Long before there was a C acronym for every executive position in a company, there were the original three: CEO, COO, and CFO. These were the people at the top calling the shots, making the big decisions, and influencing the company from within. Their ideals and values inspired and dictated how a company was run. Chief financial officers, specifically, were the gatekeepers of the finances.
Traditionally, CFOs analyzed a company’s financial risk, managed financial planning, and kept all records clean and compliant. While these are still primary responsibilities of the modern CFO, the role has evolved beyond being a figurehead on a board of directors or a name on the company letterhead. A CFO now has a multi-faceted role and is expected to be a more active player with big ideas and leadership skills, rather than a basic money handler. CFO is no longer just a title, but an aspiration for many, and a well-rounded job for those who reach it.
Becoming a Strategic Player
At the start of this decade, companies began to realize how much the CFO role was changing. A 2010 Ernst and Young survey revealed that 73% of CFOs saw their role as a destination in its own right. They realized that CFO is not simply a path to CEO. Rather, it’s just as formative to a company’s inner workings as the rest of the C-suite.
CFOs are not just gatekeepers of the finances; they are influential strategic players. As the economy took a downturn a few years ago, CFO’s had the power to make key decisions about how a business would navigate the crisis. This caused a huge rise in how much sway a CFO held in the infrastructure of a company.
As Chad Stone, CFO of the Renewable Energy Group, told Fox Business News in 2013, “During times when it is difficult to obtain financing and during economic tightening, the value of a financial mind is in more demand and more critically needed.”
This ability to adapt and think quickly in times of stress created a new role that required skills CFOs had never needed previously. CFOs needed to evaluate carefully, make thoughtful decisions and balance their priorities with the goals of the company. They did more than manage risk, but analyzed it deeper for actionable insight. They did more than monitor investments, but drove the strategy around making new ones and maintaining existing ones. They did more than cast a vote in executive meetings, but interacted and inspired the people on their corporate teams.
“As they bring their quintessential ‘spreadsheet’ to life, CFOs are playing a far more significant part in company decisions in an effort to achieve a more optimal, high performing business,” Shane Berry, senior vice president of AmEx’s global corporate payments division, told Fox Business News. CFOs are leaders with a voice and growing pressures to be a Jack-of-all-Trades.
Today’s CFO has many roles beyond finance. He is first and foremost the financial expert. But he should also be a performance leader with strategy in mind, a catalyst of action, a steward of control and an operator of efficiency. Using these four roles to comprehensively approach the role of CFO guides companies forward in what a CFO should be concerned with and influencing.
If he is doing his job as a steward of compliance and managing the finances, he can also shape a company’s overall strategy and instill a financial mindset throughout the organization. These opportunities afford CFOs a complex, challenging and demanding role. This is excellent for personal and professional development, but has created a new set of pressures.
An updated version of the Ernst and Young CFO survey reveals that 56% of CFOs feel they cannot focus on strategic priorities because they have to spend a majority of their time on compliance, control, and costs. As CFOs juggle under-staffed teams, advancing technology and wider operational roles, they will face a vastly different job than original CFOs. The survey also shows that 71% of CFOs will increasingly be responsible for the ethics of decision making in support of their organization’s purpose.
From finance to ethics, the role of CFO is a complicated but important one. Today’s CFO plays many parts to help a company achieve its optimal success and reach its highest heights.