286. The New CFO: What Does It Really Take to Step Up Into the CFO Role? with Nicola Horton

0:00Welcome to CFO 4.0, the future of finance. The CFO role is changing rapidly, moving from cost controller to strategic visionary. And with every change comes opportunity. We are here to help you take advantage of this transition to win at work, drive your career forwards and lead with confidence. Join Hannah Munro, Managing Director of ITAS, a financial transformation consultancy, as she interviews key experts to give you real-world advice and guidance on how to transform your processes, people and data. Welcome to CFO 4.0, the future of finance.

0:47Hello everybody and welcome to this episode of CFO 4.0. I'm your host Hannah Munro and today with me is Nicola Horton who is one of the principals at the CFO Centre. So welcome Nicola, thank you for joining me. You're very welcome, looking forward to this. Me too, so we're both excited to do this episode which is always a good thing. So tell us a little bit about yourself Nicola, what was your journey into CFO? Okay, well, I have always been in finance and I guess just naturally kind of worked my way up the ladder. I wouldn't describe myself as anyone particularly ambitious. I just was hardworking and very conscientious and ended up as a CFO.

1:30Oh, gosh, I don't really want to think about how many years ago, really. I did a long time ago and worked for, I've done a lot of manufacturing experience, but also kind of associated industries like distribution, et cetera. And did a big business turnaround project in my last full-time kind of employed role. And I was coming to the end of that and thought, what next for a challenge? And someone introduced me to the CFO Center and I thought, oh, that sounds exciting. Bit of variety, doing something different. and you know a bit more flexible meeting lots of people so that's where I ended up and that was nine years ago now.

2:11And obviously you've done you know a number of different roles and you work your own way up the ladder so how did you find that transition from sort of you know FC, FD through to CFO? What were some of the big shifts that you found? Yeah I think that I think it sometimes helps that you kind of move employer when you're taking a step up because it saves that you know the difficulty of moving out of one role into another that's not always been the case I have been kind of started in one role somewhere and ended up in a in a more senior position you know taking on more responsibility but I've certainly found the steps easier when it's being in a new role, new employee, because you're kind of starting from scratch.

3:00What I've found has happened quite often is that a role I've moved into has been almost like a newly created. So the business is getting to a certain size that they need the extra layer and they've introduced it, whether it be a new financial controller role or obviously a CFO, then that's been quite an interesting because you're almost forming that role yourself as you go along in terms of what your priorities are etc but there's been a bit of a mixture I have equally stepped into someone's shoes and gone in there a couple of times I've stepped into someone's shoes who's still in the organization so my first financial controller position I went to join a business where the previous financial controller had become the FD so that was quite nice because you know I was taking over her role she was new into the FD role so we kind of found our way together so there's been some interesting dynamics, I guess, in terms of role changes.

3:54And that's really interesting because traditional advice sort of says, take the step up in an organization where you have like the knowledge of the business and how it operates. But actually what you're saying there is there are some advantages to getting that step up role in a new organization. Yes, definitely. I think you, you know, starting the role is slightly easy because it's all new. You know, you're not having to let one role go and start, you know, move into another. But also, I think the natural challenge that we should bring to our finance positions comes when you start in a new business, because of course, you've got 101 questions to ask.

4:34And it's a great opportunity to ask lots of different questions, whether it be something about, you know, finance, but also about the rest of the organization, whether it's commercial stuff or operations. So really getting to understand the business is vital to our success in these roles. And that's, you know, starting in a new business is a really easy way to do that, I think. So I've always found that the most interesting, because it does feel like I'm just going to go in, absorb everything like a sponge, ask loads of questions and really get my, you know, feel like I'm getting up and running quickly.

5:08And we haven't mentioned this yet, but obviously you do a lot of work coaching and be able to step up into that CFO role. So what do you see as the biggest challenges with people making that step up? Where do you see the gaps? Are there any patterns? Yeah, it's a good question. I mean, one of my very longstanding coaching roles that I've had since being part of the CFO Centre was one of my earliest clients, actually. And he had been in that business for a long time, many, many years, in the finance team. And he kind of, you know, taking responsibility on, et cetera. And one of the shareholders was leaving.

5:44So he was promoted into the FD role, but had never done that before. And that's where my, you know, appointment came in and that I work very closely with him. So I've kind of got a view from the other side of the table almost to see the areas that he felt that he, you know, yes, I understand everything there is to know about the business, but I've never been an FD before. So I had to have someone working alongside him who could say, you know, these are the kind of things that you need to be looking at, looking out for, thinking about, you know, understanding that more strategic role. That was really, really helpful for him.

6:18And I think that often people are promoted into a role and then it's a case of, well, it's over to you now. And yet that might be a step up for them. And it's quite a challenge, really. So I think that really helped him to have that person alongside him who could, and also who could answer questions when he said, you know, should I be looking at this? Does this look strange to you? What do you think about this? And that has been really, really helpful. And with that, where do you see as the big gaps when people move from FD to CFO? Is it a skill gap? Is it a mindset gap? Where do you think the challenge is in that next step of role?

6:59I think it's probably a little bit of both, actually, because there are skills to operating more strategically, which obviously is the role of the CFO. And if they've been promoted into the CFO role, it's very easy to keep perhaps a hold of some of the detailed stuff. Whereas there's a bit of comfort with that because I know how to do that bit. And there's sometimes an easiness to thinking, well, I'll just hang on to that bit because I can do it. and without, you know, taking a step back and thinking, actually, I need to be looking at the bigger picture now. So perhaps skill set is not quite the right word, but certainly a desire to hold on to what they feel comfortable with.

7:41And equally, you know, mindset, thinking about what their priorities are and what their real purpose is and what the value of their role is to be looking at the bigger picture and supporting, obviously, the rest of the board of directors or, you know, whoever's in that kind of senior decision making team and it's it's you know being able to step back and almost have a better understanding of the rest of the business other than just perhaps being focused on the finance function which might have happened whether they've been in a financial controller position before for example so yeah a bit of both and and if you flip back on your experience what did you find hardest about making that transition into your first CFO role tell us a little bit about that uh yeah I think that similarly obviously it depends who you've got in your team so when I went into my first CFO role I was replacing someone who you know was exiting so I was taking on a role that was already established I think I was coming in at a slightly higher level in terms of experience and what that role was going to evolve into but it's because the team was already established I already had the right people in the team who were doing the more task driven things um it enabled me to have the time to be able to come in and not have a list to-do list of I've got to do this every month or whatever it's a bit yeah we actually get to understand.

9:13Also, the business had appointed a new managing director at the same time on purpose. So we suddenly had this massive task ahead of us to turn this business around. So I naturally was kind of drawn away from more of a financial controller position and more into, I haven't got a choice here. I've just got to think, right, how are we going to turn this business around? So I guess it was slightly easier because there were some real priorities that we needed to focus on. So I didn't have the kind of comfort of going back and going, oh, I could just, you know, play about with this bit over here instead.

9:50You say that it was easier to have those clear priorities, but going straight into a business turnaround sounds like a challenging first role as a CFO. Yeah, it was a challenge and very hard work, a lot of effort. And obviously, you've got to feel very passionate about the business and wanting it to succeed. A lot of it was, yes, of course, there were financial challenges, which, you know, I had to fix. There were always new things that I'd not faced before. So I would say, certainly, in terms of learning on the spot, learning on my feet, you know, knowing who the right people were to build relationships with externally, whether that was the bank or other people that were supporting the business, all those kind of things.

10:35It was quite, I've got to think on my feet here and do the right thing. but equally it was about making sure that the team was right and they've got the right people in the organization and that obviously we had to do lots of things around restructuring etc so yeah there was just a lot going on but certainly building the right people around you to start off with was the most important thing because if you've got a good team behind you you can get on and prioritize whereas if you're trying to you know fix problems as you go along because you're not getting that information right or that person's not right for the organization that just makes everything a lot harder and when you look back like and we'll take about you know even if we take out the fact that you're a new cfo right a business turnaround is not an easy task so you know when you look at that like what did you learn about that one how does that you know what advice perhaps you know it's a challenging environment right now what advice would you give to other CFOs that are perhaps facing a similar challenge?

11:40Yeah, that's a good one. I try not to look back too often because it was blooming hard work. It's like everything. I think it's probably in all roles, but certainly in finance, I think the more challenging the role is, whether that's because, you know, the situation the business is in, that's when we learn. That's when we learn stuff. And I was able to, you know, go back into contacts I'd made outside, you know, the businesses that I'd worked for previously. So whether that's, you know, a really good insurance broker that you can have a good chat with or very good people in funding world, all those kind of things are really, really helpful because that becomes your support network in terms of who the right people are to support.

12:22you know having a great relationship with your bank critical when you're in that situation because you need you need them to feel confident about what you're talking to them about and therefore they'll support you so I think the biggest learning was be prepared to get you know good contacts definitely and you mentioned there about the importance of a strong relationship with your bank what what does that look like and how do you how do you get that relationship what you know what what did you do differently perhaps to to actually drive that than the previous finance person yeah I think I mean that comes up time and time again with what I do now certainly if I've when I started working with a new client often they might not have got a relationship with their bank because perhaps they're too small or because they've never had to reach out to them um for me it's about having really good integrity and the banks value that so do what you're going to you know what you say you're going to do don't try and fob them off with things that you can't stand behind you know make sure that they understand the business you're giving them really good sound information you know what they want to see time and time again when I work with clients now their bank will say wow this you know the information you're providing is whether it monthly or quarterly or whatever they need is it gives us real handle on what's happening in the business you know the commentary you're giving around those numbers is essential too if they understand the business they'll then decide actually this is a business i need to keep an eye on or this is a business that i can see is in really safe hands and that if i am at all concerned i can have a conversation with the cfo fd and know that you know they're going to reassure me or they're going to be open and honest about what's happening.

14:12I think that's really critical. Don't, a lot of business owners might think, well, it's none of the bank's business until they need their support. And then they think, oh, actually, I wish I'd been a bit more open and honest with them, perhaps. So yeah, get them on side by sharing things. They love to hear about how their clients are doing. They, you know, you speak to good relationship managers at any bank and they'll all say, I really like my customers who I get to understand the business and what's going on in there that's not just about the numbers. So not waiting for that sort of that event where you need their support before you start building.

14:49Yes absolutely yeah yeah. Sometimes they take time to nurture I mean in that particular example of the business turnaround we wanted to move banks and it took us two years of nurturing a relationship with a new bank by sharing information telling them about what's going on before they were prepared to come in and fund us properly but you know these things take time and but it's all about that building that relationship so it is vital and as you say even if there's not an immediate need there might well be one day and it could be for very positive reasons it could be that there's an acquisition opportunity and you need support from the bank and therefore you know if they don't understand your business then they're much more likely to resist actually getting involved and obviously you've worked in a few cfo roles What was your biggest challenge as a CFO?

15:39I think it's probably the people and a good team. I think every manager would say that to you. Everybody says that, yeah. Yeah, I mean, the difference, you know, and I've operated in a CFO role where you've got a great finance team behind you and I've operated in others where, oof, it's hard work. You know, it doesn't feel like they're pulling in the right direction, things like that. And it makes such a difference when you've got a team who are, you know, on the same page, who want the best for the business, who are, again, open and honest. If there's an issue, they flag it up rather than trying to cover it up.

16:15So, yeah, I think definitely. And there's not, you know, I've not always done that. Sometimes I thought the priority is not my team here. My priority is the rest of the business. But always, I would say, I think, get those people right and it will make everything so much easier. and more comfortable and, you know, it just ripples through the whole business if you've got the right team. And you use the phrase the right team. What does the right team mean to you as a CFO? I like, you know, people who want the best for the business. So, you know, they haven't got their own personal agenda. They're just very much on board with whatever the strategy is that you want to try and achieve.

16:59um you know i think within a finance team often you need to accept that you'll get people who are you know moving on their own path of career and therefore you know they might come in at a certain level and want to have some ambition to move on and that's absolutely fine and you know if someone comes in as a i don't know management accountant and in two years wants to move on to a financial a controller role and there's no opportunity, then I would support them outside into looking for something else. And, you know, my path has crossed with people later on who have worked for me before, because I think if you maintain that good relationship, they're good.

17:40It doesn't really matter if they move on, because if they are good and you have a good relationship with them, then, you know, you think about that future team that you might need in another five or six years time, you think, I know how I'm going to call and ask them to come back and work for me. And it's them so you know don't feel sometimes people take that bit personally when someone moves on and I just think if they're really good then support them and you know hope that we will have an opportunity to work again in the future together absolutely yeah it's it's always hard when you see someone develop to to let go of those pieces you know you you've really valued their input over the years but like you say it's about where where they want to go and hope that you get the chance to work together again.

18:21Yes, it is. It is. So we've talked, so it sounds like people were a really big challenge. What, you know, what other, I guess, I'll use the term war wounds. You know, when you think about your battle scars as a CFO, what stands out in your mind? Is this a therapy session? Because you're going to have to. Absolutely. Everyone's listening to this going, yeah, I get it. I think that there are different types of challenges Obviously, you know, the example we talked about already where it was in a business turnaround, there was lots and lots of challenges there. But equally now, you know, with clients I work with that are smaller, there are different types of challenge.

19:01And that could well be around getting people to feel more confident about their business, about them kind of going out of that safe mode. And, you know, I've worked with business, owner-managed businesses, where they have started a business and they've had to be so careful with every penny they spend. And they build and build and build and it becomes, you know, it's making nice profits, etc. But they're still in that kind of mode of thinking, oh, let's batten down the hatches. And so actually getting them to transition out of that and to be more open and actually, yes, we've been quite successful here.

19:39we need to be a bit more ambitious we need to think about how we're going to expand we need to be brave enough to invest again in terms of whether it's new equipment or you know going into a new market sector that can be equally as a challenge and but equally as satisfying when you see that transition where they move from being oh no oh no we can't possibly spend 10 000 pounds on that because you know i know it will bring lots and lots of good stuff for the business but oh oh, no, no, no, just because they're in that mindset. So again, war wounds is just sometimes thinking about real challenges.

20:13You think, oh, gosh, how are we ever going to get around this? This is definitely the right thing for them to do, and yet they're resistant. It can actually just be a different thing. It can turn into a real positive. So there's lots of different examples, I guess. And so let's just pick up that example. You know, when you've had that before, how have you approached it? Because, you know, managing up, whether it's an owner manager or maybe an MD that's previously been scarred, you know, how do you get them to maybe think differently about what you're trying to do? I think sometimes it's about them being a bit more externally focused.

20:46And certainly, as I, you know, with the CFO Centre, I have a portfolio of clients. And I think what people value is how other people are doing. You know, it doesn't have to be in the same sector, but to talk about the plus, you know, the real advantage they have in their business compared to other people, obviously not in detail in terms of revealing who they are, but certainly just positioning them in terms of what success looks like could often be what's needed for them to think, actually, yeah, we're doing okay here, aren't we? because they're less internal looking and more external looking.

21:23So those business owners that are part of kind of peer groups where they're mixing with all those similar business owners, whether it's in the same sector or different, they'll often be the ones that are more ambitious, that do end up thriving because they are looking outwardly rather than just focusing on what's happening within their business. So, you know, that again, I suppose it's similar in a way to where I talked earlier on about having, you know, support around you outside the business it helps you have a little bit of different perspective I think and it's a really interesting piece because if you you know you think about the profile of an FD or a CFO and they're very much about helping the business minimize risk and stop spending and actually what I'm hearing is in this case it's actually the opposite it's that that shift into thinking I guess finding the right level of risk for the business so how do you I guess find the balance between holding back the purse strings you know and also making sure you've figured out when the right time is to make that risk or that investment yeah I mean it's a very good point because of all the people that I work with some will just think oh no we're just going to do this we're going to do this well you know it's almost have to say okay yeah that looks good we need to look at what the outcomes are going to be I think it's really up for people to understand what they're trying to achieve and I guess it really surprises me how many business owners don't actually think about the outcomes they just think about the here and now I want to do x without thinking about what that's going to bring to their business and it's the same on the opposite side where people are saying no we can't possibly do this well think about what the outcomes are so for me it's about the results of something you know the reaction of what you're doing within your business and whether that's therefore the right or the wrong thing to do and it's probably as many times on either side where people just think oh no we're going to do that okay well let's think about why we're going to do it what we expect the results to be where do you know where we're going to be in 12 months if we do that and where we're going to be in 12 months if we don't do that so sometimes it's just thinking that a little bit further ahead rather than oh so-and-so's done this so I've got to do it as well.

23:46And what I'm hearing here is as much about getting the wider you know the wider team on board the wider exec so obviously you work a lot with owner managed businesses but you know have you got any tips and tricks for I guess getting you know aligning with the owner or getting them on the pathway that you're trying to take the business? The first tip I'd always say is listen, listen. And if you think you're done listening, listen again, because there's no better way of getting to understand kind of people, people's appetite for risk, I think, or people's appetite, whether it's true ambition or what they actually want to achieve from their business.

24:30um I always give one example when I talk about kind of what I've learned over the more recent years is that I I worked with a guy who it was a nice successful business they were making money um and there was lots and lots of things that you could possibly do and when I said to him what what do you want to achieve out of your business you know you've you've built it what do want he said i just want an office of happy people full of you know full of happy people who enjoy coming to work every day i thought that's really nice that he was so honest because most people would think that's not why you're going to business is it but for him it was so listen and ask and probe and really find out what why someone is there because otherwise you're just going to end up you know they could end up going down the kind of a road that doesn't bring them many happiness in their business life.

25:26And when you're, obviously, you spend a lot of time working across different companies, mentoring different individuals, you know, how do you think about the development of a CFO? Because a CFO is kind of seen as the pinnacle of the finance world, you know, getting to CFO is a really big achievement. But, you know, how do you see the development of that CFO and that individual within that CFO role what's some things that you look for in terms of guiding your your mentees on their journey I think it's um it's about mindset it's about getting them into the the right mindset for them to um you know see where they can add value and think about what they want to try and achieve so you know if someone's still very much around well I'm going to provide lots of information to the rest of the board for them to make decisions think about how that enables them to make decisions so it's very much around again outcomes in a way to say you know what what do want to achieve from your role?

26:42How do you want your role to contribute to the overall success of the business? Because it's different in every organization and in every individual is different. So I think as a CFO to develop, it's really understanding about kind of, you know, how you want to influence on what you want to influence. And you've mentioned boards just there. And obviously that board dynamic with the CFO is super important how do you approach it when you're working with an organization you know how do you get those key stakeholders on board I think there's um it's like anything isn't it is people people will respond positively if you're credible you know if you um are able to prove yourself I guess um and that's kind of the more technical side of the role but also for people to feel that you know you're there to support the whole business and every part of that and you know whether it be that I was starting a role as a management accountant or now as a CFO if I can help people make their life a bit easier in the early days then that really helps embed me in the organization so that hasn't changed it's just the type of things I'm doing to help people make their a lot easier you know but often when you first start working in either in an organ you know in a business as an employed role or as i do now when i start working with a new client you know listen listen to what people's day-to-day issues are and really try and get underneath what the the main problems are but solve some get some fix for people and then you'll suddenly find that they're they're a follower and that that makes life easy because you're all able to then head in the right direction.

28:32So often it's simple things like that which really help embed you into a team. And when you've worked with CFOs in the past as a coach, where have been the common areas of mistake? Where do you think they go wrong?

28:51I think what can happen with a new CFO is they don't, I guess it depends on who's on that board. And sometimes you find that an organisation has a really strong MD who is, you know, it's their view about everything. And often a CFO in that situation might almost give up trying to, you know, prove their point or justify their point of view. And so for me, a common mistake is that they just sit back and just say, well, I've given them what they need. If they can't see that we're going to have an issue in six months time with cash, then that's their problem. You know, sometimes my advice would always be illustrate what the issues are, explain why, find a way of actually getting through to that individual that's going to mean something to them.

29:51don't just present someone with a load of numbers and think that they're going to look at it in the first place and secondly that they're going to understand it enough to think oh hang on a sec oh I can see that problem I can see that problem there you have to point it out to people and you know it's something which is so easy to just think well I'm giving you that information all the time but people don't look at it or people don't understand it or people think there's no words around this so what's the issue you know that's that's the key thing really make sure that you're explaining and flagging things up and I really like that because like you say it's the narrative that you know if you're I think like I work in finance it's my day job so I'm quite happy looking at pay an excel spreadsheet or a system full of numbers but you're you're absolutely right there's a lot of individuals where that feels alien or it's not something that they've been taught to interpret and it always amazes me actually how many managing directors and senior execs don't actually understand have that financial literacy about the business so that I genuinely found fast I find fascinating when you're you're speaking to different individuals as well something you've experienced yes I think you know you need to not and also people sometimes say oh yeah I'm all over the numbers but they don't actually understand what they mean so I think it's always helpful to if you're if you're presenting numbers or you're you know you're wanting to explain something is actually say what this means so rather than just present it and think that they're going to pour over it and understand it and ask if questions if they have them it's just explain in simple terms.

31:33Also, we talk about narrative and how important that is. Don't just repeat what's already in the numbers. Explain what it means. What does it mean, this P &L that I'm presenting to you? Or what does it mean around what this balance sheet's going to look like in six months' time? Put it into words. Or some people like more visual content. So I always say everyone learns and absorbs information in different ways. So So, you know, if you're going to put a pack together, make sure you've got words, pictures and numbers, because out of the three things, they'll appeal to different people who are going to read them.

32:12Amazing. And there's been so many great insights as we've gone through this hour. And so thank you so much, Nicola. So if we had to sort of round up and go, for those that are either starting a new role or perhaps are new to a CFO role within their own organization, what advice and tips would you give them for their first 100 days? I think obviously it's slightly different if you're filling someone's shoes because there's almost a role there but still don't be afraid to take a step back and really understand what that role is about how you can contribute how you can add value rather than just say oh well this is what the previous person did so I'm just going to pick that up and carry on doing it no question question what's useful question how you can you know how you can make things more valuable that you and you know your team behind you etc are contributing and you never have another opportunity later on and you know when you've been there a year it's not the same so do it straight away because if that's the that's the window of opportunity make the most of the the greatest few weeks or as a portfolio CFO make the most of that first day because you're never going to get that fantastic well thank you so much Nicola for sharing your your knowledge and experience both obviously as a CFO but coaching others if people want to learn more about yourself or the CFO center where's the best place to find you guys if you go to our website which is the cfocentre.com it's got all information there about what we do it's got all the team information so you can look at different regions and all our details are on there as well so it's really easy to make contact amazing well thank you so much Nicola it's been a genuine pleasure to have you here on the show and we'll hopefully see you again soon okay thank you thanks Nicola so for me one of the most important things about any transformation project is the partners that you work with and And whilst I'd love to list off a whole host of reasons why ITAS is the perfect partner for your transformation project, why don't I let our customers do the talking for us?

34:30One really good thing working with ITAS is it's dramatically reduced my blood pressure. Obviously, an account system is critical to anyone's business. So innovation data, like every company, we couldn't function as a company. So, you know, it's one of the most critical pieces of software. And any sort of vulnerability we have with that sort of keeps you awake at night. And now working with Vitas, I don't have any concerns about our account functionality and our account system and the usability and all of that. working with previous partners. I've got some grey hairs and sleepless nights from that as I say because it's so critical so been an absolute pleasure and long made the relationship continue.