The CFOs Have a Lot to Look Forward to

Manage HR Magazine | Wednesday, March 16, 2022

Once considered a numbers-only role, the CFO is now balancing traditional responsibilities with the growing demand for data-driven analysis and insights that support growth and strategy.

FREMONT, CA: The opportunity for CFOs to make a difference has never been greater, as CEOs increasingly look to them to assist influence corporate direction and strategy. The CFO is now juggling traditional duties with the rising demand for data-driven analysis and insights that support growth and strategy. The position was once thought of as a numbers-only position.

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A more competitive and dynamic business climate, where new technology and business models are disrupting most industries and changing how business is conducted and how customers are treated, is what's driving this transformation. Globalization, a strict regulatory environment, and the rise of rapidly expanding emerging markets are further factors influencing the landscape. These factors add complexity for the CFO and lead to a new set of business priorities.

The position of the CFO is redefined by all of these factors. The CFO role is changing to become more of a strategic partner. This includes finding new ways to raise capital, taking the lead in mergers and acquisitions, and aiding in the planning of company expansions. Future CFOs will need to carefully review and, if necessary, develop their skill sets, knowledge, areas of emphasis, and business contacts to become successful CFOs.

The CFO role used to be quite technical and distinct from the rest of the company. CFOs were either accountants or came up through the finance office, so having a strategic or corporate vision was not necessary. This was effective for a while, but it is no longer effective in the present corporate climate. CFOs must be able to comprehend the corporate strategy and be able to effectively convey it to others.

While having a strong financial foundation is crucial, CFOs will also need to have operational experience as they transition into more strategic roles. Johnson Brothers Liquor Company vice president and CFO Kevin Loegering describes a noticeable change away from purely financial and accounting functions. He claims that this position requires "far greater operational expertise, influence, and acumen." Current CFOs ranked strategy development and execution as the most crucial experience for future CFOs. CFOs will need to "have considerably broader leadership competencies beyond traditional financial competence, with significant business and sector-specific expertise and knowledge" to accomplish this.

An edge when it comes to guiding strategy and growth decisions will go to those on the CFO career track who have held positions (or at the very least have worked closely with others) in essential business activities outside the finance organization, such as operations, marketing, and sales. Companies need CFOs that have developed their careers in a "corkscrew" fashion rather than in a linear fashion. A wider range of experience also gives CFOs the chance to establish stronger bonds with executives throughout their firms and boost their standing among peers. CFOs that want to become CEOs may be better positioned if they have this much expertise. But if they want to become CEOs, CFOs will need to develop their leadership skills, widen their focus, and—most importantly—get past their lack of experience outside of finance.

The success of businesses is dependent more on data, which aids in identifying new market opportunities, enhancing consumer experiences, guiding corporate strategy, and fostering change and innovation. CFOs and finance teams are expected by CEOs to provide analytics and insights that aid in strategy and decision-making. The finance department and the CFO are anticipated to be at the center of this data revolution. Beyond the financial figures, CFOs and finance teams will need to know how to use data to develop a business story that provides context, justifications, and "what if" scenarios.

Making data timely, accessible, and relevant will require technology to a significant extent. The CFO and finance organizations are now able to get real-time information about business performance in addition to only evaluating historical financial data thanks to new financial management tools that leverage the cloud, in-memory databases, visualization, and mobile.

Even more, it's facilitating the dissemination of these insights to additional business executives, deepening those alliances. The CFO and finance teams will employ sophisticated analytics more frequently in the future to run predictive models and create more accurate forecasts. It will be crucial to comprehend technology and systems and whether they can lead to improved efficiencies, agility, and insights. Future CFOs will need to be very skilled at utilizing this technology. Theoretically, this means spending less time recording and confirming the numbers and more time connecting the data, explaining the meaning of the numbers to the business, and making decisions via the financial lens.

The future CFO must have a solid working connection with the CIO. Significance of the CFO-CIO relationship in developing a more data-driven firm but claims that it will necessitate bettering mutual understanding. By collaborating more closely, they can also assess what technologies and financial systems are necessary to support the increased duties of CFOs and their teams.

In the future, a key component of the CFO's job will be explaining the meaning of the data to a variety of stakeholders, many of whom lack financial credentials. Future financial leaders should look for opportunities to collaborate with various stakeholders and hone their communication abilities within their firms. Future financial leaders will need to speak the same language across a variety of traditional finance and nontraditional finance partnerships.

 

For many CFOs, who have historically operated in the background, this is uncharted territory. Communication skills are one of the main problems CFOs are dealing with. The need for CFOs to convey data to others without financial backgrounds is growing, but many of them lack the necessary training. However, by improving their communication abilities, CFOs of the future will be able to give internal and external stakeholder groups significant context about financial and business performance. As the CFO assumes greater leadership duties, these abilities will be crucial for fostering solid relationships throughout the company.

CFOs are employed during a period of unmatched business turmoil and change. Future CFOs and finance teams will need to be able to adjust rapidly, whether it's to help their organization enter a new market, conform to new rules, or develop a new business model. Additionally, CEOs look to CFOs to foster innovation and change inside their companies. CFOs must comprehend how disruption might affect business models to be among the top proponents of innovation in their organizations. They also need to be able to evaluate risk and financial outcomes to choose where to invest money in innovation. It's crucial to provide information and insights that may be used to develop plans and find chances for innovation. This may represent a different way of thinking for many CFOs. Innovation necessitates taking calculated risks, which can be difficult for CFOs who are normally more risk-averse.

The global economy is getting more complicated, with developed countries, emerging markets with rapid growth, and ongoing financial market volatility all having an impact on company priorities and plans. International experience will be required. To establish the best growth strategy, especially when it comes to entering new markets, it will be essential to view the company through a global lens. Future CFOs will also require a strategy for assembling a multilingual, multicultural global finance team. The CFO must navigate through and embrace a vision for the finance function that cuts across many cultures, working styles, beliefs, languages, and time zones as finance responsibilities become more globally distributed. The foundation of the CFO's role in the future will be global leaders.

The significance and scope of the CFO's position continue to expand, creating a CFO of the future that is substantially different from those of the past. To be ready for the opportunities and challenges that lie ahead, CFOs will need a diverse variety of skills and talents.

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