanding of finance and broad-based business knowledge who serves on the leadership team, the CFO is responsible for bringing the financial point of view to the forefront when his or her organisation makes its most crucial decisions. The board and owners—for instance, shareholders or members—look to their C FO to establish, maintain and monitor the vital governance programme.

The controller generally is more narrowly focused on the issues and obligations of the finance department, administration areas and, most critically, the internal control structure. Although the controller’s responsibilities may be narrower than a CFO’s, a good controller must be prepared to back up his or her CFO. Wise controllers will develop a deep understanding of how their organisation works and offer the necessary skills to support their CFO’s responsibilities.

Both financial professionals must be viewed as business partners and, therefore, take a proactive role by participating in both management and operational decision making.

As the chart that follows illustrates, the CFO and controller positions can be seen as quite different in their scope and orientation. It is unwise to assume that someone with controller experience can automatically move into the role of the C FO or that someone who has been a C FO is also excellent at a controller’s responsibilities. Some organisations prefer a CFO who is not a CPA, ACMA or FCMA to ensure that he or she lacks a “bean counter” mentality.

Responsibility Comparison

Figure 5-4 portrays the overall responsibilities of these two important roles. Notice that the CFO must take ownership of global and firm-wide issues while the controller must take ownership of the accounting team and its impact on finances and service.

Figure 5-4: Scope Responsibility Comparison

SCOPE OF RESPONSIBILITY	CFO	CONTROLLER*
Have concern for the marketplace	Very important	Important
Have a global organisational awareness	Very important	Important
Have a board orientation	Very important	Important
Be the management team builder	Very important	Important
Be the fiscal policy setter	Very important	Important
Implement the governance programme	Very important	Important
Be the strategist	Very important	Important
Be the change agent	Very important	Very important
Serve as communication nexus	Very important	Very important
Be the firm’s conscience	Very important	Very important
Instil an attitude of service in finance	Very important	Very important
Establish the culture	Very important	Important
Be the financial policy setter	Important	Important
Build the finance team	Important	Very important
Be the efficiency expert	Less important	Very important
Be the expert in finance and accounting standards	Less important	Very important
Know each team member’s effectiveness	Less important	Very important
Be the work organiser	Less important	Very important

*This comparison assumes that the controller reports to a CFO. If the leader of the finance function, especially in a small organisation, serves as both controller and CFO, then many of the responsibilities designated for a CFO must be assumed by the controller.

Functional Role Comparison

The roles of the CFO and controller must complement each other, with each person bringing his or her unique skill set to the table so that together they fulfil an essential organisational function, what is referred to in the encompassing term “management accounting.” Figure 5-5 shows a sample functional role comparison.

Figure 5-5: Functional Role Comparison

Major Functional Area	CFO’s Role	Controller’s Role*
Financial Reporting (external feedback)	Identifies external reporting needs; presents and explains financial reports.	Prepares external financial reports.
Management Reporting (internal feedback)	Develops framework on ways and means for reporting; provides a common focus on key performance indicators that measure the firm’s strategy.	Develops appropriate reporting structure; prepares reports and weds financial and nonfinancial data; provides a monthly State of the Union.
Treasury Management	Develops overall treasury strategy in line with operational and capital plans; maintains ongoing and open relationships with investors and bankers.	Monitors and supervises asset balances, investments, borrowings and fund transfers.
Risk Management	Assesses exposure and calculates firm’s risk tolerance; determines insurance coverage requirements.	Administers insurance portfolio; provides risk assessment tools to employees.
Budgeting	Establishes broad budget parameters based on the strategic plan; presents budget to board and executive council for review and approval.	Facilitates the budget process; aids in the development of detailed budgets based upon operating plan; monitors overall budget.
Strategic Planning	Sponsors or manages the annual planning retreat; represents finance’s interests in plans; presents overall financial picture to board and executive council.	Prepares analyses and information to be used by retreat participants.
Performance Analysis	Identifies operational and financial areas to be measured; establishes success factors; establishes firmwide scorecard; reviews actual performance against targets with board and executive council.	Designs, prepares and distributes operational, financial, statistical and other reports that measure actual performance against targets.

*This comparison assumes that the controller reports to a CFO. If the leader of the finance function, especially in a small organisation, serves as both controller and CFO, then many of the roles designated for a CFO may fall to the controller.

The CFO’s functional role is to help define the big picture and develop or assist in developing global strategies that carry out the organisation’s mission. The controller then uses his or her resources and technical knowledge to execute those strategies with specific tactics. Through the controller’s reporting responsibility, the executive team obtains timely feedback regarding its strategy’s viability and employees’ efforts to carry out designated tactics.

While both positions serve as a vital communication nexus, the CFO essentially fulfils the role as the main interface between the finance function and the board or executive team and between the finance function and the shareholders. On the other hand, a controller is the main interface between the finance function and all internal departments and between the finance function and most external stakeholders (for instance, IRS, vendors and so forth).

Valuing and Choosing the Appropriate Role

As a CFO, you can either choose the role that brings out the best in you or let the employer define a role for you. The following chart demonstrates that there are multiple levels within each role that the CFO and controller can play.

Take time to study figure 5-6 and evaluate which role matches what you want to accomplish as a management accounting leader. Pay attention to the ways in which the values in the two roles vary.

Figure 5-6: Role Valuation Comparison

Role	Description
Owner Adviser	Works closely with the organisation’s owner(s) and becomes their personal counsellor. Seeks external financing for growth, recapitalisation or planned IP O.
Strategist	Assists in establishing overall strategy the organisation must take to be successful. This role is required in small companies that have absentee leadership or an owner who lacks ability to think and act strategically.
Compliance Officer	Serves as the rule enforcer in the organisation where no one else serves that purpose.
Chief Operating Officer Controller	Assists in nontraditional matters and serves as a key member of leadership team. Usually found in small organisations.
Financial or Acting CFO Controller	Operates as CFO in addition to administrating typical accounting functions.
Operational Controller	Helps manage the organisation in addition to administrating accounting functions. This role is required in small organisations with absentee leadership or owners with limited leadership roles.
Accounting Controller	Does bookkeeping and basic accounting work. Often found in large organisations.