CFOs Need to Know How to Tell the Story

PayPal CFO John Rainey on the importance of communication in the ever-changing role.

©Christopher Robbins/Photodisc/THINKSTOCK

The role chief financial officer has come a long way from being the “numbers guy,” with today’s CFO being required to act as a business partner who helps with strategic corporate decisions, says John Rainey, CFO of PayPal.

In a presentation to Financial Executives International’s New York City Chapter last week, Rainey said that when he made an early career move from a financial analysis role to a financial planning and forecasting at Continental Airlines, he discovered that he wanted to be the type of finance leader who acted as a business partner. “From the outside I thought that was kind of boring and dry. That’s actually probably the most exciting point in my career. I realized that, in that role, you have your finger on the pulse of the company…That was a turning point for me.”

Today, Rainey sees his role as a co -leader. “The CFO today has to really understand the business, has to get into the details and understand what the business is trying to achieve, and not just be the gatekeeper or the person who says no to the organization.”

Rainey did not have an accounting degree, instead deciding to get his CPA at night. Though he recognizes that the CFO role is moving away from a number cruncher, he still sees a lot of value in having a deep understanding of accounting issues and principles.

“I debated at that point in time whether to get my CFA or my CPA. I had a finance major so I thought, ‘well, I sort of checked that box.’ I decided to go the CPA route because if I wanted to be a CFO, having that accounting knowledge is imperative. I do think that it continues to help, but it’s also the knowledge. I go into a discussion about our earnings or the nuances of certain accounting policies and I’ve got a safe footing there. I think that’s one of the most important skills for being a CFO. I do think that the CFO role has changed from two decades ago where it was more of a CPA-type to more of a business partner, maybe more of a CFA-type.  But, I would continue to advise anyone that having a CPA is really important for that role.”

According to Rainey, being an effective communicator is the single most important aspect of the job. As an inaugural member of the CNBC Global CFO Council, an opportunity for which he was expected to appear on TV once a quarter, Rainey was forced to focus on and develop his communication skills.

“I did a fair amount of training. The key thing that I’ve been advised is to tell my story. There’s a tendency to be reactive and want to respond to questions that were asked of you. My philosophy is that, if I’ve got five minutes on CNBC, that’s an advertisement for PayPal. I’m not going to avoid a question, but I need to learn how to turn a question into what is relevant to the audience and what’s right for PayPal. It’s the same with the earnings call. I may not know the answer, but let me tell you what you really should be asking.”

Through his experiences with the Global CFO group and other on-air speaking opportunities, Rainey understood that focusing on communicating his story was an effective way to approach the earnings call as well. Rainey admitted to feeling anxious before his first earnings call at PayPal, likening it to the CFO’s Super Bowl.

“There’s an expectation that you should know absolutely everything. As you know, as a CFO, that’s not reality.  I had a great team that I relied on. I may not know the answer to a treasury question or an accounting question. I pick up the phone. On the earnings call, you can’t phone a friend. It’s all you.”

By way of preparation, he would spend “every waking hour” making sure he knew the numbers, even choosing to stay in hotels the night before a call. As time went on, however, Rainey developed confidence and learned to anticipate themes and questions.

One of the main things that a public company CFO does is interact with investors. Rainey shared that the single greatest opportunity he had after joining PayPal was getting the investor community to understand what PayPal was. Following new announcements from (what investors perceived as competitors) Apple Pay and other mobile payments, PayPal’s stock price would decline. Rainey recognized that investors did not understand their business. “We had to quickly correct that and go out and spend a disproportionate amount of my time on the road with investor relations communicating that message and getting Wall Street to understand who we are as a company.”