What do you think of when you hear the title “Chief Financial Officer?” A master of math and analytics? The head of an army of accountants? A person with one finger on the pulse on the company?
In today’s post-recession world, that’s only half the tale. During the economic downturn, companies found themselves turning to extreme measures to survive. This meant cutting costs where they could, optimizing operations to be as cost-effective as possible, spinning off unprofitable subsidiaries, and investing strategically in certain sectors. And no one was more familiar with the company’s financial landscape or organizational challenges than the CFO. The title quickly stood out as meaning a lot more.
In 2016, eight years after the recession, caution and careful planning matter now more than ever, as do real management and limits on capital and credit. For the CFO, recessionary duties such as providing long-term strategy and financial planning have joined traditional responsibilities in compliance and revenue.
Perhaps the best example of the added workload placed on CFOs can be seen in industries that are undergoing considerable disruption. PWC, writing about the energy industry, comments on the “strategic CFO,” who “focuses on linking strategy with execution and market plans…” CFOs have to shape corporate agendas, and even implement wide-reaching changes, especially where it comes to green energy.
But the increased regulatory demands have come with a cost. In a recent 2016 survey of 769 CFOs from across the world, EY reports that nearly 56% of CFOs report they “cannot focus on strategic priorities because of time spent on compliance, controls, and costs.”
So where to begin? Whether you’re a newly-minted, “strategic CFO,” an aspiring CFO, or a chief executive seeking to hire the best CFO possible, there are a number of key concepts and skills that can prove useful in navigating this evolving relationship in a role that gets stretchier by the day.
Note that this list assumes that CFOs are already financial experts and covers other skills not typically associated with the position.
From literal paper processes to modeling forecasts and budgets, there are excellent checklists for CFOs to maximize efficiency through automation. Whether it is replacing software systems, integrating existing ones, or building more algorithms, do whatever it takes to get those minute, time-wasting tasks out of the way.
Sharp management and a savvy team
It’s not just crunching numbers anymore. CFO’s are strategizing, planning, and organizing–which means building, educating, and organizing teams, sometimes on an international level. Leadership, and perhaps even more important, people skills, are essential for this task.
A CFO should make sure he or she has a good team and that the building blocks are strong. A talented team can keep things running allowing the CFO to be freed up from the details to focus on larger issues.
Collaborating with other teams
There’s more to it than management. CFO’s need to collaborate with other executives, among them the chief marketing executive, top information officer, and human resources. From streamlining IT processes for a faster workflow to assisting the CMO with developing predictive software and analytics to target business opportunities, the possibilities are endless.
It’s safe to say that if you’re a CFO, you’re already a master of the financial planning and analysis process. The key here is to take it one step further and think strategically. Have you brainstormed challenges and worst-case scenarios, as well as any potential solutions? Are detailed sensitivity analyses your friend? Can you open up the process to other departments, and coordinate with other teams to get their feedback? These are the next-level skills necessary for success.
Win over stakeholders
38% of CFOs noted that building relationships and trust with external stakeholders was critical to success. 37%, said the same about internal stakeholders. From project managers to clients, the recipe for building relationships with stakeholders is rooted in the fundamentals of successful interpersonal communication. Honesty, interest, and good listening go a long way, as does openness and a willingness to compromise and see the other party’s point of view.
There’s no substitute for practical experience
Authors noted that successful CFOs needed to have “a rare combination of technical and interpersonal skills.” 44% of respondents to their survey listed practical experience in their current role as their overriding concern, with only 8% touting the value of an MBA or other, postgraduate degree. To hone the requisite strategic thinking and leadership, CFO’s should consider spending time running other divisions of the company. At the very least, it will provide a complete picture of the company’s operations–a view that may not always be clear from the C-Suite.
In a post-recessionary world, where the memories of economic trauma are still fresh in institutional memory, the CFO has become more important than ever. Be it planning mergers, minimizing risk, or advising on strategy and five-year growth plans, the CFO’s role will keep stretching. It’s up to you to learn how to stretch yourself along with it.