Leading The Way: The Role Of The CFO In Driving Strategic Alliances
The role of the Chief Finance Officer (CFO) has rapidly evolved in the face of growing challenges and demands, giving rise to an increased level of internal and external scrutiny.
A vital line of defence for businesses, CFOs are charged with optimising a company’s financial performance by directing and continually adapting its budgets, goals, and objectives.
However, their responsibilities range far beyond the scope of just managing finances. The CFO’s expertise is not just confined to numbers: they take a key seat at the strategy planning table, helping to shape overall direction by aligning business and finance strategy to drive growth. As such, today’s CFOs now require broader business and commercial knowledge and operational experience as they lead C-suite collaboration on long-term, interdependent work.
In a rapidly evolving landscape, any discussion of today’s CFO must address:
- The actions and skills required from Chief Finance Officers
- Their role in the development of effective business strategy through:
- working with a variety of teams
- providing crucial data insights throughout the business
- facilitating greater interaction with the CTO and CHRO to generate positive outcomes
Evolving expectations of finance professionals
Traditionally, finance leaders may have operated in silo, seeing their role as being purely about managing cost and not considering the interplay with other areas of the business. Similarly, this is likely to be how others in the business also perceived their role, creating a sense of self-fulling prophecy for those in the finance team. This has led to essential skills, such as technical expertise and talent management, being underdeveloped and underrated as CFOs are pigeonholed as financial gatekeepers.
However, in today’s digitised, interconnected world, the CFO is expected to inhabit a more dynamic and outward-facing role. The scope and influence of their responsibilities in areas such as strategic execution and performance insight are more prominent than before, meaning they must balance their traditional duties with their new role as agents of change. To succeed in this demanding climate, the CFO should be cross-functional, motivational, and willing to lead by example.
To support business objectives thoroughly and drive the talent agenda, finance leaders have a responsibility to understand and develop HR intelligence. Therefore, a strategic alliance between the CFO and the CHRO must be nurtured. Building a more collaborative relationship between the two can elevate both functions to a more strategic position within the company. It will also enable CFOs to look beyond costs when considering employees, taking a deeper look into how profitability can be enhanced through human capital. They should be able to estimate the impact of salary increments and bonuses on the business’s profitability, thereby assisting HR teams in shaping policy.
Finance leaders must also be technically savvy, having at least a moderate understanding of IT. They should be able to provide guidance and advice on issues pertaining to the systems and applications in use for finance, whether that’s understanding the underlying data and its context or how systems integration can support a more relevant digital process. These technical skills provide today’s CFOs with the information and confidence to challenge what is possible, manage risks, and play a key role in strategic decision-making around IT investments.
Consequently, to gain a more well-rounded understanding of the HR and IT aspects of their role, and to set their business up for success, today’s finance leader should be working towards bridging silos and partnering with the CHRO and CTO.
When the sum is greater than its parts
By joining forces and being able to rely on the expertise offered by the CHRO and CTO, it is not just finance leaders that stand to benefit. Improved communication, understanding and collaboration enable issues to be avoided, and where they do occur, novel solutions to be implemented.
It is not uncommon for HR or payroll projects to be led by the CFO in isolation from HR. But without collaboration between the CFO and HR, key messages and data insights can fail to be communicated effectively. It can also lead to a primarily functional use of HR and payroll systems which is a missed opportunity to take advantage of qualitative elements of contemporary solutions. As CFOs work towards boosting their company’s competitive advantage, they can leverage data analytics to deliver a well-rounded financial picture that guides the wider organisation. If these valuable insights fail to reach the right teams, they will not resonate in the boardroom.
This disjointed approach can lead to wasted time and resources. Instead, what is needed is a formidable triumvirate of success. Within this robust alliance, the CFO, CTO and CHRO should be able to feed off each other to constantly reinvent the workplace. It is only through this collaboration that they will be able to redefine themselves as collective digital stewards, driving value, improving efficiency, and setting the future direction of the business.
Collaboration is the key to future success
The last few years have seen a fundamental shift in how people and businesses get work done. This highlights how quickly circumstances can change and the need for organisations to be agile enough to keep pace. As a result, finance leaders have rapidly moved to the fore as key players in determining how businesses adapt to these changes – particularly in those places where digital, HR, and finance intersect.
The old silos are no longer fit for purpose and will simply put companies unwilling to change at a severe disadvantage. Creating a strategic alliance between the CFO, CTO and CHRO will allow these key individuals to work together to future-proof the organisation and set it up for continued success.
About the author: Mark Jenkins is Chief Finance Officer at MHR.