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Before digital disruption, CFOs had a clear focus on treasury, accounting, and budgeting. Over the last decade, business practice has shifted towards financial leaders adopting a more proactive and strategic role. How has this transformed the leadership skills and general competencies of the CFO, as well as relationships with other senior business leaders?
Our interviews with CFOs from SMEs to multinationals have revealed four key ways of approaching the rapidly changing scope of the CFO.
Successful CFOs raise issues, question decisions and by doing so, make companies productive and profitable. It may not be a convenient process for senior leaders, but it can bring enormous benefits to a business.
How does routinely questioning the status quo affect the CFO’s leadership, or an ability to influence strategy? These factors tie in to the CFO's role as Pilot, that is, the increasingly visible type of CFO who leads from the front-line, presenting business strategy to board members and stakeholders as well as cascading it down to company-wide teams?
Philippe de Briey, Europe CFO of Monsanto, sees the process as one of ongoing team-building that presents a strategic vision. “I want to help senior leaders think differently about the business, putting themselves in the shoes of the investors and the markets at the same time.”
Past models that attempt to pinpoint the multifaceted scope of the CFO demonstrate that having a flexible skill set has long been a necessity.
The newest developments of the role, grouped as Coach, Scientist, Engineer and Pilot, have emerged from the need for the CFO to make rational decisions based on data spreading throughout the company, well beyond the scope of finance. Florence Rocle, VP Global Finance Services of Sodexo, believes this transformation was always coming and the development of the role, inevitable. “We no longer expect CFOs to be accountants. They should rely on people who are accountants since their role is much more global.”
As an Engineer, the CFO is increasingly focused on building a long-lasting people strategy and innovation culture that will live on as a company legacy. This is because as author William Heitman explains in his seminal study The CFO: Industrial Engineer of Knowledge Work: “The CFO is the engineer of the company’s knowledge base, which is fundamentally composed of people and systems.”
Today, it is the duty of the CFO to ensure data visibility extending as far out of the nominal scope as talent manager and chief advisor to the CEO. As David List, CFO of Conotoxia, puts it: “The CFO increasingly has a bigger role in all aspects of a company – and strategy is certainly one of those aspects.”
From the Scientist’s perspective, the focus is more towards the market, basing decisions on data and rationale rather than experience – as other members of senior management may be accustomed to. Omya CFO Terry Moro explains: “These days I sit around the table with the management committees made up of people from sales, manufacturing and logistics. This is something completely new – and these committees are not used to being directly challenged against a budget.”
For the CFO as Coach, there is a concern to bring new skills to the table that both better fit new generations and their ways of working as well as the finance department’s traditional tasks. As Ryan Mangold, CFO of Taylor Wimpey explains: “The requirements for finance have basically gotten broader. There needs to be a greater understanding of a lot more – tools, processes, analysis – and this naturally impacts on the judgments that we make.”
Approaching leadership from a personnel perspective is a challenge the Coach relishes, the opportunity to teach both colleagues and employees, articulating the workplace culture in accessible terms – accuracy, alignment, and behavioural. But as Sebastien Rouge, CFO of Latécoère observes, change is incremental and adaptable to company culture. “Our focus is on aligning employees and their work to the diverse skillsets that they have brought to the table. This is the challenge, rather than wondering whether I should be managing a digital native over someone who is used to working with pens and paper.”
In terms of the Pilot, leadership is a balance between what the company does well now, in terms of performance throughout the organisation, and where the company can be if all business functions are properly aligned. As the CFO of a packaging company, puts it: “People rely on your technical skills, yes, but also on your capacity to always “get” the bigger picture.”
The need to notice and draw attention to strategic and operational issues early enough sees the CFO in the shows of a Pilot. In this way, the CFO can maintain a constant dialogue between operations and finance to ensure what is relevant for both is understood as operationally important.
As Latécoère CFO Sebastien Rouge finds: “If the role of finance is understood and the company works towards executing their goal – which is always to improve performance – the whole company will function better.”
And what is a key for performance in the finance function? Eugene Low, CFO of Mercer, places it firmly in an unteachable skill – curiosity. As he explains, “When someone has curiosity about a problem is willing to ask the right questions to go deeper, that is far more beneficial than an FP&A or accounting degree.”
Find out more about the other key challenges facing CFOs in 2018