Redefining The CFOs Role For Effective Strategic Leadership
Today’s Chief Financial Officers (CFOs) are far more than number crunchers. Once they were perceived as risk-averse cost gatekeepers in charge of financial reporting and forecasting, but the evolution of the role has accelerated in the past two years. Transformed by technological innovations, massive data repositories, and challenging economic factors, today’s CFOs need to be strategic leaders that drive change throughout the business.
CFOs are starting to be seen as “co-CEOs,” reliable leaders who navigate economic uncertainty and low consumer confidence, securing overall business stability. While CFOs aren’t expected to lead on all fronts of business operations, they are expected to widen their professional remit to be involved in areas traditionally covered by other business functions – such as ESG or managing investments to link disparate tech systems.
Recent research we conducted in partnership with Deloitte, surveying 700 CFOs and senior departmental leaders globally, found that CFOs’ self-perceptions are not aligned with the rest of the business. For example, CFOs are seen as “inspiring” by others – a characteristic that many CFOs didn’t see in themselves: only 10% of CFOs consider themselves as such vs. 37% of their colleagues. So, how can CFOs look to take charge of business leadership, and exercise the potential they have, whilst carving out a unique scope within the business to tackle what may seem challenging but exciting business priorities?
Realigning self-perception and expectations
85% CFOs compared to 86% of their colleagues believe they can help solve business problems. But when it comes to human skills, there is a clear divide between how CFOs are perceived and how CFOs see themselves. CFOs tend to over-credit themselves when it comes to actively coaching others across the organisation (27% CFOs vs. 12% colleagues), but at the same time, CFOs don’t give themselves enough credit for being empathetic (18% CFOs vs. 29% colleagues) or strategic (32% CFOs vs. 45% colleagues).
The trend of undervaluing their own leadership efforts holds across a variety of business challenges. It’s especially noticeable regarding tech-related efforts like facilitating hybrid work (81% vs. 93%) and ensuring effective cybersecurity measures (82% vs. 90%), although these duties traditionally fall to CIOs. It seems that ongoing global disruption has helped businesses understand the importance of the CFO in ways they themselves have yet to realise let alone capitalise on.
Transforming the role of the CFO
Today’s business environment requires leaders to be confident in their ability to quickly adjust plans according to ever-changing realities. CFOs are often the first in the room to dissect the impact of a particular challenge, mitigating risk and determining the best next step. With this visibility, they’re in a unique position to observe and navigate the boundaries between different departments and look forward, rather than back. But where exactly should they be moving?
Our research found that 86% of CFOs and 81% of business colleagues agree that improved ‘processes’ – to make workflows more efficient, less burdensome, etc. – are important for businesses to become more agile. At the same time, 82% of CFOs vs. 86% of their business colleagues agree the challenges they’ve been facing in the past 2.5 years could have been improved with stronger communication between departments. Keeping in mind the business needs, it’s essential that CFOs, uniquely positioned to become the link to every corner of the business, implement a revamped approach to planning, making it a process that would connect all business units and enable greater transparency.
Enabling cross-departmental digitisation through connected planning
Connected planning refers to the technology-enabled process of business planning that joins together people, data, and plans to help accelerate better business performance. Traditional planning approaches lack the collaboration, insights, and predictive, self-learning capabilities necessary to inform strategic decision-making. This process breaks down information silos to eliminate any inefficiencies in financial, corporate, and operational planning.
Connected Planning will be key to agile and influential CFO leadership as this role requires heightened strategic vision. 40% of business colleagues would like to see their CFOs provide a stronger strategic vision and 38% would like to see stronger planning & growth orientation from their CFOs. With such planning tools, all the departments will have a single source of truth to refer to, and the ability to quickly adjust plans based on performance or during unforeseen circumstances.
This approach allows businesses can stay ahead of any future disruptions and pivot as needed, providing CFOs with the data to support the relaying of their vision, collating data from employees, analysing it, and acting based on data-driven insights
Ensuring success of ESG initiatives
Our research also found that CFOs see ESG as a fifth item of priority on their list, whilst 85% of senior colleagues consider ESG to primarily be the CFO’s concern. ESG has undoubtedly risen on the corporate agenda, and it is now imperative that organisations look at how they can pivot the operations they already have in place, so they are more sustainable.
Clearly, there is a real opportunity for CFOs to expand the role of managing their organisation’s ESG initiatives and embrace it as one of their core priorities. CFOs’ active involvement can help bring more visible, significant improvements in this realm.
Championing the CFOs unique role
The business landscape will continue to evolve and there is an urgent need to be even more proactive and forward-looking. To thrive in this new dynamic, CFOs need to take ownership of new business priorities and drive them forwards.
Be it in the delivery of agile planning or ESG initiatives, success will largely depend on whether CFOs are able to evolve with time. It can be challenging to positively pivot the role and responsibilities – but it also brings exciting new opportunities to drive organisational success and become a more strategic leader across many business functions.
About the author: Victor Barnes is the Senior Vice President at Anaplan.