5 ways the chief financial officer’s role has changed
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
Teaser: In this post, we’ll reveal which C-suite role we believe has evolved most and become most important to the organization. Read on to discover the 5 reasons we believe the chief financial officer role is the fastest-evolving in the company.
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CFOs are taking on responsibilities far outside their home of the finance function and leading on strategy, technology, innovation, and culture.
Having worked closely with chief financial officers (CFOs) all over the world, in organizations of all shapes and sizes, we’ve seen firsthand how the role of CFO is evolving.
We’d go so far as to say that no other C-suite executive role has had to grow faster or become more far-reaching within the company than that of the CFO.
5 key ways the CFO role has evolved
Customer needs, company cultures, and workplace technology have all evolved, and so too have demands placed on CFOs.
Let’s look at the 5 main areas:
1. Strategic decision-making
According to a McKinsey survey, 4 in 10 CFOs said they created the most value for their organizations through their strategic leadership and performance management. This strategic development isn’t a surprise to us.
The reason is, by being the link between being able to analyze data effectively and presenting and interpreting it for the board, CFOs are uniquely placed to offer sound, numerically accurate forecasts that help shape the future direction of the organization. Makes sense, doesn't it?
2. Driving transformations
Almost 60 percent of CFOs told Deloitte they are increasingly playing a leading role in their companies’ efforts beyond Finance. More and more CFOs say they have a leadership role, or co-leadership role, in company transformations.
The same survey finds that the types of transformations CFOs are finding themselves leading have critical impacts on the business. And range from shifts in strategy, business model, and offerings all the way through to growth, integrations, and divestitures.
Far from being behind the scenes and running large Excel files, CFOs are finding themselves making decisions about the future direction of the company. Long may it continue.
3. Adopting new technologies
Over 30 percent of CFOs say they’re responsible for technology adoption at their companies.
More and more, we’re seeing CFOs who’re deeply involved in deciding how their business adapts to new trends, this is especially true in areas where technology and Finance intersect.
CFOs, therefore, need to be extremely technologically literate because increasing technology adoption in the finance function may have a lasting effect on their companies’ resilience in the face of the next crisis.
4. Environmental, social, and governance (ESG)
According to Deloitte 37 percent of CFOs are charged with leading the ESG agenda for their company.
That’s about the same number as chief sustainability officers (CSO) who take the lead in ESG.
What does it tell us when there are as many CFOs leading on ESG as CSOs out there?
CFOs are uniquely placed to play an important role in giving insight into the facts and figures which add credibility to the sustainability agenda.
By making the impact of sustainability measurable and tangible, CFOs can help companies focus on ESG initiatives that benefit the company too.
5. People & culture
If the “Great Resignation” and pandemic-induced changes to working culture are anything to go by, then CFOs should be playing a vital role in shaping the organizational culture around them.
People are drivers of commercial value and creators of intellectual property in a business; they don’t sit on the balance sheet as an asset.
CFOs, as we’ve seen, are some of the best transformational change agents in their organizations, so understanding how they create value for the working culture is vitally important to winning, attracting, and retaining talent, especially in the current environment.
Creating value and increasing the return on investment
Home is where the heart is, or so they say. The CFO's home may be in the finance function, but today they are also the beating heart of the whole company.
While CFOs have traditionally been centered on cost, compliance, and record keeping the role has expanded to include leading roles in corporate strategy and vision.
Not only the backward-looking activities of the past but now making the best use of data and analytics to forecast and make strategic decisions about the future.
The role, ultimately, is about creating value and increasing the return on investment of everything in the organization.
CFOs can be leaders but need a rebrand
CFOs need a deep understanding of their company but also–and just as importantly–broader expertise when it comes to societal, technological, and regulatory trends. Demonstrating this expertise is a part of rebranding the organization’s view of the CFO and the finance function.
It’s clear from what we’re seeing as leading advisors to senior Finance leaders, and from industry trends that the modern CFO has a lot on their plate, in fact, the modern CFO is more like the whole buffet.
They have to ensure that the company can operate successfully in an uncertain economic environment as well as a rapidly changing digital landscape.
This shows how important it is for businesses to find, keep, and develop the right people in Finance leadership roles.
Companies must look for the next generation of leaders who not only have the right skills and experience, but who can also shape, drive, and develop the company's overall culture.
Do you agree with our assessment of the changing nature of the CFO role? Comment below on any other areas you think the CFO role is developing. To learn more about how BPI can partner with you to make this goal a reality, please get in touch.
This was the first article in our new series "Re-branding the CFO". While you await future articles why don't you check out our most recent series "Future-proofing the finance professional" below?
Also, check out our latest series "The Finance Function of the Future". You can read all the articles below.
Continue reading below for more articles about trends in finance and accounting.
Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 11,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 180,000+ followers and more than 240,000 subscribers to my blog. I am also an advisory board member at Born Capital where I help identify and grow the next big thing in #CFOTech. Finally, I'm a member of the board of directors at PACE - Profitability Analytics Center of Excellence where I support the development of new analytics frameworks that can improve profitability in companies around the world.
GTM at Digits & Angel Investor | Always be closing
1yGreat post, Anders. Would you say that the CFO is also the Chief Strategy Officer?
Director
1ymust alone be a well groomed person .
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1yI think your article is spot on, Anders. In South Africa we have experienced a serious change in approach to CPD by our institute, to adapt to and fit these evolutionary changes in both the CFO role and that of chartered accountants in general.
CEO I Carter & Company International Business Advisory Firm
1yAs a CFO and a founder, I've come to realize that stretching out by taking some responsibilities beyond the major roles of a CFO is what makes me stand out. Evolving as a CFO is essential if you want to achieve amazing ROI for yourself and clients. I agree with your assessment of the changing nature of the CFO roles Anders Liu-Lindberg
Anders Liu-Lindberg Interesting piece of information about the 05 key ways that the role of CFOs has evolved. It is absolutely well noted!! My takeaway from this article; "Customer needs, company cultures, and workplace technology have all evolved, and so too have demands placed on CFOs". I do really appreciate your efforts in coming up with this article🙌☺