Skills worthy of a CFO

A set of rapidly expanding duties has created a huge personal challenge for many finance leaders and executives.

The evolution of the CFO role has finance leaders taking on prominent responsibilities with various departments in addition to handling the critical function of helping to drive organisational strategy. These duties include:

• IT, risk management, and HR. Financial professionals participating in a 2015 global survey sponsored by software company SAP said the activities most likely to be added to the finance function’s responsibilities in the next five years – if they aren’t included today – are IT (35%), risk management (30%), and human resources (29%)
• Implementing and managing technology systems. More than two-thirds (69%) of CFOs surveyed in 2015 by cloud ERP software vendor Intacct said they manage at least three business systems; just 11% said the only system they manage is their financial system.
• Health benefits decisions. More than five in six (85%) CFOs surveyed in 2015 by the not-for-profit Integrated Benefits Institute said they play a role in decisions about their company’s health benefits; 43% said the finance function participates as an equal partner with other functions such as human resources.

Meanwhile, almost two-thirds of CEOs participating in a 2015 global survey by KPMG said the CFO’s role will increase in significance over the next three years, as compared with other C-level roles.

It can seem like an overwhelming task to develop skills in all these areas. But an EY report suggests that focusing on three areas – personal competencies, strategic considerations, and external forces – can help CFOs master the skills they need.

Strategic shift

Not long ago, many top finance executives held a well-defined and fairly limited role in their organisations.

“In the old days, finance basically focused on bookkeeping and as a gatekeeper and setting policies, making sure there are no violations, no fraud,” said David Wu, CPA, founder, CEO, and managing partner at executive search firm GMPTALENT International in Shanghai City, China. “These days, those are important, but also you need to be involved more in the business.”

As an executive recruiter, Wu understands exactly what finance organisations are looking for in a CFO. Finance directors now often need to be proficient in human resources, IT, and legal issues, he said.

When mergers and acquisitions are being considered, CFOs often perform the research and due diligence and are heavily involved in the negotiations as well as the post-merger strategy. When the CEO takes a vacation, the CFO often steps in to perform company leadership tasks, Wu said.

“What the market really needs is a well-rounded CFO who understands how money flows, how to make investments, how to lead a team, how to negotiate with customers, how to run the operation,” Wu said. “Like a mini-CEO, mini-COO.”

Getting it all done

Handling these new responsibilities effectively is possible if CFOs can master the right personal competencies, according to the EY report. It suggests that CFOs evaluate their own strengths and weaknesses in a variety of areas in finance, operations, and strategy as they create their personal development plan.

In areas where they have skills gaps, they can surround themselves with team members with complementary skills, seek coaching, attend executive learning programmes, and even resolve to immerse themselves in a new area.

To meet strategic responsibilities, the report suggests that CFOs:

• Support innovation and new business models.
• Develop and deliver agile strategy, adapting to changes when necessary.
• Drive sustained long-term growth.
• Inspire and lead the way with strong purpose and ethics.
• Support digital capabilities.

Finally, CFOs must master external forces and considerations to provide their organisations with appropriate leadership, according to EY. These include capitalising on global opportunities, managing risks of political instability, making the organisation more attractive to young job candidates amid a talent drought, taking advantage of capital markets to secure capital at low costs, navigating regulation, and mastering digital challenges and opportunities.

“How many CFOs find time to think about the future megatrends and how they affect their business?” Richard Baker, Thames Valley and South Markets leader for EY, said in the report. “All these big factors are going to profoundly affect the organisation, and CFOs should be key participants in, if not catalysts for, the leadership team’s debates.”

—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine editorial director.