BY BEN BEAVER

Reprinted with permission of

Mass HighTech April. 6-12, 1998; Volume 16; Issue 14

Gone are the days when a CFO’s job was simply about keeping score.

In today’s marketplace, the chief financial officer is a critical player on a cross-functional management team. The CFO must be a strategic thinker, who can see how his or her company fits into a global economy, while planning for growth in a era of dramatically shortened product life cycles and heightened competition.

Of course, basic grounding and knowledge of Generally Accepted Accounting Principals, and of keeping a company’s basic financial reporting, accounting, and payroll systems running smoothly and efficiently is still necessary. But so are industry-specific skills.

In the software industry, for example, the CFO must have a clear understanding of the principles behind revenue recognition and licensing agreements. In the hardware industry, the CFO must have a keen understanding of market demand to properly manage his company’s financial planning.

Companies today are looking for CFO’s with dynamic and varied backgrounds that include:

Global knowledge: As the economy becomes more global, international experience is becoming more vital to the CFO. Firms become global players far more quickly, and far earlier in their life cycles, than most low-or mid-tech manufacturing and service companies. The successful CFO will know how to manage ---- and leverage --- this unprecedented global expansion to the company’s advantage.

Financing experience: The CFO today should be a major contributor to the firm’s efforts to raise the capital needed to support rapid growth. If joining a startup venture, he or she must be experienced working closely with individual investors, bankers and venture capitalists. More established companies will seek a CFO with experience in positioning itself for an IPO will play a major role in courting potential institutional and individual investors.

M&A wisdom: As small companies develop new products and enter new markets, alignment with other firms that have developed synergistic products is natural. The high-tech CFO will invariably see far more acquisition situations than will a counterpart in a more stable and mature industry sector.

Large and small company experience: A rapidly growing company needs a dynamic CFO who can successfully bridge the gap between a company’s entrepreneurial, start-up phase and its larger, more established stages. Despite the natural bias at smaller firms against executives who come from large companies--- often the fear is that such executives are " Big Picture" managers and not "hand-on" enough for an entrepreneurial venture – many successful high tech firms move through their growth cycle rather quickly. The most successful CFO will have an entrepreneurial drive balanced with meaningful experience in both large and small companies.

It was once true, and still is for most industries, that companies could think about their organizations from a purely functional perspective. But in the high-tech world, rapidly growing firms are increasingly tearing down functional silos in recognition of the inter-connections between the different segments of their business. As a result, firms are seeking breadth from their executives, including their CFOs. While CFO’s in the past have often been seen as retarding growth because they were protecting the bottom line, the high-tech CFO is now being called upon to figure out how to get a deal done and to be a creative proponent for growth. He must serve as a "business partner" to each of the company’s leaders.

Of course, some skills and traits are still shared and highly sought after, no matter the company doing the hiring. Basic leadership ability, absolute integrity, strong interpersonal skills, high energy and strong personal credibility are always of major importance in selecting a CFO. Nonetheless, specific experience that is highly transferable to the needs of the hiring company is increasingly a requirement in the high-tech arena.

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