The Spectrum of the CFO Role: Where Do You Stand?
Amid increasing global economic uncertainty and technological penetration, the CFO role is undergoing profound transformation. Based on observations by Shawn Cole, President of executive search firm Cowen Partners, this article analyzes the shift in CEO expectations for CFOs, pointing out that traditional financial expertise is merely an entry requirement, while creativity, communication skills, technological literacy, and strategic flexibility have become core competencies for CFOs in the new era. The article references KPMG's concept of the 'Renaissance CFO' and emphasizes the CFO's bridging role in connecting daily operations, long-term strategy, and financial goals.
Editor's note:This is a contributed article. The author, Shawn Cole, isCowen Partners Executive Search's President and Managing Partner of CFO Search. The views expressed in this article are solely those of the author.
We are currently facing a CFO crisis.Two-thirds of CEOsbelieve the importance of the CFO role will continue to rise, but one-third of CEOs believe their CFOs are not up to the challenge. The reason is that the global economy demands CFOs possess creativity, communication skills, and technical expertise, while traditional CFOs are often rooted in risk aversion and crisis management. So, where do you stand on this spectrum?
The massive shift in CFO responsibilities stems from an unpredictable economic environment, further exacerbated by the significant financial disruption caused by COVID-19 recently.
Today, business growth and long-term survival require taking on significant financial risks. Market volatility is far greater than ever before, and technology has globalized every industry, making market segmentation and competition deeper, broader, and more complex. Factors such as advanced technology have given rise to what KPMG calls the need for a "Renaissance CFO."
Evolving Expectations
What does a successful CFO look like today? They are not just accountants; they are partners to the CEO, vocal leaders of the organization, and action-oriented executives within the corporate structure.
What was once a highlight on a CFO's resume—extensive financial management and accounting experience—is now just the minimum requirement. Having a solid background in accounting and enterprise resource planning (ERP) system management no longer guarantees anything. ERP experience has now become a prerequisite, much like having an accounting or finance degree.
What we observe at our executive search firm is that CFOs, upon joining a company, often need to take on ERP selection and implementation projects as part of their organization's goals for data automation, analysis, and forecasting.
This is part of a trend where technology permeates every level of business and brings more profit-and-loss opportunities. The dominance of technology dictates everything from advertising, marketing, and sales to internal operations, and can make or break a company.
Today's technology-driven unpredictable market means companies need to continuously strengthen interdepartmental connections to achieve more strategic and organizational operations. The CFO plays an indispensable role in uniting company management.
More importantly, CEOs are looking for talent who know how to leverage technology to improve data analysis, strategy formulation, risk management, and interdepartmental communication. They want CFOs to bring rich financial and non-financial expertise, innate creativity, and technical prowess. They expect CFOs to use these capabilities to implement meaningful, data-driven, company-wide initiatives.
Furthermore, CEOs need CFOs to understand globally changing markets. They want CFOs to leverage their understanding of emerging markets and new industry players to adjust corporate strategy at any time. Flexibility, creativity, and agility are the three most sought-after soft skills in the CFO role in 2020.
These capabilities stand in stark contrast to the traditional CFO's isolated financial expertise and are crucial in crisis management and crafting successful growth strategies. In today's economic environment, even decades of diverse financial management experience may not get you near the CFO office without the ability to adjust the company's growth strategy when facing new competitors.
CFOs face a daunting task: to act as a bridge between daily operations, long-term strategy, and financial goals. The CFO's role is no longer just about approving expenditures and overseeing budget issues. Instead, the modern CFO must leverage effective cutting-edge technology to analyze company cash flow and collaborate with other executives to develop short- and long-term plans that safeguard company assets without compromising the CEO's vision.
This may seem daunting, but the role has never been so exciting, engaging, or held such limitless potential to make a tangible impact on a company's growth and performance.