The roles and responsibilities of the Chief Financial Officer (CFO) have changed dramatically over the last 30 years.
Previously, the CFO was in charge of settling the company accounts as well as drafting the financial statement reports and company budgets. However, number-crunching and budgeting are no longer the only considerations when hiring a CFO today. With the proliferation of new government regulations and globalization taking the world by storm, the role of a CFO has been quickly evolving to meet the demands of a rapidly changing world. For example, in 2016, more than 40% of CFOs spent most of their time in areas other than finance. (McKinsey & Company, 2016)
What then does this suggest about the attributes of a good CFO? As more roles and responsibilities are thrusted upon CFOs, here are 3 of the top attributes we believe are commonly found in effective and competent CFOs.
Attribute #1: Strategic Insight
In the modern business world, a CFO is required to do more than just balancing financial statements and reporting them to the CEO. In fact, CEOs today expect CFOs to be business partners concerned with the strategic vision of the company rather than simply being effective bookkeepers or budgeters. Hence, a good CFO ought to be able to dive deep into a company’s processes, understand what drives value for the firm and use this information to develop a strategic direction for the company. Jack McCullough, founder of the CFO Leadership Council, sums up the key attributes of a good CFO in this quote: ‘It is the person who can synergize strategy and finance who will have an impact’. (Bogan, 2017)
Attribute #2: Managing Talent
As the responsibilities of CFOs increase, so do the responsibilities of the finance teams under them. CFOs require a strong pool of talent at every level of their departments to keep up with the rising job demands. In a recent KPMG survey, 97% of CEOs stated that attracting and retaining top-notch finance talent is critical, but only 33% of CEOs gave their CFOs a passing grade in talent management. (KPMG, 2020) Hence, a good CFO should possess the ability to develop and train the team under them to cope with the ever-growing demands of the finance function.
Attribute #3: Ability to Integrate Data Analytics
One may say that a major change in the role of CFOs from past to present would be the scale of their decision making, from being mostly budget-oriented to strategy-centric at the company level. In today’s day and age, data analytics has become the forefront of decision-making. However, with 75% of CFOs understanding the importance of data analytics but only 47% thinking that their team is effective in it, therein lies the problem. (IBM, n.d.) A good CFO should develop a culture that integrates data analytics into the decision-making process.
In conclusion, while modern-day CFOs retain the traditional responsibilities of accounting, number-crunching and budgeting, the ever-changing world has forced CFOs to constantly adapt to meet dynamic business needs. Hence, good CFOs are the ones who can offer strategic insights into the company’s future direction, nurture strong teams of finance talent, and go the extra mile to integrate data analytics into their finance functions.