In the past, the role of Chief Financial Officer was largely limited to support and compliance. Over the past several years, however, there has been a marked shift in the responsibilities and skill sets that a highly effective CFO must bring to the table.
In order to keep pace with a constantly changing marketplace, CFOs must replace traditional models of finance functionality with more agile infrastructures, embrace new skills and mindsets, and invest in innovative technologies that can streamline routine tasks and provide actionable data to make key strategic decisions.
The following information will discuss how the role of the CFO has changed in the past 30 years, and describe some of the new skills a progressive CFO must develop in order to deliver exceptional value to his company.
Then vs. Now
30 years ago, the CFO largely remained in the background of an organization’s hierarchy, and (in contrast to the CEO) was widely viewed as a “shadowy figure” that kept the books in order and provided regular budget updates and other financial reports to the board of directors. Traditionally, the CFO was tasked with 3 basic duties:
- To maintain accurate financial records
- To provide accurate financial reports
- To ensure statutory compliance in financial matters
Nowadays, these basic duties remain core competencies for the CFO position; however, for many companies they have become minimum requirements rather than the chief focus of the role. Finance expert Paul Ainsworth eloquently summarizes this shift in focus when he says:
“Today’s CFO is fundamentally different from the CFO of yesterday in very important ways. While the CFO of yesterday was more of a support function, the CFO of today and of tomorrow is of strategic relevance to a company. Today’s CFOs drive the direction and success of the organizations they work in, and rightly so, given the ever-changing business environment we operate in.”
In an ever-increasing number of progressive organizations, the CFO is no longer a glorified compliance officer, but is rather a full-fledged business partner to the company’s CEO, able to take key financial data and leverage it into optimal business decisions by means of advanced analytics, a growth mindset, and strong communication skills.
Skills that CFOs Must Develop
The modern CFO must develop and maintain an expanded skill set in order to deliver the highest value to his or her organization. 6 key attributes that a successful CFO must cultivate are:
An investment mindset.
There’s a fictional debate that well illustrates the stereotypical differences between a CFO and a CEO. In this hypothetical argument, the CFO asks: “What happens if we train our employees and they leave?” To which the CEO counters: “What happens if we don’t and they stay?” In contrast, the modern CFO should be able to appreciate both sides of this debate, and focus not only on the company’s current bottom line, but also on overall operational needs.
A focus on results over efficiency.
Without a doubt, financial efficiency is an important piece of the overall puzzle for any business. Nevertheless, it is only one piece among several. Company CEOs are increasingly looking for a higher performance from their finance department with a lower price tag. In other words, CFOs are being judged on effectiveness instead of efficiency.
Willingness to leverage innovative technology.
According to research, approximately 40% of finance activities can be fully automated, and an additional 17% can be mostly automated. Of course, these figures hint at huge savings in overhead costs within the financial department. Moreover, advanced data analytics enable CFOs to become the champions of leading indicators rather than the custodians of dusty financial history. Amazon provides an instructive example in this regard: the company measures not only how many deliveries are shipped, but how many are received by customers. Such customer-centered metrics can provide deeper insight into opportunities for growth.
Ability to collaborate on technology purchase decisions.
In the past, a company’s main technology buyer would be the Chief Information Officer. However, more and more organizations expect the CFO and CIO to collaborate in making key technology purchase decisions. This is because the modern CFO with an investment mindset not only thinks in terms of upfront costs, but also in terms of performance optimization and future ROI.
Strong leadership and communication skills.
CFOs today are not just “number crunchers.” Rather, they must manifest strong leadership skills in various ways. For example, they must be able to provide the “voice of reason” to company directors that are leaning towards a risky venture. At the same time, they must persuasively communicate their thoughts on optimal strategies and investment opportunities moving forward.
The ability to recruit like-minded finance talent.
Finally, CFOs must be willing and able to man their finance department with talented professionals that are business people first, and finance people second. With an entrepreneurial mindset, new hires will not be narrowly focused on routine record-keeping tasks, but will be willing to embrace innovative analytics tools, and will stay on the lookout for creative cost-cutting and investment opportunities. Eventually, these ideas will reach the ears of the CFO, thus completing the cycle.
It’s true that none of the above attributes are new to the 21st century; in fact, successful CFOs have displayed these skills and qualities for several decades. However, these will become increasingly vital within an unpredictable marketplace that offers peril and opportunity in equal measure.
As the above information demonstrates, the modern CFO must be a forward-thinking, strategically invested executive. He or she must not only meet the minimum support-oriented competencies of the position, but must also manifest a results-driven mindset, strong leadership skills, and a willingness to think outside of the box.
Many progressive CFOs use innovative technology, such as that provided by Platinum Group, to accomplish their objectives. Platinum Group is a full service human capital management (HCM) resource that allows businesses to manage their payroll and benefits compliance, time tracking, and attendance, and also conduct other human resources functions in a way that maximizes efficiency and eliminates redundancies. This is made possible by means of our platform, iSolved. For more information about Platinum Group, or to schedule a demo of iSolved, please visit our website.