How CFOs Stretch Boundaries

CPAs who advance to the CFO suite are “big picture” thinkers.

THE TRANSFORMATION OF THE CORPORATE FINANCE function, driven in part by technological advances that have freed CFOs from routine information-gathering chores, means today’s finance professionals must be big-picture thinkers, excellent communicators and skilled managers and motivators who can widen their staffs’ horizons.

THE CFO’s JOB HAS BEEN BROADENED by the growing interest in nonfinancial measures of corporate performance, such as balanced scorecards.

THE CFO HAS BECOME A BUSINESS ADVISER with a good grasp of how the business runs, in addition to a full understanding of accounting, risk management, taxation and all the financial tools the company needs to run and monitor its businesses. The CFO is not just the team scorekeeper.

TIME MANAGEMENT IS AN INCREASINGLY IMPORTANT skill for CFOs. Besides juggling financial and operational assignments, most CFOs are forced to split their time between serving an increasing array of internal and external customers.

CPAs WHO WANT TO BECOME CFOs need to have more than technical expertise. They also need to hone communication skills, seek out diverse work experiences, learn the employer’s business, give strategic advice at meetings and expand their people and management abilities.

RANDY MYERS is a financial writer who lives in Dover, Pennsylvania. His e-mail address is .
inny Fess identifies enterprising employees among her staff at the Johnsson Group, a financial consulting firm headquartered in Chicago, and transforms them into a profit center. Rich Schalter obtained a commercial driver’s license so he can operate all the products his company manufactures. Donella Rapier oversees alumni affairs, including fund-raising, for the Harvard Business School.

There is nothing very special about any of the activities of these CPAs except for this detail: Fess, Schalter and Rapier all serve as chief financial officers of their organizations. Not just responsible for “making the numbers,” they represent a new breed of CFOs who function as business partners to other senior executives and line managers and sometimes take on operational responsibilities of their own. This article examines how they and other CFOs have stretched the traditional scope of that position and provides tips for other CPAs inclined to follow their lead.

This broadening of the CFO position at countless companies across the country is being driven in part by technological advances that have freed CFOs from routine information-gathering chores. Once a finance officer has critical data and the time for analysis, acting on those data is a short leap—and CEOs increasingly expect their CFOs to do just that. The growing interest in reporting information through nonfinancial performance measures, such as balanced scorecards, is also fueling the trend.

CFOs Need Time Management Skills

It can be easier to balance a budget than balance a schedule. Time management is the greatest challenge facing executives today, according to 36% of CFOs, followed by keeping up with technology (27%).

Source: Survey of CFOs from companies with more than 20 employees, RHI Management Resources, Menlo Park, California, , 2001.

All this means today’s finance professionals must be more than technically sophisticated. They also must be big-picture thinkers, strong communicators and skilled managers and motivators. “No one wants someone just sitting around passing judgment,” remarks Fess’s boss, Johnsson Group chief executive officer Margaret Johnsson. “The CFO has to inject a focus on revenue generation and profit enhancement. If that person is always relying on the line staff to do that, then what is it he or she has helped the company to do?”


CPA Ginny Fess began her career as a public accountant, joining (Arthur) Andersen in 1984 after earning an accounting degree from the University of Illinois. Two years later she moved into a series of corporate jobs, first at Baxter International and later at Caterpillar Inc. She became a consultant with the Johnsson Group in 1994, winning the CFO post in 1997.

In a company filled with accountants, where everybody on the management team shares a bottom-line mentality, it didn’t take Fess long to start thinking about more than numbers. When she noticed that Johnsson Group consultants were often disappointed in the temporary workers they had hired for routine accounting chores—reconciling a new client’s books, for example—she didn’t just pass the observation on to her boss but instead proposed a solution. Why not use some of the office staffers in her internal accounting department rather than temps, Fess suggested, and bill their time to the client? After all, her employees were a known quantity—better skilled and more reliable than the temporary workers—and in many cases were eager for opportunities to broaden their professional horizons. Four now split their time between doing work for Johnsson Group itself and for Johnsson Group clients.

“It’s become a huge career development path for our people and a profit center for us,” says Margaret Johnsson. “Fess’s group now makes more money than it costs us to do our own internal recordkeeping. And our clients can’t get enough of them.”


The CFO is not just the scorekeeper who runs the numbers for the rest of the management team. CPA Rich Schalter, chief financial officer for Michigan-based Spartan Motors Inc. and also its executive vice president, secretary and treasurer, knows his role requires much more. “Now the CFO has become a business adviser—someone with a good grasp of how the business runs and makes money, who also has a full understanding of accounting, risk management, taxation and all of the financial tools a company needs to run and monitor its businesses.”

Schalter’s path to a CFO post began with an accounting degree from Michigan Technological University in 1977. A year later he was a senior auditor in the Lansing, Michigan, office of Peat Marwick International, now part of KPMG. Eager to help run a company, he then took a series of finance positions with various entrepreneurial enterprises before landing with Great Lakes Hybrids, the U.S. subsidiary of the German seed and sugar beet company, KWS AG. In 1996 he moved to Spartan, a maker of heavy-duty chassis for fire trucks, ambulances, motor homes and other specialty vehicles.

In all his jobs, Schalter strove to stretch boundaries. For example, he injected himself into IT decisions, often, he says, “leading the charge” for change. At Great Lakes Hybrids, he attended leadership courses sponsored by the American Management Association and also took German lessons because, he says, “I thought it was important to know and understand our parent company’s culture.” At Spartan he spent a week on the chassis assembly line and toured the facilities of the company’s major customers, where he met with their presidents, CFOs and purchasing managers. More recently, he took and passed a commercial driver’s licensing test so he could operate all of Spartan’s products. “You have to do those kinds of things,” Schalter says, “to understand how your product is put together and what your customers’ expectations are for your company.”

As Schalter’s experience demonstrates, time management is an increasingly important skill for contemporary CFOs. In addition to juggling financial and operational assignments, most are forced to split their time serving a growing array of internal and external customers. Schalter devotes about a quarter of his time to talking with bankers, investors, Wall Street analysts and customers and a comparable amount with insurance brokers, auditors, legal counsel and tax advisers. He also oversees the information technology function at Spartan and serves as the MIS director for its principal business unit. To get it all done, he says, he tries to act more as a leader than a hands-on manager, empowering the employees below him to take on significant functional responsibilities. For example, he involves the controllers of each of the company’s four subsidiaries in strategic financial planning, not just historical accounting activities, and Spartan’s financial reporting manager takes the lead for all the SEC filings. Nonetheless, Schalter quips, “you have to be able to do things quickly and stay on your toes.”


Another new-breed financial officer is CPA Donella Rapier. She juggles multiple roles at the Harvard Business School, where she has served as CFO since 1996 and also associate dean for external relations since early 2001. Now Rapier has responsibility not only for helping to spend the school’s money—it has a $1.4 billion endowment and an annual operating budget of about $300 million—but also for helping to raise it.

Rapier began her career with PricewaterhouseCoopers (then Price Waterhouse) after earning a degree in accounting and management information systems from California State University, Northridge in 1984. Obtaining an MBA from the Harvard Business School in 1992 on a full scholarship from Price Waterhouse, she rejoined the company as a senior audit manager in Boston. In that position, Rapier developed materials and conducted courses on a variety of accounting and auditing topics. This led to a part-time faculty appointment teaching accounting at Harvard’s Kennedy School of Government in 1995 and then to a similar post at the Harvard Business School.

Rapier credits her success to all four major components of her background: public accounting, training at a Big Five firm, her MBA and her teaching assignments. She can juggle her multiple responsibilities, she says, in part by letting her controller handle day-to-day finance operations and by giving department heads flexibility in how they spend their budgets. She also relies on sophisticated information systems the business school installed a couple of years ago, such as Oracle’s financial suite and budgeting software from Hyperion. As a result she can spend time on resource allocation, financial reporting, long-range planning and the school’s ongoing initiative to open offices in other regions of the world. And, of course, fund raising.

“I’ve seen a lot of accountants who stay very narrowly focused on accounting issues,” Rapier says. “To be a CFO today you need to be constantly learning about the business of your clients. You need to read the broader business publications, not just the accounting journals. You have to do it all.”


After 25 years in public practice and managing his own firm, financial consultant Dennis B. Kremer, CPA, and head of Dennis B. Kremer Associates in Purchase, New York, grasped an opportunity in 1999 to become the CFO of an Internet start-up. The company had built a prototype of a roaming digital library for storing consumer purchases of music, videos and books. Kremer’s decision to become a corporate CFO was partially due to his frustration with the risks of running a practice where employee retention and training had become a constant and costly concern.

As a CPA who had counseled businesses for a long time, Kremer believes he was extremely well-prepared to take on the role of CFO of a small company. He had experience in strategic planning, problem solving and contract negotiations and was familiar with every operational aspect of running a company. Kremer also had certifications as a valuation analyst and a fraud examiner. “A career as a CPA teaches an individual to look at a situation, figure out what the issues are and then come up with creative solutions to problems,” he says. He had absolutely no apprehensions about making a significant career change.


Some of the executives who are broadening the CFO position came to it by unusual routes. In 1998 Teri Spencer, chief executive officer of Arizona-based software engineering firm Ephibian, was looking for a top-level executive who could assist her on special projects. She chose to hire Henry Guy, a U.S. Naval Academy graduate with a bachelor’s degree in economics, an MBA from Vanderbilt University with an emphasis on supply chain management and a can-do attitude of the sort the military can produce. As a Navy lieutenant, Guy learned to think quickly and make tough decisions. On one mission, he led a United Nations weapons-inspection team that boarded more than 100 ships in the Red and Adriatic seas during Operation Desert Storm to prevent weapons from being smuggled into Iraq. “No two ship searches were ever the same, and you had to be quick on your feet to avoid a potentially dangerous situation,” Guy recalls.

When he joined Ephibian, the company was staffed almost exclusively by engineers. Guy warned Spencer the two areas he probably shouldn’t tackle were finance and sales because he lacked experience in them, but in the perverse way that business sometimes works, those were the very units he wound up running.

“It turns out that the company’s greatest need was in finance, so even though I didn’t have a great finance background I immersed myself in the job and learned everything I could about the position,” Guy notes. He wasn’t operating completely in the dark, of course—he’d taken corporate finance, accounting and entrepreneurial finance courses at Vanderbilt—but it still was quite an undertaking. “More than anything else, I learned by pulling together financial plans and helping to set up the company’s accounting system,” he says.

He was a quick study. Roughly eight months after joining the company, Guy became CFO. Late last year, he was promoted to chief operations officer for XSource Corp., the New York-based holding company that owns Ephibian.

Guy sees ongoing education as one of the keys to success. He has been studying Swedish since being named to the boards of several sister companies. Guy advises CPAs who aspire to become CFOs not to think of themselves as “only an accountant” or “only a controller.” “If you just think inside that box, people will be glad to let you stay there,” he says. “If you take an interest in the rest of the company, in sales and marketing and operations, people are going to be happy and receptive to it.”


Like CPAs, who are committed to continuous instruction, Lawrence Davenport pursues lifelong learning opportunities. Although he holds both a bachelor’s and a master of arts degree from Michigan State University and a doctorate in higher education management from Fairleigh Dickinson University, he currently is pursuing another master’s degree in training and performance management from Leicester University in England via a distance-learning program.

Now the deputy chief administrative officer for the U.S. House of Representatives, Davenport served as CFO of the Milton Hershey School in Hershey, Pennsylvania, a private school for at-risk children, from 1994 through 2000, and for two years prior to that was CFO of the Seattle school district. His route to top jobs in finance came about from a variety of posts in education and public service. From 1981 to 1982 he was associate director for domestic and antipoverty operations for the federal volunteer agency, ACTION. For the next five years he was assistant secretary for elementary education and secondary education for the U.S. Department of Education. He’s also been an associate vice chancellor at the University of California, president of the San Diego community college district, and assistant secretary for management and administration at the U.S. Department of Energy. To learn what he needed to know about finance, Davenport plunged into training programs and seminars along the way, including courses at San Diego State University, the Stanford School of Business, the Harvard University Graduate School of Business Administration and the Wharton School of Business.

All of Davenport’s study and experience came to full blossom at the Milton Hershey School. Founded by chocolate magnate Milton S. Hershey and his wife, Catherine, the school is among the five largest of all American educational institutions and has an endowment of about $5 billion, allowing the school to be managed with an operating budget of about $100 million and a capital budget of comparable size. During his tenure as CFO, Davenport implemented a balanced scorecard performance-measurement system and convinced his colleagues that the school needed to benchmark itself not just against other schools but against the best organizations in the country, including Fortune 500 standouts such as Walt Disney Co., Intel Corp. and General Electric Co. He also created a one-stop customer service center to handle all custodial, security, grounds and vehicle maintenance and structural and mechanical trade matters at the 3,200-acre campus—all, of course, while shepherding the school’s finances.

“Today’s CFO is no longer sitting there just saying, ‘We have enough money’ or ‘We don’t have enough money,’” says Davenport. “They’re asking—and answering—the really tough question, ‘Is this where we ought to be putting our money.’”

While Davenport credits his job in San Diego for giving him the broad business perspective CFOs need, he also cites his ongoing education as a contributor to his success. Like Rapier, he enjoys sitting on both sides of the classroom; over the course of his career, he has taught at five colleges and universities as well as various public school systems. “Getting challenged by graduate students is a good way to hone your thinking,” he says.

Are these kinds of experiences an easy package to put together? Of course not. But the rewards can be many, and Davenport and others suggest those rewards may not end with the CFO title. As CPAs increasingly demonstrate a broadening set of technical skills, management experience and leadership ability, they can expect to win positions on corporate boards and jobs as presidents and chief executives of organizations. For men and women once viewed as number crunchers, the future looks promising indeed.

Getting There

For CPAs who have designs on becoming chief financial officers, here’s some advice beyond mastering the technical aspects of the job:

Hone your communications skills. Be capable of explaining financial terms and analysis in ways that help people make better decisions.

Seek out diverse work experiences, including operational assignments where possible. A great place to get that experience is in a turnaround situation.

Learn the employer’s business and be able to give strategic advice in a meeting. If you don’t understand all aspects of the company, you won’t be seen as a business partner to the president—and if that’s the case, you probably won’t become the CFO.

Broaden your people and management skills. When the detailed number crunching goes away, you need the right people in place. Give your staff appropriate signals to keep them motivated, growing and learning.


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.