4 strategic orientations for CFOs
CFOs are taking on more responsibilities, expanding their roles far beyond making sure the numbers add up. Some oversee human resources or IT or both, and that’s in addition to a growing role as C-suite strategist. Boards are seeking CFOs’ expertise in the areas of risk management and regulation.
Research by Accenture shows the strategic role of the CFO is on the rise: 73% of respondents in a survey report that the CFO’s influence in supporting strategic decision-making has increased in the past two years, and 61% say the CFO’s influence in business partnering has grown.
David Axson, a managing director of Accenture’s Strategy, Finance & Enterprise Performance practice, explained the finance chief’s role this way: “The CFO agenda is about driving growth in an increasingly complex and global marketplace, while ensuring compliance and delivering ever more enterprise value. You’ve got to do all pieces. None of those are optional.”
A recent Deloitte report asks a very good question, given the varied expectations facing finance chiefs: Where should CFOs focus, and how should they orient themselves to support strategy?
The report uses responses from CFOs to frame four orientations that can help CFOs be better strategists:
Responder: In this role, the finance chief supports strategy by helping business leaders analyse the financial implications of strategy choices, according to Deloitte. This orientation occurs when the chief executive limits the role of finance to quantitative support, but CFOs can be effective in this orientation by delivering relevant data to the businesses through a strong financial planning and analysis (FP&A) function.
Challenger: This orientation puts the CFO in more of a strategic position, as a “steward of future value,” according to Deloitte. In addition to the FP&A capabilities of a responder, the challenger also has relevant information, and permission from the CEO, to challenge business-unit leaders on strategic initiatives.
Architect: The CFO works to create a “path to yes” on important business projects in this orientation. Collaboration amongst finance and business leaders exists to shape strategic choices and maximise the value of those choices. To be an architect, the CFO often needs a strong finance team working closely with, or within, the business.
Transformer: The CFO becomes a key partner to the CEO in this orientation, helping to shape and implement future strategy. “CFOs as transformers proactively engage in addressing the core questions in a strategy process, and they develop and execute options through finance in a way that allows the company to shift its strategy effectively,” the report said. One example from Deloitte: changing the debt-equity mix with structure financing and lease models to free up cash for future growth.
These orientations can help CFOs and others – CEOs, board members, business-unit leaders – set matching expectations for the role the CFO plays. The orientations are “not static, and the appropriate orientation will vary with the changing context and performance of the organization,” the report said.
Related CGMA Magazine content:
“Critical Skills Needed for Finance to Cut Through Complexity”: The expansion of finance professionals’ roles in an increasingly complex business environment has created the need for more skills development. Find out what new duties finance is taking on – and how accountants can prepare to succeed in those duties.
—Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.