The CFO is no longer seen just as a ‘bean counter’, they are now being looked upon by CEO’s to act as a business partner. A 2014 report by KPMG found that 72% of CEOs see their CFO as taking a greater role in future decision making processes, while a Forbes questionnaire of 178 CEOs found similarly that the greatest opportunity for a CFO to have an impact on the value of an organization was by contributing to performance and growth.
The CFO has benefited from the growing recognition that they can provide a voice that is trusted across the board of directors, and that their skill-set is best suited to compliment the CEO and challenge their decisions. In doing this, they can help to drive innovation and prevent any potentially costly disasters. If the CEO is the heart of the company, the CFO is its head. While the CEO looks at the more romantic task of driving growth, the CFO should be ensuring that costs are kept as low as possible, and the two should come to a equilibrium whereby growth booms whilst risks are still mitigated against.
As the CFO role evolves into this partnership, they are also encroaching on the tasks of other C-suite executives. The CFO relationship with the CIO is one. The CIO now often reports directly to the CFO according to 39% of respondents to the 2013 Gartner FEI CFO Technology Study, and the CFO’s influence over the department was found to have gone up a total of 44% since 2010/2011. Organizations need to ensure technology is as up-to-date as possible in order to maintain a competitive edge, yet it must also be cost effective.
The CFO is also becoming increasingly integrated with the COO and the CSO roles as well. The COO role is becoming a unicorn for Fortune 500 companies, with just 35% now employing one, down from 48% in 2000. Many are departing without a replacement being brought in, and the CFO is taking up their duties instead. For example, McDonalds’ COO Tim Fenton left the fast-food firm last year for health reasons. Rather than bring in a direct replacement, McDonalds handed perational oversight over to CFO Pete Bensen.
The importance of the CFO to company strategy is also being seen in the number of CSOs who are now taking on the role, despite having limited experience with the finance function. ADP, for one, appointed Jan Siegmund, its former CSO, as its CFO earlier this year. In an interview with McKinsey, Siegmund noted how the two roles crossed over: ‘As a chief strategy officer, one has a unique opportunity to think about the enterprise in its completeness—to focus on the big-growth drivers and performance drivers for a company. That kind of prioritization is also crucial to being effective in the CFO role, where it’s easy to lose the big picture of what’s needed to drive the company’s success in myriad daily transactions.’
The same Forbes questionnaire mentioned earlier also found that CFOs are spending too much time focusing on regulations and the operational aspects of their role. CFOs must find a way around this to become what the CEO is looking for, or risk being frozen out. This can be easily achieved by using technology to automate many of their former traditional accounting roles, as well as trusting others in the finance function, such as the controller, to deal with issues such as compliance that are preventing them focusing on the strategic decision making required.