The Constant Evolution of the Chief Financial Officer
Years ago, a chief financial officer was the executive responsible for a company’s financial and shareholder reporting responsibilities. Today, this financial aspect is but one small part of a much broader scope of responsibilities. CFOs have become strategy setters and enforcers who are balancing complex regulations, global competition, technology, internal talent and much more. They are expected to understand not just accounting and finance, but their company’s products, services, teams, marketplace and competitive landscape. The job has gotten tougher, the hours have grown longer, the risks have gotten bigger—yet because of these challenges, there are more opportunities for a CFO to shine than ever before.
Pearson Partners’ Q2 2013 Spotlight Series breakfast discussed the evolving role of the CFO, revealing how these multitalented leaders wear many hats and spend many sleepless nights working to ensure their companies’ success.
June 11, 2013 Pearson’s Esteemed Panelists Q2 2013
- Jeff Kupp, Chief Financial & Operations Officer/President, Authentix
- Shaun P. Mara, Former Executive Vice President and Chief Financial Officer, Dean Foods
- Skip Moore, Partner, Deloitte
- Tracy L. Morris, Chief Operating Officer and Chief Financial Officer, Capital Southwest Corporation
Growing Complexity, Increasing Responsibility
The CFO role has grown increasingly complex in recent decades, expanding beyond core finance, reporting and accounting responsibilities to encompass managing unprecedented regulatory compliance requirements; leading operational areas ranging from IT to legal to human resources; establishing and leading strategies for growth; and ensuring the right talent is in the right place at the right time as company priorities shift. According to a Pearson Partners survey of CFOs, respondents agreed that CFO skill set requirements have increased in the last decade, primarily because of increased risk management (94 percent), increased regulation (91 percent) and globalization of the economy (92 percent).
Deloitte research has defined four primary roles that CFOs perform. The first is the steward, who protects the company’s assets and provides accurate financial information to the public and stakeholders. Secondly, CFOs are operators who balance capabilities and talent against service levels and costs. As strategists, CFOs are involved in mergers and acquisitions, financing and day-to-day oversight of long-term strategy. Finally they are also catalysts, instigating and promoting throughout the organization the behaviors and actions that accomplish company strategy and mitigate risk.
CFOs must also expand their responsibilities and knowledge base to ensure competitive success in a global marketplace. They play a critical role in helping their companies differentiate themselves among the global competition, acting as strategic leaders and helping to ensure alignment of action, spending and company focus.
Far Beyond Finance
To help a company compete successfully on a global basis, the CFO must continuously assess talent and partnerships to ensure that the company’s controllers and other financial leaders—within U.S. operations and around the world—have the skills, resources and knowledge necessary to meet the new challenges brought by global competitors and suppliers. At the same time, the CFO must ensure regulatory compliance in every country in which his or her company operates.
The CFO is in the unique position of being independent and free from agendas that matter solely to specific areas of the company, providing objectivity that can be highly valuable in setting priorities that are best for the company overall. In fact, one of the CFO’s main roles is ensuring that a company not only has the right priorities, but has a manageable number of priorities and stays on track in focusing on them.
Part of this responsibility involves gaining a deep understanding of the company’s products and services by spending time with people throughout the organization and learning about what they do and why. At the same time, a CFO must continually assess the talent within the organization, ensuring a good match for its strategic priorities and maintaining a balanced team with members whose strengths and weaknesses complement each other.
As evidenced by the Pearson Partners CFO survey, the CFO role is constantly evolving in the face of a changing regulatory environment and increasingly complex responsibilities. Yet, most CFOs reported that being a CFO is a satisfying and rewarding job that allows many opportunities for leadership and contribution to a company’s future. The keys are embracing change, taking time to reflect on the big picture and relying on support from fellow executives and trusted advisors.