Published on 27th May 2019
The expectations for CFOs are changing - in a more digitally oriented, agile business environment their responsibilities are expanding outside of the numbers. Now often seen as strategic leaders, not only the holders of the purse strings, it is likely that the next few years will see the CFO's role grow in importance more than any other C-suite position.
However, with this junction of change comes a more complicated role to promotion for many traditional finance positions. As a financial controller, it is becoming increasingly difficult to acquire the variety of skill sets needed to match the dynamic role that the CFO is becoming.
So how exactly is the CFO function changing and what skills can financial controllers and other finance roles develop to get there?
How is the CFO role developing?
1. Dealing with unprecedented levels of uncertainty
Watermark Search International's 2018/19 CFO report found that 42% of their respondents were uncertain of this year's economic conditions. A further 40% expect that their companies will face a higher level of external financial and economic uncertainty than they did in 2017.
In an age of fast-acting digital disruption, security risks, uncertain political landscapes, and global regulation, there is every possibility that today's strategy could be destroyed by tomorrow's events. CFOs are now needed more than ever to provide useful insights that will allow aggressive growth despite high levels of uncertainty.
2. The digital era
In an age dominated by digital, it is not surprising that technology is becoming a major part of company spend (in fact 79 percent of CFOs see technology increasing as a major part of spending in 2018, according to Watermark Search International's 2018/19 CFO report). Creating seamless digital customer experiences and digitally transforming cumbersome manual tasks is now a significant goal of most ASX300 companies.
However, with these new form of investments must come new ways of determining ROI. Traditional forms of investment return calculation are proving hard to apply to digital applications. 52% of CFOs reported finding it challenging to apply traditional return on investment fundamentals to digital technology programs.
Planning and enabling smooth and cost-effective digital transformation is becoming a core element of a CFO's responsibilities and one which will likely make or break success in an uncertain era.
3. Influencing commercial strategy
CFOs are now expected to play an active part in shaping strategic direction and defining an overall strategy. Almost 90% of Watermark Search International's 2018/19 CFO report respondents said that they are key participants in determining forward action.
This goes beyond the traditional bounds of the CFO role where they were valued for providing guiding insights to the CEO but was not considered to have a seat at the table. However, with so much uncertainty dogging businesses, CFOs' commercial understanding and analytical capabilities are making them essential to planning outcomes.
However, it is worth noting that many CFOs still find it challenging to be involved in execution, with 80% of respondents in the Watermark survey finding it challenging to implement at a business level strategies that they helped to design.
4. It's no longer all about cost cutting
Cost reduction is still a key criterion for a successful CFO, but this has become so routine that it is no longer valued as a core KPI. Only 21% of respondents in the Watermark Search International's 2018/19 CFO report say that controlling and reducing operational costs is a KPI used in measuring the effectiveness of the finance team.
This demonstrates an interesting shift of priorities for the CFO, from ensuing general cost-effective operations to focusing on forward-thinking strategies that positively impact the business.
What can controllers do to develop their skill set and progress to CFO?
As the CFO role continues to expand beyond the traditional finance sphere, financial controllers and other numbers-based roles are no longer always the most natural choice for succession. As a result financial controllers must work to develop a variety of skills, beyond their own roles, which will help them to succeed in the CFO position.
Some of the key skills to develop are:
Develop superior communication skills
Most senior finance roles require strong communicators in order to ensure the job is done well. This is even more true for the CFO who must disseminate complex financial information to a non-financially trained audience in order to contribute effectively to stakeholders, investors and the rest of the board.
It can be difficult to rack up communication experience outside of treasury or investor relations departments so it is important to make efforts to bridge this skills gap. Offering to take calls from investors and chair meetings can allow you to develop this much-needed practice.
Become an expert in new technology
As technology becomes an increasingly present factor in business operations and crucial to proving efficient running costs, having a good understanding of new developments will become essential. It's key to understand that your expertise should not be limited to financial technology. As we have seen, CFOs are now involved in determining the future of companies, so understanding wider trends, security risks and how they will make you competitive is key.
Grow your leadership skills
CFOs are indispensable strategic business leaders in their own right and must be able to direct and present to a number of stakeholders in order to have their vision realised. Leading teams and taking on responsibility throughout your career will help you to prepare for taking on this level of authority.
Effective delegation is also a significant leadership skill that is necessary for the level of responsibility undertaken as CFO. This must be partnered with big-picture thinking. Those obsessed with detail will struggle to manage the weight of tasks required of financial leaders.
To learn more about how to make it to the top within the finance industry, get in touch with the recruitment specialists at Ambition today.
To view the full Watermark Search International CFO Report, please click here.