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The Chief Financial Officer: From Guardian of Strategy to Catalyst for Change
The role of the CFO has evolved in recent years into a function fully involved in the definition and implementation of company strategy.
Current trends and developments such as global changing markets make chief financial officers and other financial leaders central to a company’s ability to change and adapt.
The traditional remit of the CFO has become more complex as financial management, accounting and control have become more global and interconnected.
What is the evolving impact of the CFO on corporate strategy?
Many CFOs have secured new responsibilities in areas such as IT, legal, HR and procurement. Modern-day CFOs have not only expanded their functional scope, they now also increasingly drive changes that impact the organisation as a whole.
Whereas for a long time CFOs were the guardians of corporate strategy implementation, they now are a powerful force in defining the strategy as well.
In all this, CFOs must ensure that initiatives are aligned with strategic guidelines and constantly contribute towards the business objectives. As the scale and scope of their responsibilities have been extended, most successful professionals are now fully aware of their pivotal role in corporate success.
What skills do successful CFOs possess?
A CFO today needs to offer a diversity of skills: financial theory, practice and techniques; social, language and communication skills; and also flexibility. CFOs also must demonstrate a strong ability to understand business strategies in order to contribute to all areas of the organisation, with many acting as catalysts and steering strategy development and implementation.
The most successful CFOs are those who combine such financial skills together with strong leadership and business acumen.
How bright are the CFO’s career prospects?
The role of CFO is gaining in standing as a career ambition. Once finance leadership was widely regarded as a stepping-stone to the role of chief executive officer. Today, financial leaders are strengthening their position in their own right.
After all, the complex decisions they make regarding globalisation, off-shoring variance of tax regulations and so on can make or break a company. Their growing involvement in shareholders’ meetings, investorrelations and corporate strategy highlights this development.
Assuming greater responsibility for company steward- ship brings closer ties with company owners, especially in privately owned companies, where CFOs hold a position of great trust and influence.
With these changes in mind, it is conceivable that the CFO could ultimately supersede the CEO as the most important C-level position, making aspiring to the role of CFO a career ambition for young professionals. Yet, those CFOs who eventually become CEOs will be able to capitalise on their career experience to date. To be ultimately successful as CEOs, former CFOs must be able to focus on talent, especially on how to attract, manage and retain top talent. Having had a wideand diverse exposure to international management challenges on top of strictly financial management roles will therefore be a key asset.
How does the CFO steer change?
Historically, financial leaders in general and CFOs in particular were often content to manage the status quo within the company and to implement the policies set by the CEO.
Now, CFOs increasingly act as change leaders, taking on a strategic role as they drive their own strategic initiatives within the finance organisation and across the company as a whole.
While change management remains a key priority in business today, CFOs are increasingly taking on this responsibility as a result of the great cost implications involved. In addition to building relations, identifying opportunities, minimising risk and improving long-term business performance, the CFO adds global scope to their repertoire. Two of the CFO’s main duties are to reduce costs and improve efficiency, two essential elements of finance transformation and a catalyst for business change.
Restructuring processes and organisations remains another key focus for financial leaders. There is a noted rise in those who are implementing outsourcing, centralisation and shared services. Identifying this change is only one part of the puzzle. Aligning this focus with strategic priorities within the business can be a challenge where the CFO will take the leading role. Pioneering and prioritising change within the business highlight the complexity of the CFO’s role: he or she has to be responsive and ever adapting to a changing business landscape.
- CFOs increasingly drive change that has a wide ranging impact on the business
- The focus for CFOs is no longer solely on implementing corporate strategy but also on defining strategy
- The key to CFO success is to offer a combination of financial skills, strong leadership and business acumen
- The role of CFO is becoming a career aspiration in its own right rather than a springboard to the post of CEO