“From back-office accountant to front-line executive, the rapid rise of the chief financial officer is unrivalled by any other corporate role,” wrote Jason Karaian, the author of What CFOs do, the influence they have, and why it matters last year. His statement goes generally uncontested: today’s chief financial officer is seen as occupying a position of prestige. In fact, Karaian goes on to argue: “with access to every facet of the business, chief financial officers now wield a level of influence matched only by chief executives.”
The top financial spot is a far cry from what it was once was. Where it was once seen as undesirable to be labeled as a “number cruncher’, this term now holds increasing weight. Karaian argues the change has come about with today’s emphasis on big data and technology.
“As the volume and velocity of data expand exponentially … companies seeking to harness the insights within the data will inevitably turn to their chief financial officers for guidance, boosting their status even further,” he writes.
But just how far is that impact felt, and in what ways is it manifested? As the chief financial officer of a particular company, where will your leadership take you?
At the most basic level, the chief financial officer’s influence is felt across every department in the company. Your leadership helps shape the parameters for the overall company strategy; this in turn trickles down to departmental planning.
Not only do you determine how much each department should spend; you’re also helping them recognize how best to use their resources. Part of the chief financial officer’s role is to help each department head recognize how best to use their resources to meet their objectives, and ultimately move the company strategy forward. In order to provide effective guidance in this area, you need an almost intuitive understanding of the company’s goals.
Top management influence
As the chief financial officer, you already occupy one of the most senior roles in the business. However, being in this role also increases your chances of taking the top executive spot. The number of CFOs who are promoted as CEOs are on the rise. Karaian notes that the promotion often takes place after the chief financial officer has completed a stint in general management at a regional or divisional level.
“And so the odds that a senior executive spent time in the finance function on the way up the corporate ladder are rising,” he says. “Thus the CFO’s methodical, data-driven approach to decision-making is gaining proponents over the archaic “gut feel” school of management.”
A chief financial officer once aspired to a role on the board as part of their retirement plan. But the demand for CFO participation on the board has grown to such an extent that they are now given directorship positions much earlier in their careers, sometimes within a year or two of assuming the position. And this creates a new avenue for growth and influence: the board chairman position is now a much more viable aspiration for a chief financial officer than it once was. Suzanne Wood of recruitment firm Russel Reynolds told Quartz magazine:
“In a chairman role, you look for somebody who’s prudent with a low ego, good judgment and is a facilitator. The low-ego, second- in-command nature of a CFO sits very well for the non-executive chairman brief. We’ve had CFOs in their early 50s make the move into chairmanship.”
From operational influence to top management and board influence, today’s chief financial officer sits in a position of increasing power. With this comes the increased responsibility for sound technical judgment and ethical decision-making. If your company is looking for a part-time or interim chief financial officer with both those qualities, contact The Finance Team. One of our associates can assist your company in the time and manner you need it.