CFO authenticity and the skills of leadership.

The Sarbanes-Oxley Act and the myriad of interpretations that followed in its wake have had a profound effect on CFOs today, not the least of which is demanding a level of leadership skills that may not always have been needed before. While CFOs in the past few years have been moving beyond a purely financial role and assuming a more strategic function, the new regulatory climate has thrust them to the forefront.

With the internal control environment becoming such a critical focus for companies, the CFO--who is, after all, the one who best understands that environment--is now assuming a more conspicuous role with the board and in company operations, and is ensuring that outside stakeholders have a deep understanding of the firm's internal controls. He/she is uniquely positioned to create and nurture the culture of accountability within the organization that the regulation demands. This responsibility, coupled with the increased focus on strategy-setting--which had become part of the CFO's role even before the Sarbanes-Oxley Act emerged from aftermath of corporate scandals--has placed today's CFO in the ideal place to progress to the CEO role.

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As such, the CFO today faces unique challenges, perhaps the biggest of which is resources. CFOs have ever-expanding responsibilities, brought about principally as a result of Sarbanes-Oxley's emphasis on transparent reporting and documentation. Ensuring that they have the right resources to do the job--and maintaining an appropriate level of motivation along with those resources--has become a top-of-mind issue for most CFOs.

Support a Culture of Accountability

It is also vital that CFOs ensure that the company's systems and processes support a culture of accountability. Employees must feel connected to the strategy of the organization, in a way that is meaningful to them and that motivates them to do the right thing.

A major part of the CFO's role as the financial leader is the development of his/her employees. To do that, he or she must be capable of earning their respect, and must possess "authenticity." The trait of authenticity--perhaps the most important characteristic of a good leader in the finance function--comprises competence and integrity, plus the ability to garner the respect of others.

And, the "others" comprise a wide circle. Financial executives today must have the ability to motivate their staffs and understand the operations of the business, as well as the control environment, and gain the respect of the company's CEO, directors and outside investors. They must be able to provide all constituents with a "total organization" perspective that stretches beyond finance. If any one of these constituents doesn't view the CFO as authentic, the CFO's effectiveness is seriously compromised.

Outstanding CFOs have the ability to deliver on financial goals while recognizing the importance of investing in people. Training is certainly a big part of that investment, as is providing opportunities for finance department members to rotate into various positions. A stint in internal audit, for instance, is an effective way to gain a deeper understanding of the company's control environment.

People Skills Are Vital

In the past, CFOs have been accused, perhaps accurately, of being focused exclusively on the financial bottom line, to the detriment of the employee bottom line--morale, retention and development. A CFO who lacks people skills is simply not going to be effective in today's environment. It is vital that CFOs put into place the appropriate development, training and motivation that will develop great leaders and build a world-class organization. And, the CFO needs to get out and meet his/her people, understand their issues and what motivates them. Be visible and accessible and, above all, communicate!

I've said it before, but it cannot be stressed enough: the CFO is responsible for setting the "tone at the top" that drives the organization. We've seen how a self-serving attitude can poison a company like Enron. CFO Andrew Fastow, by his actions, affected how others in the company viewed Enron's existing, robust code of ethics. The message he sent was: Yes, the code exists, but it does not need to be followed. Many people in the organization were aware of the conflicts of interest that existed, but didn't view that as a problem in their culture. That's just the way things were done at Enron.

In stark contrast, the CFO with authenticity has the power and influence to affect the corporate culture in profound ways that can bring lasting, positive change to our profession.