Philip Smith, journalist

‘CFOs today are facing massive disruption from technology, the pandemic and geopolitical upheaval, but all this disruption also presents a huge opportunity for CFOs to have an impact.’ So said Brendan Sheehan, CEO of finance transformation management consultancy White Squires, at the launch of The CFO of the future, a recent report from ACCA and the Institute of Management Accountants.

In many ways, as the report suggests, CFOs have already seized these opportunities, developing their roles far beyond the traditional notion of safeguarding the organisation’s finances and assets.

‘The CFO now has an umbrella role, broad in its remit and responsibilities,’ says Helen Morgan, finance director at fashion retailer ‘There’s digital corporate governance alongside the core of safeguarding the assets.’

The report argues these changes have been given added impetus during the Covid-19 pandemic, which has required CFOs to be fast, reactive and plan for the here and now, according to Morgan. But she adds that they have also been required to look after other assets, such as the organisation’s people.

‘Wellbeing of the team has been very important,’ she says, with the CFO acting as a reassuring voice amid apparent chaos.

‘CFOs of today are strategic and forward-looking, and no longer limited by their organisation’s financial agenda’

Driving seat

‘The role of the CFO has evolved over a number of years, but now the CFO is a business leader and could be described as chief performance officer,’ says Sheehan. ‘They are driving change in the business.’

Simon Smith, a veteran CFO and co-founder of Infinite CFO, a technology company providing finance function solutions for startups and growth companies, agrees. He says that his clients are not hiring CFOs for their technical expertise.

‘They are looking for a CFO who is strategic, who understands how to scale the business, and can execute on growth and performance,’ Smith says.

But that does not mean putting the fundamentals on the back-burner. As Ruban Ghandi, finance director at Queens Park Rangers FC, points out: ‘I don’t think that any CFO can take their eye off the cost-control part, while the business is still saying that you need to be contributing to growth.’

A survey carried out to support the report reveals that most of the six hypotheses put forward (see panel) are starting to be realised. The respondents, who came from all sizes of entity and a spread of countries, agreed most strongly that the role of the CFO was already, or would be, in leading the execution of strategy.

Six ways forward

The role of the CFO has been steadily evolving in recent times. The report sets out six hypotheses around the development of the CFO’s roles:

  • Predominantly focused on stakeholder and investor management rather than safeguarding and reporting
  • A leading responsibility for business strategy formulation, validation and execution
  • Shifting from principally historic-based cost control to growth optimisation
  • Measurement of all aspects of the strategic objectives of the organisation
  • Provide the greatest value to the organisation through forward insight rather than retrospective reporting
  • Increasingly have the CEO role as the next progression in their career development.
People, purpose and profit

The broadening of the role to include the evaluation across the three Ps of people, purpose and profit, as exemplified by the ‘wide view of performance’ hypothesis, was less strongly supported.

This perhaps reflects the challenge that while an entity’s performance is increasingly being evaluated using non-financial data and unstructured data, the finance function in general and the CFO in particular need to assert their role in this area.

The least supported hypothesis was that the career progression of the CFO was towards a CEO role.

Divergent views

CEOs’ take on how the role of the CFO is evolving is also illuminating. The CEO community is less likely than the CFO group to agree that CFOs are currently focusing on stakeholder management (27% v 38%), although more CEOs than CFOs (67% v 59%) see a CFO stakeholder focus as a reality by the near future.

CEOs are also less comfortable than CFOs (33% v 50%) with the notion that CFOs have taken on the role of chief performance officer and are already providing forward insight. However, as many CEOs as CFOs expect CFOs to be performing this role by the near term. There is a similar difference in the two groups’ perceptions of responsibility for leading business strategy.

However, when it comes to perceptions of the extent of the change in the CFO’s role, CEOs have a far greater impression of the extent of that change than do CFOs themselves (see graphic).

As Clive Webb, ACCA head of business management and co-author of the report, says: ‘Our CFOs of today are strategic and forward-looking, and no longer limited by their organisation’s financial agenda.

They are more well rounded than ever and will continue to enhance their skillsets as many take on more responsibility and possibly become CEOs in the future.’

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