The CFOs of Today are Key to Optimized Organizational Performance

Oct 12, 2020 | Hanadi Khalife

Whether it is in the midst of the coronavirus pandemic, global trade wars, geopolitical tensions, or simply the myriad complexities of business, we are seeing CFOs across companies and sectors in the thick of the action – salvaging a difficult situation or strategically planning for long term growth and very often both.

The CFO’s role was already changing, but with the pandemic, it has become even more critical to enterprise survival. So, whether it is a decision to hold off on advertising spends, review business performance, or seek foreign investments, strategic decisions are predominantly driven by the CFO’s office while being front-ended by the CEO. This is a far cry from the earlier role of simply being a “table stakes job” where the CFO and his team were simply expected to manage balance sheets, cashflow, working capital, etc. with little to no involvement in all the operational responsibilities, which rested with others. Global economic volatility, fluctuating energy prices, and turbulent currency markets, along with a shift in economic power, are some of the many challenges that CFOs around the world face today; working in partnership with the corner office to make sense of every situation and navigate shark-infested waters.  

Today’s CFO team is expected to add value well beyond the traditional roles of cost management, controls, and acting as the conscience of the organisation. Whether they are operating in a large or small company, CFOs have increasingly expanded from finance and accounting operations to technology, strategy, and even HR. Over the years, the perceived role of the CFO has evolved to that of a trusted business advisor and strategic business partner.

There is growing conversation about the impact of digital transformation on the finance and accounting profession and the rise of the “strategic CFO.” Well, in the new normal of a post-COVID world, this conversation is expected to get even louder. A new digital landscape led by automation is already driving CFOs to see things differently. As the traditional accounting function gets taken over by software programs, much of the heavy lifting will be cannibalized by technology, leading CFOs and their teams to focus on the interpretation of the data, rather than the recording and reconciliation of it. This also means that CFOs will be taking on a more operational role and looking deeper at data around sales, operations, marketing, and even HR, and in turn sharing key insights with the CEO and board members to inform the next course of action. Number crunching, data analysis and decision making aside, the CFO’s role is becoming more cross-functional, serving as the integration hub for key business processes; as a catalyst for change – including business transformation; and as a consultant or trusted business advisor in helping to create sustainable growth. 

The CFO is now tasked with increasing operational efficiency while providing  strategic foresight to the CEO on key issues. Internal issues aside, the CFO more than anyone else has to have a better grasp of regulatory, economic, and political factors and implications. In the U.S. for example, the role of the CFO became significantly more important partly as a reaction to Sarbanes-Oxley. The sweeping 2002 law imposed reporting and audit controls on public companies as a way to avoid the kind of accounting scandals that rocked Enron and WorldCom just a year earlier. India too has enhanced its regulatory compliance ecosystem in light of the spate of insolvencies and financial irregularities that India Inc. witnessed in the past few years. The rules of the game have changed for CFOs in response to the more uncertain, dynamic, and global economic environment in which businesses operate today. It must be noted that the CFO’s ability to charter tough terrains is second to none.  

Having to deal with a more dynamic external environment and increasingly complex operational ecosystem within the organisation is requiring CFOs and their teams, across all sectors and industries, to grapple with new sets of technologies that are largely digital in nature. Be it data analysis to automation, AI and machine learning skills, or the soft skills needed to be able to communicate with investors and external stakeholders, the demand on CFOs is relatively high. Finance skills are now just the “ticket to entry” into the profession. Technology is no longer a stand-alone function, but one that is embedded in all aspects of business. Better tools with predictive insights are becoming mainstream. Technology is evolving very quickly, providing the potential for CFOs to reconfigure finance processes and drive business insights. 

Managing and developing the right finance talent is the other issue CFOs are having to deal with – their increased involvement and interest in talent development being testimony to the changing nature of the CFO’s role. Once the domain of HR or Personnel, the practices and processes businesses put into developing the best people in finance now firmly rest on the radars of CFOs and are typically cited as a key priority.

The CEO’s solution is usually to generate more volume; however, resources which enable this do not increase proportionately. Most of the time, it requires the CFO to take on more responsibilities to support the achievement of that growth. These fundamental changes are shaping and driving a need for a new blend of technical, business, and behavioural capabilities with a much broader and vaster outlook. Consequently, the current business and operating climate presents multiple challenges for CFOs and their teams but, they also provide a great opportunity for ambitious CFOs to drive superlative organisational growth whilst acquiring a rewarding and enriching career for themselves and creating value for the organizations they serve – a win-win for all.