The Shifting Role of the Finance Professional: Trends and Developments
As business, technological and political environments continue to shift, the role of the CFO evolves along with them. The Chief Financial Officer of today must be equipped to handle expanded duties with a more all encompassing approach. In light of this progression, let’s examine three ways in which the CFO’s role has transformed, and will continue to do so.
From Bean Counting to the Big Picture
As we discussed in a previous post, the days of the CFO as an isolated number-cruncher are in the past. Today’s CFOs are looked to for big-picture strategy, and are expected to have one of the most important voices at the executive table. According to a recent study by EY3, 75% of CFOs reported spending at least 50% of their time on strategic aspects of the business. 1
In order to effectively manage this broadened mandate, the finance department will need to have their fingers on the pulse of the entire organization, making inter-departmental relationships more important than ever.
As OpenTextBC puts it, “Finance professionals therefore need a broad view of company operations to communicate effectively with business unit managers, board members, creditors, and investors. The goal is productive cooperation and teamwork between finance and the business units to meet corporate objectives.”2
Simply put, the analytical nature of the finance professional, coupled with their proximity to the bottom line make them a key part of the overall decision making process. Globalization has presented many new opportunities and threats to be assessed, and a steady hand on the wheel is imperative. In 40% of Fortune 500 and S&P 500 companies the role of Chief Operating Officer no longer exists, creating a further vacuum, which has been partially filled by the CFO.1
“A background in finance gives CFOs a unique ability to apply a systemic and objective lens to business operations,” explains James Robinson of Sysco Software. “And while CFOs remain burdened by stigmas of being penny-pinchers and number-junkies, the shift to a more quantified approach to business has provided an important balance to the “gut-instinct” style of management from previous times.”1
Big Decisions Need Big Data: The Finance Professional as Technology Leader
As big data supplies companies with ever-increasing amounts of information, it’s not good enough to simply be ‘good with numbers’. Instead, a premium is placed upon those that can interpret this mountain of statistics and transform it into actionable insights. Strategy and risk management are top of mind, and bringing a solid understanding of the data to the boardroom table will be of high value. With technological developments affecting most, if not all, areas of an organization, excelling in the utilization of new technology, or simply keeping up, will require large capital expenditures. Assessing the financial impacts of acquiring, managing and optimizing this technology is a task that falls to the finance department.
“Success will be determined by the level of creativity strategic leaders bring to the field,” explains Todd McElhatton, CFO of SAP’s Cloud Business Group. “Understanding where technology is best leveraged – and where it isn’t – is critical for modern corporate leadership and an intelligent finance organization.”3
Social Responsibility and Legal Compliance
“A decade after a series of high-profile corporate scandals, CFOs have been thrown into the spotlight and placed under the microscope like never before.” says Robinson.1
Indeed, higher scrutiny of corporate accounting has been a bi-product of the fallout to 2008’s financial crisis. Pair this with an increased emphasis on corporate social responsibility, and the result is a finance department that must please legally and socially conscious stakeholders, while still maintaining a healthy bottom line.
“In the aftermath of recent accounting scandals and the global recession of 2008–2009, CFOs consider accuracy of financial reporting their top priority, and they also must now provide more detailed explanations of what’s behind the numbers to board members and other stakeholders,” says OpenTextBC. “Rather than showering the board with financial reports and statistics, CFOs are crafting more focused presentations that deal with the company’s overall financial health and future prospects.”
Recently we profiled three Chief Financial Officers who have gained acclaim for their bold decisions and management style. Although finance will always be number-centric, the imperative for bold action, strategic thinking and leadership will only continue to grow. As the finance department thinks progressively, forward looking finance professionals, and the organizations who employ them, will benefit.
1 “7 Emerging Trends That Are Changing Finance: Evolving CFO Role.” Sysco Software Solutions. January 27, 2016. Accessed June 19, 2019. https://www.sysco-software.com/7-emerging-trends-that-are-changing-finance-1-evolving-cfo-role/.
2 Gitman, Lawrence J., Carl McDaniel, Amit Shah, Monique Reece, Linda Koffel, Bethann Talsma, and James C. Hyatt. Introduction to Business. September 18, 2018. Accessed June 19, 2019. https://opentextbc.ca/businessopenstax/chapter/trends-in-financial-management-and-securities-markets/.
3 2019 CFO Priorities: Experts Predict Top Trends.” Digitalist Magazine. Accessed June 19, 2019. https://www.digitalistmag.com/finance/2018/12/18/2019-cfo-priorities-experts-predict-top-trends-06195293.
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