As an organization built “by CFOs and for CFOs”, we feel that our most valuable resources are our members and partners. And, with an eclectic representation from a variety of industries and backgrounds, our knowledge base is vast, allowing us to focus on our mission to “empower CFOs”. Adhering to this goal, we always offer new perspectives and first hand expert advice to you, directly from our sponsors, allowing you to access the best possible resources.
Known for providing companies with a greater level of financial insight and control, Consero Global, one of our renowned partners, serves to efficiently drive businesses forward by solving time-consuming operational and process hurdles. If you’re looking for some advice on what makes corporate boards work, Mike Dansby, Consero Global’s Vice President of CFO Services, gives an interesting recap of our Austin chapter’s June 8 program, “Working With Boards”. While Mike served as moderator, additional panelists included Zeynep Young, CEO of milk + honey; Bill Kennedy, COO at uStudio Inc.; and Bill Wilson, General Counsel at Reiter, Brunel & Dunn, PLLC.
Here are some of the key areas that Mike highlights for us:
The ideal makeup of the board of directors
In the smallest organizations, the board of directors may only consist of the company’s investors and its founders. But as companies grow, their board makeup needs to evolve accordingly. As Mike explains,” From this change, conflicts can arise from basic issues on how a board is structured.”
“Imagine the board of a privately held company that has three different venture capital firms represented,” he states. “Say one firm invested early in the fund, while the other two entered later on. The early investor is often more willing to take the long view, working through missteps and not forcing rash decisions. But the other two latecomers may disagree, pushing for a quick sale or a risky strategy change.”
This hypothetical scenario is one that Mike and other panelists have seen in many forms throughout their combined years of experience. What early-stage founders and executives might not realize, though, is that it can be avoided by careful selection of board makeup and a balanced representation of shareholders, management, and independent directors.
How to approach financial reporting to board members
Board members, as well as the CEO and other shareholders, rely on the CFO to present regular reports on the financial status of the company. Since CFOs are typically seasoned experts in standard accounting and financial reporting practices, this expectation may not seem like a very challenging endeavor. But Mike and the panelists revealed that the most difficult aspect of keeping board members up to speed often involves translating complex financial data into actionable insights. With diverse backgrounds, board members may be unfamiliar with financial concepts that CFOs consider elementary. Or, they could be easily confused by accounting jargon, reams of data, or a combination of both.
CFOs have an important role to play in cultivating better board relationships. To get the most from financial disclosures, Mike suggested focusing on keeping reports grounded and making sure that they are always timely, consistent, concise, and narrative-driven.
The CFO’s role in a board meeting
According to Mike, throughout most interactions with their board, CFOs might find themselves relating to a fortune teller or palm reader. That’s because, after hearing the CEO discuss headline numbers and big-picture strategy, the CFO will then take the floor and explain what those numbers mean and how (or if) the company can achieve those objectives. Along with helping board members to understand financial data, CFOs may also find themselves inadvertently challenging a CEO’s strategy and vision.
“CEOs are notoriously optimistic when it comes to sales projections,” Mike states. “But a board meeting is not the appropriate venue for open disagreements. Instead, CFOs must remain adaptable.”
He also added, “Don’t correct the CEO, but instead explain to the board what needs to happen to achieve that goal. In the end, CFOs need to provide room to explain and account for a range of potential outcomes, as well as the result that everyone is hoping for. This could be summed up in a bit of tongue-in-cheek wisdom.”
“Don’t throw the CEO under the bus,” Mike says jokingly. “Let him throw you under the bus.”
If you have any questions or comments or if you would like to know more about Consero Global, we encourage you to contact the company directly and benefit from the expertise of its knowledgeable representatives.