Only 22% of CFOs achieve a high degree of personal effectiveness, and Gartner Inc. research shows that just a limited set of activities and successful relationships outside the finance department are the biggest contributors to a CFO’s personal effectiveness.

The research was based on more than 100 CFO interviews and it assessed CFO personal performance and effectiveness across 231 attributes to reveal what the most effective CFOs do differently with their time, relationships and teams.

“CFOs tell us they have more demands than ever, but the surprise in this research is just how few activities differentiate the most successful operators from the rest of the pack,” said Peter Nagy, research vice president in the Gartner Finance practice. “The most important relationships that drive high performance in the CFO role are found in the boardroom and where the customers are, not in the finance department.”

Gartner determined CFO personal effectiveness based on how closely a CFO’s organization aligned to efficient growth behaviors, such as positive risk taking to drive long-term growth, as well as the CFO’s ability to meet CEO expectations around revenue growth, margin expansion, return on invested capital and balance sheet health.

CFOs Overinvested in Finance Department Activities

As part of the analysis, Gartner studied the average weekly activities of CFOs and found that the average CFO lost one full day of work per week to ineffective activities. The largest misallocation was in how much time CFOs spent working within their own departments.

“CFOs want to reinvent their departments, keep their talent pipelines full and provide services more efficiently to internal business partners, so it’s not surprising that most respondents noted that managing these activities were a huge demand on their time,” said Mr. Nagy. “However, none of these activities, even if mastered, ultimately impacted how effective a CFO was in their overall job performance.”

Gartner found that there was no correlation between an organization’s size or industry in how effectively their CFO performed. Within the finance department, a CFO taking personal ownership of finance talent acquisition, mergers and acquisitions strategy, cost management or digital transformation also had no material impact in how effective the CFO was rated in overall job performance.

Relationships Outside Finance Drive CFO Effectiveness

While time allocated to, and relationships created within, the finance department did not drive CFO personal effectiveness, Gartner identified three key groups of relationships which the most personally effective CFOs focused on nurturing:

• The CEO and Board — The most effective CFOs succeed in constructively challenging their CEOs to achieve better decision-making outcomes. CFOs reported that they were underinvested in time allocated to both overall corporate and finance strategy, potentially negatively impacting their ability to play this role effectively.
• Customers and Sales Leaders — Personally effective CFOs are customer-centric and spend more time with external customers than their peers. CFOs surveyed by Gartner reported time spent with customers was the single activity they felt most underinvested in. CFOs who exhibit strong customer relationships are also deeply connected with their sales leaders and play an active role in owning pricing strategy.
• Business Unit Managers — The most effective CFOs are plugged into business unit performance. Levers that can be used to achieve this are having business unit CFOs as direct reports, maintaining strong relationships with business unit general managers and a deep involvement with business unit performance metrics.

“While it may be discouraging that just one in five CFOs currently meet the Gartner standard for a high level of personal effectiveness, the good news is that just focusing on a few key relationships outside of finance can drive significant gains in this area,” said Mr. Nagy. “The key for CFOs is to be mindful about where they invest their time and with whom, and then develop strategies for protecting those time investments from their many other day-to-day demands.”