Productivity SA CFO Okuhle Sidumane, Sappi Southern Africa CFO Pramy Moodley and BMI Coverland FD Tammy Narain explain how effective expectation management helps them ensure every engagement with their board is a success.
CFOs are required to manage multiple expectations in their organisations every day. This often becomes a balancing act as they try to juggle different demands. When it comes to the boardroom, CFOs have to be on top form, as they hold the company’s future in their hands.
According to Productivity SA CFO Okuhle Sidumane, transparency and assurance are fundamental expectations from the CFO. BMI Coverland FD Tammy Narain and Sappi Southern Africa CFO Pramy Moodley also believe transparency is their most important superpower when engaging with their board.
Okuhle says the ability to steer board decisions in the right direction, encourage calculated risks, and drive consensus on strategic issues is equally critical.
To do this effectively, she emphasises the importance of bringing a collaborative skillset to the boardroom, especially in aligning with the CEO’s vision. “This healthy balance of viewpoints aids the board in making well-rounded resolutions,” she explains.
“I believe a board doesn’t always want to see the CFO and CEO have the same views for every topic. There is value-add in the two leaders’ strong capabilities, informed by different disciplines, working towards the same goal.”
Additional exco contribution towards the finance story CFOs deliver is also a plus. “Almost everything pivots around the CFO, because if anything in the organisation has a number, it is perceived to be the CFO’s responsibility,” Okuhle says. “I have found myself having to provide cross-functional assurance to the board, often relating to areas outside of my scope, on behalf of the exco.”
CFOs shouldn’t shy away from the additional responsibility, she explains. “Exco needs to be able to challenge the forecasts, projects, calculations and disclosures to make the best decisions.”
She adds that CFOs need to deliver a well-rounded story of the entire organisation’s numbers, governance and compliance to the board and need the support of their exco to do this.
“A roadmap providing guidance, risks and opportunities is imperative,” explains Tammy. She adds that “out-of-the-box thinking” and “not always saying no” hold credibility and create openness.
Pramy agrees, saying boards want CFOs who are trustworthy and hold a high level of integrity. “The board needs to support the key decisions, vision and strategy of the company and have trust in my ability to deliver per my promise.”
Okuhle explains that sustainable mitigation and resolutions are key focus areas for any board and it’s up to the CFO to manage their expectations accordingly. “For example, the board wants to hear what our implementation plans are in the short, medium and long term. It’s important that we are clear about the projects that can’t be implemented immediately and what we’re doing to build capacity for long-term mitigation,” she explains, adding that part of this means eliminating surprises.
Most importantly, CFOs should always present the business case for why the organisation is going in a specific direction and what informed their actions.
What CFOs expect from their board
In return, Tammy also expects transparency and partnership from her board. “Working together to make decisions will ensure a supportive, accountable board.” The board needs to communicate their expectations clearly and be willing to work with management. This includes welcoming the bad news too, Okuhle says. “At each board meeting, there is a balance of bad news and good news. At the beginning of a new board term, especially, it seems there is only bad news as the organisation goes through change management,” she explains. “I am always worried that the board is not engaging with the bad news enough, because they are focusing on new deliverables.”
Additionally, she believes there must be more time invested towards recommending and approving actions right at the beginning of board meetings instead of during the “for information” or “noting” agenda points. “This is incumbent on how the agenda is crafted,” she explains.
Okuhle has found that linking each agenda item to a specific compliance requirement paragraph from the PFMA, King IV and other guidelines they have to adhere to has worked for her.
“This guides the board on how much time they should invest in the topic and, in turn, guides management on how much time and resources they need to invest in presenting to the board.”
This is especially useful in the public sector, where stringent compliance requirements and many regulations come in the way of quick and effective decision-making. “I have had experiences where the board has been resistant in making a call based on only 60 or 70 percent of the information. This is the reality of our operating environments – it’s rare that you have all the information,” she says.
She explains that decisions are inherently dependent on the unknown. “Deferring matters and spending more resources getting the remaining 30 percent of information has been destabilising in my experience.
“It has already taken every ounce of courage and professional judgement for the executive to rely on the limited information available. For the board to kick it back (especially if the 30 percent would not have changed the substantive issue) is extremely challenging for decision-makers.”
To avoid the same kickback, Okuhle makes sure she builds trust with her board by providing risk management plans to address the missing 30 percent.
The CFO pack to boardroom success
To ensure every boardroom engagement is successful, the composition and calibre of board members are important, as well as cross-pollination, says Okuhle. “As executives carry out the day-to-day operations of an organisation, they will benchmark it against similar institutions. It strengthens our operations when board members that are actively participating in other boards and committees bring similar advice to our benchmarks,” she explains.
She adds that it is also dependent on the different subcommittees’ interaction with each other. “As part of exco, the CFO is present in different subcommittees. They must exchange notes and advice before going before the board.”
Tammy explains that individual functional decision-making has become more frequent recently.
“Having difficult conversations to break the barriers between functions is the first step to actually working together and making collaborative business decisions.”
Pramy adds that having the right people, with the correct industry experience and technical knowledge is important, but good interpersonal skills and a willingness to challenge are also crucial for successful boardroom engagements.
“Boards and CFOs have to be open to discuss the ‘elephant in the room’,” Tammy says. “Often we find that difficult conversations aren’t addressed head-on, which leads to poor execution and results. Discussing and then supporting decisions once agreed on is key.”
Okuhle cautions that board meetings can easily become counter-productive if they aren’t structured. “Answer the question and leave it there,” she says.
She adds that the board pack is the best way to manage expectations, avoid surprises and make sure engagements are effective. “If your considerations aren’t included in the board pack, don’t try to bring them in as part of the dialogue.”
Pramy explains that reading board packs well in advance can also help. “Summarise the key issues that will be presented. If you see something is a continuous problem, engage with the key board members upfront.”
Okuhle prioritises policy endorsements. She explains: “It’s destabilising when policy endorsements are dragged out and, in the meantime, we continue to operate in an internal control environment with deficiencies that we know how to fix.”
Okuhle’s key considerations for an optimised board pack are:
- Good administration and organisation
- Version control measures – use technology to manage these instead of emails
- Standardised results presentation templates in sync with subcommittees
- Communication with the company secretary to refresh yourself on the minutes
- Don’t rely on just the minutes – make your own notes so you can work on action items sooner
- Master delegation.
