“As CFO, I’m in a unique position within the organization, at the absolute centre of the universe. The only other executive besides me that has that same presence at the centre is the CEO.” – Bruce Besanko, OfficeMax
As a chief financial officer in South Africa today, you might relate to the sentiments of the financial chief whip of US-based office retail giant OfficeMax. As a chief financial officer in today’s environment, you occupy an irreplaceable role; one that gives you privilege to knowledge that others don’t have, and the power to, in many ways, direct your own little kingdom.
But with those opportunities have come an increasing amount of responsibility. Indeed, research shows that the chief financial officer who 20 years ago occupied the same position as you do now, required different skills to what you need to function successfully today.
Two large-scale research projects – one conducted in Europe, the Middle East and Africa and the other in the Americas – were undertaken by auditing firm EY conducted interviews with more than 1000 chief financial officers across the globe.
“Based on our research,” says EY, “it is clear that the chief financial officer role at today’s leading companies is evolving.”
Alongside their traditional mandate to provide financial insights and analysis, chief financial officers “describe a greater involvement in supporting and even developing strategy, and guiding key business initiatives,” says EY.
The firm draws on both research reports to pinpoint the key themes around what has changed and what remains the same for chief financial officers in today’s world vis-a-vis times gone by. A summary of their findings reveals:
- Chief financial officers are contributing to organizational strategy more than they did in the past.
- Chief financial officers remain the first word on the company’s financial performance. But they are becoming increasingly involved in the company’s operational decision-making as well. According to EY: “CFOs manage or materially support information technology, investor relations, real estate and strategic mergers and acquisitions.” Some are involved in commercial activities as well.
- Over the years, there has been an increasing focus on the need for chief financial officers to possess good communication skills. This is because “chief financial officers must convey complex financial results and business performance to external stakeholders while also championing specific initiatives internally,” says EY.
Jean-Marc Huet, chief financial officer of Unilever, once said he sees himself as “head of HR for finance.”
“If you look take any financial crisis in a business starts with people. Everybody looks at me. People are primary responsibility,” he said.
For Nick Noviello, chief financial officer of tech company NetApp, technology is becoming more and more of a factor as well.
“Chief financial officers are playing a big operating role with the technology – both physical and virtual infrastructure – that is used to run the firm,” Noviello told the Wallstreet Journal.
“It’s important not only to think about that architecture today, but also tomorrow and be able to put IT in the context of business strategy — meaning where do we want to go and, operationally, how do we get there?”
Sir Charlie Mayfield, chairman of the John Lewis Partnership, pointed out another area in which today’s chief financial officer needs to be increasingly proficient: that of compliance. This is especially true in South Africa, where your company not only needs to comply with tax and auditing rules, but things like black economic empowerment legislation and numerous corporate governance requirements specific to this environment.
According to the EY research, these new necessary skills do not, however, replace the traditionally valued abilities of the chief financial officer. “Fundamental skills in finance are still paramount,” says the research. “Our respondents unanimously insist that these skills are imperative.”
Interestingly, the majority of the companies surveyed did not have a specific candidate or a formal plan to prepare their next CFO. In the old days, an outgoing chief financial officer could look for a few key things when searching for a replacement: a number-crunching technocrat with years of industry experience. Today, with the heightened need for soft skills and technology abilities added into the mix, that search becomes somewhat more difficult.
The Finance Team can assist current chief financial officers who are looking for assistance to identify a candidate with the right set of skills for their company. Whether it’s just a second pair of hands or someone to complement the existing, team, TFT has developed a sophisticated method of gauging the strengths of each of our financial associates and can help you develop a flexible solution to your needs. Visit www.thefinanceteam.co.za to find out how.
Photo credit: robertwalters.co.uk