Gregg Grobler, CFO of the innovative international executive search firm Marlin Hawk Group, discusses the evolving role of the CFO today.
Once considered a purely number-crunching role, the job description for a CFO in the modern workplace has changed dramatically. Mounting leadership pressures such as disruptive technologies and the increasingly competitive corporate landscape mean that CEOs are often reliant on their finance executive to balance traditional responsibilities with new ones.
With this in mind, the CFO can no longer be focused purely on driving finances. Instead they must seek to establish themselves as a true partner to the CEO and as a business leader with exceptional financial intelligence. Additionally, the ability to demonstrate meaningful strategic leadership and value across an entire organisation has become a critical attribute.
It is important that a CFO transcends the facts and figures and contributes to something that is equally significant: culture.
Culture Fuels Organisations
Culture is the DNA of any business. It is what makes an enterprise unique and sets it apart from its rivals. As the saying goes, “culture is the way we do things around here.” Typically, company culture is driven by other members of the senior management team - usually the CEO, MDs, or HRDs. The general perception is that CFOs are more linear in their skillset, solely focused on finance. But while a rock solid finance strategy is the lifeblood of a business’ success, it’s still only one piece of a much bigger puzzle, so finance professionals need to also be cognisant of the impact they can make in other areas of the organisation, as well as their potential to drive strategy and culture.
The CFO has touchpoints across every function in an organisation, giving them a unique insight into how to ensure the company and its broad strategies remain relevant and successful. Given their responsibility for putting a hard figure to the learning, development, social activities and benefits of an organisation, it is imperative that they have an ear to the ground when it comes to culture. Moreover, a CFO’s analytical skills can be useful for quantifying the effects that having a great culture can have on a business’ bottom line. It is time that CFOs transitioned from being the sponsors of change to the leaders of it.
Recent figures show that top US companies are increasingly turning to outsiders to fill finance chief vacancies. About 43.4% of CFO positions at Fortune 500 and S&P 500 companies are held by candidates hired from outside their companies, up by almost 10% on average over the previous decade. External hires offer a fresh perspective and can force substantial cultural changes, uninhibited by the perceived status quo of a business. The onus therefore falls on incumbent CFOs to prove that they can affect this change without the need for their company to look elsewhere.
According to KPMG's 'The view from the top' report, 34% of CEOs say that experience with transformation is one of the most important attributes for a CFO. The ability to lead by example and build a culture of agility is crucial. Digital transformation is changing the way that organisations across all sectors operate at a granular level. It is inevitable that this current era of disruptive technology will have an effect on businesses in a wider sense, as they are forced to adapt both financially and culturally. A forward-looking CFO will look beyond financial strategy when it comes to disruption, focusing on the greater challenge around human capital. When planning large scale transformation programmes, the key is to lead with culture. Ultimately, a healthy culture will drive the change so it is integral that culture transformation is step one of that journey.
As we know, AI and management software is a potential threat to those working in certain areas of businesses, especially where tasks are repetitive in nature and can be easily automated. It’s likely that, as these technologies evolve further, finance experts could be required to run newly emerging areas of the department, whether that’s trend analysis, technology implementation or stronger business partnering and stakeholder engagement to drive other business departments.
It is also inevitable that roles will change within the finance function. Current remits may be automated but will be replaced by new roles and expertise.
We can face this evolving landscape by managing talent in the correct way, upskilling our current teams to fulfil different or evolving roles, as well as constantly assessing whether new roles should be introduced. Increasingly, and especially in larger organisations, roles like Finance Data Analyst are growing in importance as companies large and small realise that it is essential to have someone managing the financial insights that our new technologies are enabling. This is a trend that is only going to strengthen as data and AI capabilities become more sophisticated. Fostering an agile culture in this context will provide finance teams with a different perspective on the business and allow them to prepare for the new chapter which AI and Data will help shepherd in.
The reality is that CEOs expect a lot more from their CFOs than they used to. Besides having the necessary leadership skills to motivate their teams and drive strategy, they want an individual who can tell a story and influence others, as well as crunch the numbers.
Yet, far from posing a threat to current and aspiring CFOs, this is an opportunity to be seized by finance professionals. It is the chance to become a more proactive member of the executive team and shape an organisation in more ways than through finance.
The most important thing for the modern CFO to remember is that cultural transformation does not happen overnight. It can take years to affect real change, but the process begins with gradual and incremental adjustments, first addressing the cultural shifts that are necessary and then and it is up to finance leaders at all levels to demonstrate the agility to move with the demands of a changing landscape. Finance executives can kickstart the process by opening up crucial conversations on where the business is now, where it needs to be and, ultimately, how it can get there.