Historically, the CFO has been the person to hold the purse strings and steer the business towards profitability and decent returns for the shareholders. However, due to today’s rapidly changing world and the demands on the C-suite, the CFO role has become much broader. The CFO of today has to have visibility and understanding of the entire business and be the architect of the changing face of finance.
‘The traditional CFO role has shifted from the service provider of all things finance to the delivery of increased shareholder value through strategic alignment, technological process & IT advancement and the harnessing of internal networks’ intelligence’.
Gerry Donald: CFO
The evolution of the CFO role is driven by a number of key factors:
An ever-increasingly digital and technological landscape
As digital transformation reshapes finance, CFOs are spearheading this shift, using technology to redefine their responsibilities and enhance the overarching finance function. Simple routine tasks can be automated whilst advanced analytics are unlocking deeper insights to inform strategy and operational roadmaps.
The role of AI cannot be understated. In a recent Gartner study, they found that “thirty percent of finance leaders plan for near-term AI investment growth, while an additional 53% anticipate greater investment in the mid and longer-terms”. Knowing what technologies to invest in and which will create the most value to the business, is standard terrain that CFOs now have to navigate. In order to integrate technology appropriately, CFOs need to collaborate with CIOs, not only to choose the right technologies for the business, but also to upskill finance teams, roles and processes.
These shifts in technology mean that the CFO role has changed to incorporate more holistic knowledge and strategic innovation.
The changing concept of value
As the CFO role changes, so does the basic concept of enterprise value. CFOs have to consider a wider range of factors such as ESG (environmental, social and governance) measures, customer experience and employee security. Multi capital accounting is shifting the CFO to CVO, or chief value officer, a person responsible for measuring all human, social and intellectual capital that the business captures.
This broader definition of value means that the CFO has to be more strategic, capture both financial and non-financial data, adapt to economic trends and market dynamics and has to be adept at dealing with ambiguity.
The pace of change
We are seeing unprecedented change across all manner of business variables. This means that functional departments and the C-suite have to adopt agile working methods, being prepared to get involved quickly when things change. Uncertainties relating to cybersecurity, privacy, shareholder activism, international conflicts and dysfunctional politics mean that you have to react quickly in the face of change. The key for CFOs is to maintain core capabilities whilst advancing the edge and create flexible teams that are knowledgeable of and able to react to the wider context.
So, what makes a good CFO?
A good template for a CFO is what is called the T-shaped professional: someone who is a leader, with financial acumen, people skills and digital fluency. Someone who is agile, strategic and a critical thinker that can apply their thinking to a wide range of situations. By embracing our changing world and adopting the knowledge and skills required, CFOs will become ever more critical to the success of their organisation.
At The Siena Partnership, we work with our clients to recruit CFOs and finance specialists helping their organisations innovate and deliver business success.
If you’d like to continue the conversation with our Head of CFO & Finance Practice, Mike Faull, contact him here: mike@thesienapartnership.com