The CFO’s Four Lines Of Sight: Building A 21st Century Finance Function

CFOs must maintain their four lines of sight in today’s digital world.

The role of the CFO is becoming more central in any organization—and more complex. Whereas historically the finance function kept tabs on the books, it is now expected to help analyze the forces shaping that financial outlook, and to project what’s beyond the horizon. I recently spoke with Hilla Sferruzza, the CFO of real estate development company Meritage Homes. We discussed how the CFO and their team must have a holistic, all-encompassing understanding of the entire business in today’s world. Additionally, we talked about the role of the modern finance function in digitalization, and the importance of lifelong learning in building up the skills needed to succeed in the 21st century.

Jeff Thomson: Today’s CFO has four lines of sight: hindsight and oversight, focused on financial monitoring and historical figures, as well as insight and foresight, focused on anticipating the future and evolving to meet the needs of stakeholders like the board, investors and the community at large. How do you maintain these four lines of sight? What unique value do you and your finance team provide to the organization? How do you contribute to strategic planning, risk management and future scenario planning?

Hilla Sferruzza: Luckily, these four lines of sight typically work in tandem and supplement each other, so managing them all simultaneously is usually symbiotic. For example, when reviewing the latest monthly financial results, I may identify a spike in commodity costs at one of our divisions that has not yet occurred at others. During this process, there is certainly oversight and financial monitoring to ensure the data is complete and accurate. However, as I am also comparing the results to a monthly budget or forecast, I start to consider what this may mean for the rest of the year, gaining foresight and quantifying the impact on the entire organization. If my findings are predictive of future trends, I will relay it to applicable stakeholders, including our internal teams, to have them proactively address the situation locally, to our board members, to alert them of a shifting market condition, and externally to our investors, who may need to adjust their expectations and go-forward models for our performance.


In this same vein, I expect the members of my finance team to juggle various responsibilities, and keep top-of-mind that one of our core functions is to provide guidance and assistance to the operational teams. Therefore, I believe that it is critical for everyone on my team to fundamentally understand our business. With that understanding, the team develops expectations about financial statement relationships that allow them to spot errors, identify predictive trends and assist other departments in structuring transactions and negotiating with our trades in a manner that will maximize our results. Being a central repository for data, the finance team also acts as a disseminator of best practices across our organization, ensuring knowledge transfer is occurring throughout our multiple geographies.

The strategic planning and risk management process at Meritage is owned by our entire executive management team, as we all contribute different perspectives that allow us to collaboratively reach the optimal result for the organization. Operations, finance, HR and legal all view our long-term objectives. They assist in charting a path that will help achieve our operational objectives, be financially viable and keep us within certain guidelines that are necessary for both liquidity targets and our rating agency metrics, all while keeping our legal risk profile within our acceptable thresholds without over-taxing our human capital. I truly believe that this joint process is the key to our success, as we carefully vet through potential issues and gain alignment throughout the organization prior to any strategic shifts.

Thomson: Meritage has a digitally enabled business model that allows potential buyers to browse homes on your company’s website, allowing them to tour homes virtually and putting them into contact with locally based salespeople. Can you discuss how digital technology enables you to service customers at scale, while also personalizing their buyer experience? What future investments is Meritage planning that will expand these capabilities?

Meritage Homes CFO Hilla Sferruzza

Sferruzza: As the IT team is part of my CFO umbrella, I am very passionate about advancing our digital initiatives. With over 90% of buyers starting their home search on the internet, we knew we had to enhance our website scope and expand it to include solutions beyond just a pure marketing/research function, such as mortgage pre-qualification. However, we also realize that many customers still prefer that final touch in this large purchase decision to be assisted live with a trusted expert. To offer the convenience and flexibility, we have structured our digital solutions to be either self-sufficient, for those that prefer an independent experience, or to seamlessly integrate at any phase of the process with live interaction from our sales, mortgage or escrow teams. We allow each customer to personalize and customize their experience in a manner which best fits their needs.

We believe our commitment to innovation is a differentiating factor for Meritage in this crowded homebuilding industry and are therefore constantly exploring the next opportunity to push the digital envelope. Our near-term initiative will be a roll-out of self-guided tours of our homes with NFC educational technology that will provide an informative and interactive experience for our customers, even after hours. Longer term, we are looking to borrow a page from the auto industry and the acceptance they have garnered from their customers to visualize their car by building it online and then committing to the purchase. Customizing and building a home online and then adding it [to] the shopping cart is the next digital customer-facing evolution, and one we already have in our sights.

Thomson: You’ve worked with Meritage since 2006, but you previously worked in the hotel industry and as an auditor with KPMG. How do diverse work experiences make you a better CFO? What advice would you give to those just beginning their accounting and finance careers about the importance of job rotations and diverse work experiences? What was the most valuable thing you learned in your career trajectory?

Sferruzza: I would describe myself as a lifelong learner, as I truly believe that experience and knowledge create the best backdrop for decision making. To that point, the more diverse the experience, the more data points are available to consider. Personally, I believe that a broad base of experiences early in my career helped me understand what my passion is, which is mission-critical to long-term career success. For me, every work experience afforded me additional perspectives that I still utilize every day and…has taught me how to ask the rights questions, and direct them to the right people. As I found my home at Meritage, my broad experience narrowed into a tighter funnel of knowledge, where I now focus on being a function-matter expert, but I needed that initial varied background to get there. To this day, I seek external feedback to make sure that our ideas and concepts aren’t stale, as at Meritage, we don’t ever want to miss out on an opportunity because our lens is too narrow.

Over my nearly 15 years at Meritage and at various organizations along the way, I learned that corporate life is driven by many mantras. One of my favorites is, “If you want to go fast, go alone. If you want to go far, go together.” Whether I’m managing and developing my own team or contributing as a team member to my CEO, collaboration, alignment and inclusion will always yield the best results. Now, this doesn’t mean that every decision should be a compromise in the middle; I’m actually not a fan of this approach as I believe it yields diluted results. I prefer soliciting feedback, considering all positions, letting go of pride of authorship of an idea and being open to change before concluding on a path forward. And maybe most importantly, once a decision is made, [I] support the change management process and ensure the successful rollout of the initiative. As my team knows, I frequently say that it takes too much effort to herd cats, so make sure everyone is rowing in the same direction, and you’ll achieve your goal quickly and efficiently.

This article has been edited and condensed.

I’m president and CEO of IMA (Institute of Management Accountants). Prior to joining IMA, I was the CFO for business sales at AT&T. In this column I’ll draw on my