CFOs are increasingly involved in setting strategy – a transition that is requiring them to become more effective communicators and to think more holistically, according to a new Ernst & Young report.
CFOs from multinational companies such as Nike, Coca-Cola Enterprises, Ralph Lauren, Xerox, and Archer Daniels Midland, say they’re taking on more responsibility beyond finance and, as a result, are reporting high levels of career satisfaction, according to the report, Views. Vision. Insights. The evolving role of today’s CFO, which was released this week. Finance chiefs also report interest in roles beyond finance, including as chief executive officers.
“Organisations are giving them wider scope and demanding that they have a broader set of skills in addition to fundamental skills in finance and expertise in investing and managing capital,” Tom McGrath, senior vice chair of markets at Ernst & Young, said in a press release.
Ernst & Young compiled the report from interviews with CFOs in the Americas to gain perspectives about the company’s on-going research in other regions that suggests the top finance role has become increasingly strategic. Among the findings:
- CFOs are increasingly asked to develop strategy in existing and emerging markets while managing the on-going demands of the finance function role. In turn, some CFOs believe their role is evolving from “chief sceptic officer” to a manager of growth.
- CFOs are increasingly pressured to become world-class communicators. They are challenged by the need to communicate complex issues to a variety of audiences – investors, financial analysts, customers, partners and employees – as stakeholders demand accurate information and transparency in real-time.
- Most CFOs think they have viable internal candidates to succeed them. But few organisations have identified a specific candidate. And many lack a formal plan to prepare their next CFO.
“The next generation of CFOs must possess a vastly broader set of skills than its predecessor,” Myles Corson, markets leader for the financial accounting advisory services practice at Ernst & Young, said in a statement. “Finance skills remain fundamental, but other key developmental areas for aspiring finance leaders now include experience in corporate development and strategic M&A, in international markets and in the commercial side of the business.”
The report supports Ernst & Young’s 2010 report, The DNA of the CFO: A study of what makes a chief financial officer, which polled 669 CFOs in Europe, the Middle East, India and Africa, and its 2011 report, Finance forte: The future of finance leadership, which polled 530 group CFOs and their direct reports.
The study’s findings are also in line with recent studies by KPMG and Deloitte, which also noted shifts in the CFO role.
Additional CGMA resources:
- Traits of today’s CFO: A handbook for excelling in an evolving role: Today’s CFO must be a successful collaborator, consultant, communicator, and leader. Understand the critical skills that will allow you to move beyond your comfort zone and into a leadership role within your organisation.
- Changing legislation, regulation cause shift in CFO roles: Business executives worldwide are changing their compliance processes in response to evolving legislation and regulation. As a result, CFOs are extending their reach beyond the finance function.
- Change management: Three perspectives on the CFO’s role: Three takes on the role CFOs should play in the process of organisational change.
—Jack Hagel (jhagel@aicpa.org) is the editorial director of CGMA Magazine.