10 Signs Your CFO Might Be Underperforming

There are times and situations in which every organization underperforms at some level. It is a simple but sometimes stressful fact of business. In order to reduce this stress, it is important to be able to identify (whenever possible) when underperformance occurs and why it is occurring. To ignore the signs of underperformance is to risk that it becomes systemic and damaging in the long term. 

In this blog, I set out to answer this important question: If you are the supervisor of a finance leader, how do you know if your finance leader is underperforming? Taking a page from David Letterman, here are the top 10 signs your finance leader might be underperforming. In my next blog, I will provide suggestions on what to do in each of these areas.

10. Preparation is seen as an “event” not a process. I have had several bosses ask me over the years – why is this always an “event”?  They were referring to the detailed preparation for regularly scheduled meetings was presented at the last minute and the team has to scramble to deliver it., This last-minute scramble allowed for little or no review time and little or no time to correct errors. Given that the dates were known well in advance, the meeting should have been the endpoint of a smooth well-organized, low-stress process.

9. Deadlines are missed. Government payments are not paid on time. Government reports are not filed on time. Payroll remittances are late, generating unnecessary late fees and penalties. HST reports with payables, corporate tax returns with taxes payable, T4 reports are filed late, creating avoidable filing fees and interest charges.  Ministry reports are not filed by the deadline and requests for extensions are commonplace

8. Co-operation. Your finance leader is not cooperative with you or with other leaders in the organization. They do not provide information willingly and they get defensive when asked tough questions.

7.  Surprises. Are you surprised by your financial results? Did you expect to hear about these situations from your financial leader much sooner than you did?  My motto is never let your boss be surprised.  Good news travels fast, bad news travels faster. Month-end results should not be a surprise. Cash shortages should never be a surprise. Bank covenant breaches should never be a surprise.

6. Errors are continually made. There should be a process in place of double-checking to minimize errors. And that process should not rely on you, the boss, to catch finance’s errors. Underperforming finance leaders often treat errors casually, saying it is not material, it is close enough. This attitude never exists in a financially healthy organization.

5. Organization. Your finance leader does not appear organized or able to prioritize between multiple requests and get the important ones done accurately on time.. The year-end audit is not well organized and external auditors spend a lot of time and you pay a lot of fees and auditors blame the finance staff for late reporting. Underperforming finance leaders often complain about auditors and suggest changing audit firms.

4. Can’t/Won’t answer questions. Your finance leader is unwilling or unable to answer your questions to your satisfaction. They talk in accounting jargon and cannot explain accounting concepts in terms a non-accountant can understand.  Back-up support is not provided so you don’t know if there even is any backup that you can check or spot-check to help your understanding.

3. Bank reconciliations are not done on a monthly basis. I have stressed the importance of monthly bank reconciliations in 2 recent blogs but to iterate once again: Any finance leader that tells you that they don’t need to be done monthly is making dangerous business assumptions and is likely underperforming in many other key areas of the job.

2. Monthly reporting. If you are not receiving monthly financial reports before the end of the following month, you are at a significant and dangerous disadvantage when making any business decision. Although I have reported as quickly as 8 A.M. on the first day of the following month most standard accounting “closes”  are 5 or 10 working days into the new month. Alternatively, the closing can be completed on the 15^th of the month with reports following within a few days after the accounting records are “closed”, meaning no more entries are made in that month. Underperforming leaders will have an assortment of excuses about why they are not able to produce timely financial reports, so much so that their supervisors often stop asking and accept this poor performance as normal.

1. Trust. You do not trust the reports you are given by the finance leader, which are often full of errors and are generated from a problematic process.. The finance leader continually makes promises and commitments they cannot keep. They will tell you what you want to hear in the moment and make a commitment they know they can’t or won’t keep.  You end up not trusting your finance leader.  And once trust is lost, it is very seldom regained.

So what do you do when you see some or many of these signs?

I can admit that I have personally underperformed in numbers 10, 9, 7, 6 (but I try not to make the same mistake twice), 5, 3 and 2.  Every time that has happened, my boss has made it abundantly clear that I should learn from my mistakes and not continue to make them.  If deadlines are not being met, then I was told that I should be doing something about it, either organizing myself or my team better or putting a business case forward for additional help.  I know underperformance increases with workload. But there are many ways to deal with an “overflowing plate.”

Stay tuned to the next blog, when we talk more about what you should do if you see too many on these Top 10 signs of underperformance.