Identifying an underperforming CFO or Controller isn’t always straightforward. These roles are critical to financial stability and strategic decision-making, yet their effectiveness can be masked by complex financial reports, industry fluctuations, or even a lack of clear performance metrics. Business owners and CEOs may sense something is off—cash flow is tighter than expected, financial forecasts consistently miss the mark, or critical insights are lacking—but without defined benchmarks, it’s difficult to pinpoint whether the issue lies with the individual or external factors.
So, how do you measure whether your CFO or Controller is truly delivering value? It starts with assessing key performance indicators (KPIs) that go beyond basic financial reporting. Beyond the numbers, an effective CFO or Controller should also drive transparency, accountability, and forward-thinking strategies. If these areas are lacking, it may be time to take a deeper look at their performance and determine whether leadership changes—or additional support—are necessary.
What to Do when a CFO or Controller Underperform
When you notice underperformance, you must act quickly and address the issues head-on. Taking proactive steps helps you tackle challenges with your CFO or Controller and get back on track.
Review Performance and Set Clear Goals
Begin by reviewing the CFO or Controller’s performance. Examine their impact on financial reporting, strategic planning, and stakeholder communication. To drive improvement, set clear, achievable goals that align with your company objectives.
For instance, if timely financial reporting is a problem, set deadlines and checkpoints to keep reports on schedule. Regularly revisit these goals to keep them relevant and challenging.
Develop a Personalized Improvement Plan
Develop a personalized improvement plan that focuses on specific areas of underperformance. Include clear steps and timelines to track progress. Break larger goals into smaller, manageable tasks to make them more achievable.
For example, if they struggle with risk management, suggest attending workshops or working with someone who has expertise in the subject matter. The plan should be reviewed and adjusted as needed.
Improve Communication and Feedback
Improving communication and feedback creates a productive and supportive workplace. Try these steps:
- Keep communication open.
- Give regular, honest feedback.
- Hold one-on-one meetings to talk about performance.
- Foster two-way conversations to share knowledge and challenges.
- Use dashboards to visually track progress.
Mentor the Person Internally
Offer mentorship opportunities within the organization and pair the underperformer with an experienced mentor for guidance. Mentors can share experiences, give advice, and help brainstorm new ideas. Set up a mentorship program with regular check-ins and goal-setting sessions to create an environment that encourages growth.
Send the Person to Courses/Conferences to Learn from Others
Aside from boosting your financial knowledge as a CEO, financial leaders need to enhance theirs, too. Here’s how to support their growth:
- Encourage attending relevant courses or conferences.
- Find industry events that focus on areas needing improvement.
- Offer networking opportunities and ideas into new trends.
- Promote sharing what they learn with the team to keep learning ongoing.
Consider Leadership Coaching Programs
Invest in leadership coaching to boost your CFO or Controller’s skills and performance. Some professionals offer strategies for addressing challenges, help identify strengths and weaknesses, set realistic goals for your business, and build leadership skills.
Check programs that are either face-to-face or online, with 1-on-1 sessions or group workshops. These coaching programs help Controllers and CFOs work and perform well on your team.
Use a Fractional CFO or Controller Consultant
Consulting services can work with your CFO or Controller on challenges like financial forecasting or cost management. Consider short-term, fractional consulting for immediate needs or a longer partnership for continuous support.
Switch from a Full-Time to a Fractional Controller or CFO
Think about switching to a fractional role for more flexibility and access to diverse expertise without a full-time commitment. Fractional CFOs or Controllers bring useful experience from different industries, offering fresh ideas and solutions.
This approach lets the company tap into high-level expertise while keeping costs in check. Assess your organization’s needs to see if a fractional role fits.
Why Address Controller or CFO Underperformance
Addressing underperformance and fixing issues early is key to keeping a company’s finances and strategy on track. When they don’t meet expectations, it can disrupt everything from daily tasks to long-term plans.
With the right support and company resources, leaders can drive growth, boost individual performance, and strengthen the company’s foundation for lasting success.
7 Ways on How to Measure CFO and Controller’s Performance
To truly benefit from your CFO or Controller’s expertise, you must know how to measure their performance. This section explores how aligning their efforts with the company’s success will make a huge difference.
Identify Important Metrics
Identify KPIs that show the company’s impact. Focus on accuracy, execution, and risk management. You can also track ROI, cash flow management, and debt-to-equity ratio metrics. These indicators help measure how the company maintains financial health and aligns with its strategy.
Maintain Accuracy and Timeliness of Financial Reports
Evaluate the precision and punctuality of your business’s reporting. Accurate reports are essential for informed decision-making and maintaining stakeholder trust. Consider these steps:
- Implement a checklist to verify all data before submission.
- Maintain timely reports to respond quickly to market changes and internal needs.
Plan and Execute Financial Strategies
Evaluate how they develop and execute strategies that align with the company’s objectives. Consider their role in budgeting, forecasting, and long-term planning. You can also examine how they prioritize resources to drive growth and implement cost-saving measures.
Manage and Reduce Financial Risks
Keep an eye on how they spot and handle risks to support the company’s long-term stability. Focus on these key areas:
- Risk assessment and compliance
- Crisis managemen
Check whether they have strong internal controls and conduct regular risk audits. Good risk management shields the company from unexpected problems.
Communicate with Stakeholders Effectively
How well do they communicate with stakeholders and focus on clarity, transparency, and responsiveness. Good communication builds trust and aligns everyone with the company’s goals. Also, look at how they share information with the board, investors, and employees. Clear and open communication boosts confidence and supports sound financial decisions.
Manage Costs and Improving Efficiency
Analyze their effectiveness in cost management and operational efficiency, contributing to the company’s profitability. This includes evaluating their ability to streamline processes, reduce waste, and optimize resource allocation.
For example, assess initiatives like renegotiating supplier contracts or implementing accounting software solutions to cut costs. Efficient cost management enhances the company’s competitive edge.
Embrace Innovation and Change in Finance
To stay competitive, encourage them to embrace innovation and adapt to changes in the financial world. This means exploring new technologies to streamline operations and improve decision-making. Using these tools helps Fractional CFOs and Controllers boost efficiency and find new growth opportunities, keeping the company ahead of industry trends.
Fractional CFOs and Controllers
When a CFO or Controller is underperforming, business owners often face a tough decision: invest time and resources into improvement or make a leadership change. However, there’s another option that provides financial expertise without the long-term commitment—Fractional CFOs and Outsourced Controllers. These professionals bring high-level financial leadership on a flexible basis, offering the strategic insights, cash flow management, and financial reporting accuracy that growing businesses need. By leveraging outsourced financial leadership, companies can access seasoned professionals who drive efficiency, enhance decision-making, and implement best practices—without the cost or risk of a full-time hire.
What is a Fractional CFO?
Fractional CFOs offer strategic leadership on a part-time basis and offer flexibility without a full-time commitment. The role gives companies access to high-level expertise aligned to their needs, making it a cost-effective way to improve financial strategies.
They also bring broad experience and knowledge in planning, analysis, risk management, and growth. Fractional CFOs guide businesses through complex challenges and offer new ideas and solutions.
What is an Outsourced Controller?
Fractional Controllers, or Outsourced Controllers, manage accounting operations, provide accurate reporting, and support planning. This role gives companies access to high-level financial management without the cost of a full-time hire, making it an efficient way to keep records precise and accounting practices effective.
Most businesses often hire Fractional Controllers to improve their processes and boost company efficiency. These professionals bring diverse experience and offer fresh insights and tailored solutions.
Interested in learning more? Contact us today for a complimentary consultation to discuss how our Outsourced Controller and Fractional CFO services can benefit your business.
Fractional Financial Leadership FAQs
Need more information? Here are some questions to help guide your decision.
What are the signs of CFO or Controller underperformance?
Some signs of underperformance include missed targets, inaccurate reporting, and poor communication with stakeholders. These issues will lead to misalignment and inefficiencies.
How can an Outsourced Controller or Fractional CFO help improve company performance?
An Outsourced Controller or Fractional CFO will provide expertise and guidance, streamline processes, and offer fresh perspectives on planning. Their flexible approach allows for tailored solutions that enhance efficiency and drive growth.