The Changing Role of the CFO

CFOs of large companies can feel like they're under more pressure than ever before. Over the past several years, their roles have spread and developed far beyond financial stewardship.  

They're often expected to spearhead massive organizational change, play a leading role in technology transformation, facilitate the integration of their team with other departments across the business, and maintain growth at a time of economic, geopolitical, and climate uncertainty.

A Steady Hand in Trying Times

CFOs are expected to have an in-depth understanding of economic conditions and their effects on the business. However, the last few years have been particularly challenging with threats from all sides clamoring for finance leaders' attention, causing them to be nimble in their responses.

Just as CFOs can’t expect workers and investors to instinctively understand their decisions, finance leaders can’t be expected to instinctively understand everything that impacts their organization in detail. Aligning with trusted and varied advisors on issues like economic data, geopolitical shifts, and climate change can be key to getting clarity to make better decisions.

A 2023 survey by Deloitte based on findings from interviews with over 70 CFOs and 15 stakeholders based in the UK, found that when CFOs were asked what levers they use to overcome business challenges, they tend to cite ‘teamwork’, ‘relationships’, ‘communication’ and ‘recruitment’ as key enablers. CFOs rarely, if ever, mention tech or data as a lever to overcome business challenges.

It also found the many CFOs rely on a "trusted network of friends" and that many look to build and maintain a robust professional network, particularly in key functions such as tax, HR, accounting, and enterprise risk management. It could be important to utilize these experts thoughtfully, encouraging open dialogue, challenges, and friendly criticism to shared challenges.

Lead Business Transformation

CFOs often play the role of company realist while balancing the executive team’s wishes for growth. The relationship between finance and other areas of the company can become strained when revenue growth and profitability are at odds. Even the savviest CFOs can’t do everything.

"Managing workload and priorities is a key task for an enterprise," says Mitch Provosty, CFO of RREAF Holdings. "It’s vital to have standard reporting and metrics that allow us to measure and make effective decisions." 

Next year, Provosty will introduce his larger team to a dynamic agenda dashboard, an automated business intelligence system that collects data from multiple sources such as contracts, Excel sheets, property management software, banking data, and more. The system then arranges action items such as closings, refinancing, loan expiration, and tax due dates, in order of importance. 

"Managing such a large-scale operation requires multiple team members to input data correctly so management has the relevant information and can act accordingly," he says.

Introduce Growth Initiatives

Finance leaders are frequently involved in long-term strategy and management decisions, which can include funding and implementing digital transformation. These initiatives include new products, technologies, partnerships, or innovations.

Even a CFO with 25 years of experience may want to consider the careful execution of a growth strategy to keep on track. That can include frequent audits of company functions to ensure the data being used for key decisions is properly sourced and categorized. This might lead to changes in the short and long-term technology roadmap needed. These changes may include moving toward more automated processes to address urgent and rapidly evolving needs.

However, it isn’t always about building new. Finance executives might need to step in when existing data and processes can be consolidated and work either integrated or automated. They can play a key role in streamlining the business, particularly during a period where macroeconomic pressures bear down on costs.  

Build Relationships

Much like CFOs ask their team to partner with other teams in the business to better understand how they operate, it’s the finance leader's job to facilitate excellent relationships across the C-suite. A strong partnership with the CEO and Chief Technology Officer is common. However, CFOs might not speak regularly with their Chief Marketing Officer and could be missing opportunities to better drive the sales growth strategy.

Additionally, CFOs might use their objectivity to drive consensus in a leadership group where senior leaders disagree. According to a 2023 survey by EY of 1,000 CFOs and senior finance leaders worldwide, 67% of respondents say there are tensions and disagreements within their leadership team on how to balance short-term and long-term priorities.  

C-suite level disagreements might be uncomfortable for leaders, but they can also contribute to healthy decision-making with checks and balances. Therefore, CFOs might work diligently to foster a high level of trust that allows the leadership team to openly debate difficult decisions.

Successful growth also requires that leaders transition from "doing" to "leading." The EY report notes CFOs can help establish clear roles and responsibilities with department heads and accounting managers. Finance leaders might consider where teams have the freedom to make decisions on their own, while also developing a talent bench in management to support multi-dimensional transformation.  

The CFO can advocate a culture of safe experimentation and create a “fail fast” mindset. Defining “failing fast” can be important so teams understand the leeway for agility while also meeting macro performance targets. CFOs might consider ways to delegate accounting tasks more effectively while prioritizing a well-functioning team.

The Takeaway  

Businesses that survive cycles of uncertainty are those adaptable enough to thrive through obstacles. Having the right teams, data, technology, and processes in place often play a role in survival and success. There are plenty of opportunities for CFOs to map out a deliberate growth strategy despite an ever-evolving business climate.