CFO Cross Functional Engagement

The CFO is ultimately accountable for a variety of functions that, whether they are viewed as a responsibility of the Finance function or otherwise, are crucial to the running of the business. Depending upon the size of the company, the CFO has the potential to be accountable for more functions than similar officers in larger companies, where responsibility for the same falls to another officer. Even in larger companies where the CEOs handle the management of the following functions, the company management, in general, and the CFO in particular, will be highly involved if the functions are systematically aligned.

What is Cross-Functional Engagement and Why it Matters for CFOs

Cross-functional engagement refers to collaboration and communication between different departments or teams. It involves breaking down silos and encouraging employees to work together to achieve common goals, and it is one of the ten pillars of finance.

Cross-functional engagement will bring:

1. Better decision-making: When different departments share information, they are better equipped to make informed decisions. For the CFO, departments provide data, insights, and feedback to inform financial decisions.
2. Improved communication: Cross-functional engagement promotes better communication between departments, which can lead to improved efficiency and reduced errors. For example, working closely with the sales team can help you understand the business drivers behind projections and adjust financial plans accordingly.
3. Increased innovation: When employees from different departments collaborate, they bring different perspectives and ideas, leading to increased innovation and new ways of solving problems. As a CFO, you can promote cross-functional engagement by creating opportunities for employees to share ideas and work on projects together.
4. Better risk management: By working closely with other departments, you can identify potential risks to the company and take steps to mitigate them. For example, collaborating with the legal department can help you stay up-to-date on regulatory changes and avoid compliance issues.

CFO Oversight of Cross-Functional Areas

Besides involving their team in other departments, the CFO will be responsible for the supervision of other departments, depending on the size of the organization. The other departments will be tightly linked to the finance function in such companies. Below are some of the duties the CFO will take on in some companies.

Human Resources

Managing the numbers and people in the organization can be a very strategic advantage, and the CFO knows best how to align the people to achieve maximum growth and profit. It is a chance for the CFO to make a point to structure the enterprise in a manner that the teams in the organization communicate and work well in their respective departments.

Many times, companies will dramatically underestimate the cost of turnover. HR strategy should focus on company culture, leadership development initiatives, proper incentives, and other plans to increase employee satisfaction.

Here is a list of responsibilities CFOs will have to manage within HR:

• Oversee employee benefit/insurance programs
• Employee handbook – company philosophies, payroll policies, benefits, workplace policies
• Oversee employee hiring, salary/benefit changes, and termination procedures
• Oversee the salary administration process
• Oversee the creation and implementation of human resource policies
• Oversee employee agreements/employment contracts
• Manage equity-based compensation plans and agreements
• Maintain an equity-based compensation program/tracking ability

Legal

The CFO might be confronted with the task of overseeing legal in organizations where the organization doesn't have a General Counsel officer. Each function in an organization is dependent upon the organization itself, and this is the case when it comes to the legal function in a company.

 As part of risk management, the CFO will need to ensure compliance across the business, including the standardization of contracts and other processes that expose potential liability for the company.

Properly maintaining an effective legal filing system can be crucial to managing risk and reducing time spent on legal. Here is a list of responsibilities inherent in managing legal:

• Oversee centralized filing of all original legal contracts and agreements
• Oversee the database to track legal agreements
• Review legal documents with legal staff and outside counsel
• Responsibility for legal due diligence reviews, including technology ownership and corporate records

Operations

When the CFO is assigned other duties, they tend to be drawn towards something such as a “Chief Administrative Officer,” where the focus is on the non-operational functions of the department, such as insurance, human resources, and legal. But in smaller firms where a Chief Operating Officer is not present, the CFO tends to be drawn towards the operational function, where their duty is to assist the CEO.

 In a way, the CEO is the head of external operations, and the CFO will lay out plans for internal operations in accordance with the aims of the CEO. The CFO is best positioned to provide advice regarding the operational objectives related to performance and growth due to their proximity to the financial well-being of the business.

The CFO, in this instance, might also oversee some relationships with partners and suppliers. The CFO can:

• Oversee real estate procurement, lease negotiations, and space planning
• Implement and oversee purchasing processes
• Oversee Facilities Management
• Conduct Department policies and procedures, e.g., customer support, demos, and order fulfillment

Strategies for Cross-Functional Engagement

By developing a personal relationship with the heads of the various departments and employees, you can foster trust and a sense of cooperative teamwork. You, as the CFO, need to establish this relationship in order to facilitate the involvement of your staff in the other organization members.

Below are some methods regarding the development of inter-departmental relations for both you and your team members:

• Arrange frequent meetings with the heads of various departments and important employees.
• Attend meetings and events of other departments.
• Make the effort to understand what the goals and challenges are of other departments.
• Seek out the chance to work with other departments in a project or initiative.
• Arrange activities that will give members of different teams the chance to bond outside the office environment.

• Create formal team development programs for departments to simulate a business case.

Challenges to Cross-Functional Engagement

Getting people to work together does not come without challenges, especially when they are not accustomed to working together. Understand potential resistance areas to ensure healthy relationships throughout the company.

Resistance to Change

Resistance to change is a normal phenomenon in an organization that is associated with the implementation of new strategies, processes, and systems. Employees in an organization resist changes due to fear of the unknown, lack of trust and confidence in the management, and a loss of control in the organization.

If a part of the organization has been accustomed to functioning alone, they might view the move to encourage collaboration in their midst as disrupting their work processes. They might view a potential threat in working together because they fear being labeled inefficient and thus disposable.

To overcome any possible resistance to the upcoming changes, the objectives of the cooperation should be explained to the involved individuals. All involved should know that they are crucial to the project.

Siloed Departments

Departments siloed from the rest of the organization have developed a specific way of doing things. Disrupting that effort with support from others or distracting them with other projects can create challenges for your organization, even where employees are eager for the change.

Successful cross-functional initiatives require planning. Take the time to develop a strategy around how teams will collaborate instead of simply laying an objective on the table and walking away.

Limited Resources

Departments may have competing demands and may not have sufficient resources in talent and funds to allocate to the project.

To overcome this challenge, organizations must ensure that cross-functional initiatives align with overall strategic goals and allocate resources accordingly. Departments should collaborate on resource allocation and identify ways to leverage each other's strengths and expertise to achieve common goals.

Conclusion

CFOs play a vital role in inspiring collaboration throughout the organization. It is up to leaders like the CFO to lead by example and go out of their way to find opportunities for cross-functional engagement with others in the organization. Working with others can create new opportunities to leverage technology and data in ways that may have been previously underutilized.

If you want to explore more ways a CFO can better lead their company and be effective in their role, don't hesitate to reach out. We would love to help you explore different ways of improving your company's overall performance.