Finance Thought Leaders have talked about the changing role of Finance for many years, and as activity has shifted from the transactional to the more value-added, so the role of the CFO has also changed.
I’m increasingly fascinated by the accelerating rate of change in the role of Finance leaders, and what this means in practice. In this article, I cover three key ideas:
- A simple skills-based model to define the roles a modern CFO has to play
- How changing roles can affect a Finance leader
- Strategies to get ahead of the curve
Technical ‘finance’ skills are a given – you will need to be both qualified and experienced. What is becoming increasingly apparent is the much broader skills which the modern CFO needs to have, to excel in their role. What I’ve attempted to do here is to scope out three simple roles which modern CFOs need to be able to fulfil over and above their “traditional” Finance role.
The three broader roles the modern ‘best-in-class’ CFO needs to fulfil:
The model is quite simple and not meant to be exhaustive or definitive – there is more detailed information at the end. It’s based on some research (although there’s not a huge amount available) and my extensive experience working with leaders across Finance. Perhaps one of the most interesting studies is documented by ACCA and has been incorporated into their training material, which reinforces the point that these are skills which Finance leaders should develop.
Some of the skills within each role are strongly related– for example, communication is vital for all three roles. While I may have missed some specific skills, the overall direction of travel is clear – excellent CFOs need to fulfil several broader roles which require quite diverse skills.
How this can affect leaders in Finance
There is no doubt that many Finance leaders see this as a daunting list. I’d go further and say that it’s a big stretch from the skills that got most Finance professionals into Leadership roles in the first place. I’m not saying that people good with numbers lack these skills. I am simply questioning whether you have put the same time and effort into these broader skills as you have into learning, applying and developing your accounting skills.
Many Finance professionals are not automatically good at these skills, and once you recognise your weaknesses, you can put in place personal development strategies to improve. Developing strength in these skills early will put you at the front of the curve. Conversely, failure to do this will, in my view, leave a Finance leader lagging behind their peers.
Perhaps it’s always been like this, but as the pace of change increases, so the demands for transformation increase. Yet the transactional demands of Month / Quarter / Year-end results still need to be completed.
Where do you and your team find time for strategy, transformation, reflection and personal development?
How Finance Leaders Make Their Life Easier
To use a common phrase, “It’s lonely at the top” and there are few options for sounding boards.
Who do you turn to?
How can you acquire and hone the core skills you need to have?
There are several options.
- You could read books or even take courses – but it can be challenging to know which books and courses and whether you need in-depth knowledge, or an overview to be able to ask the right questions, and lead.
- You can hire people who have the skills, a Programme Manager for example. You might have them in the team already, and you could supplement them with external help.
- You can hire external experts.
The reality is that it is going to be a combination of all these things.
Experience and the judgement experience brings, are of course essentials.
So how do you help yourself (and your team) acquire these skills on the job, practising them when needed?
Imagine if you had someone on hand who can…
- Share 30 years of business transformation experience,
- Summarise the important ‘must dos’ to a handful of key points,
- Boil the basics of project management down to three simple questions,
- Draw up a simple model to help reach a consensus on company-wide investments
- Mentor you to success in acquiring the skills of a 21st Century CFO
As someone once said, “Mentoring is a brain to pick, an ear to listen, and a push in the right direction.” In our experience, the best way to accelerate change is to hire in some experience. But the best way to learn is to try, under the guidance of an expert.
Our business is built on two beliefs.
- You and your team will have the answers yourselves and will find them with our questioning and guidance.
- The solutions you and your team develop, are more likely to resonate and be successful, as the level of ownership and accountability will be much greater.
The trick as a transformation guide is to show you and your team enough of the core skills they need, to enable them to develop and implement the solutions themselves, in a supportive and safe environment.
1. The Strategic Partner role profile
The CFO links all parts of the organisation together as part of the budgeting and investment cycles. They lead on investment priorities and often broker decisions across teams. They look beyond the numbers and offer a rounded perspective representing and supporting each part of the business to shape the whole business.
They have become the strategic partner of the CEO, unlocking value by shaping investments, acquisitions, and financing decisions. The modern CFO anchors the strategic debate.
To do this well, the CFO needs to be able to collaborate with others. They clearly need to speak and present articulately and confidently. They need good tactical-thinking skills to sell ideas. They need the confidence to deal with confrontation and conflict, potentially with ‘big characters’ who have strong opinions. They need to be able to inform and broker decision making across these characters. They need to be able to ‘tell good stories’ to bring audiences with them. CFO’s who can sell ideas across the C-suite put themselves at the centre of decision-making.
All this gives credibility to the strategic direction.
2. The Agent of change
These skills are an extension of the Strategic Partner role – essentially being able to envision the future finance operating model based on the investments, prioritisation of changes, future benefits and cost reduction. Having the ability to inspire the team to contribute to delivering that vision, to support in defining what needs to be done, and getting on to deliver it.
To do this well you need to understand the levers of change – the external factors such as volatility of the markets you operate in, globalisation and harmonisation. Overlay onto this changes in regulation and governance, alongside a fast-growing set of current and emerging technologies, digital customers, cloud-based systems, AI and machine learning. To have the ability to combine all of this into a coherent vision of the future.
This is more that the standardisation and automation of finance processes and more about transforming the culture of the finance team. Moving away from transactional analysis into more value-added business partnering activity which creates value in an organisation.
Being able to piece this together to both describe the future and (moving into the third role) to inspire leaders and colleagues to engage in the changes needed to build the future.
3. The Chief inspirer (or Talent Magnet)
This third role is about more than just defining the vision; it’s about communicating the vision, inspiring people to get involved and engaging people in building it. This is going to involve communicating to people across the organisation, at different levels, frequently and in different ways; face to face, Town Halls, in writing, possibly hearing resistance and complaints.
Creating a culture that people want to work in, both within Finance and beyond. An environment where people want to put their heads above the parapet, to develop new ways of doing things, to explore options.
To do this, the CFO needs to create the sort of environment people want to work in, knowing they will learn new skills and grow as individuals. This is a lot more than being a good communicator – this is about understanding what individuals across the Finance team want and need and helping them to achieve it. It’s being a psychologist, a coach and a mentor. This will require active listening, and a supportive but challenging environment. It will be more proactive than reactive. Nurturing your team to help them acquire the skills described in each of these three roles.
Sources:
- ACCA Global Professional Accountants – The future: Drivers of change and future skills (2016)
- Deloitte The importance of being human in a digital world The role of the CFO today
- McKinsey What are the roles and responsibilities of a CFO (Nov 2023)
Message me if you want to have a conversation about enhancing your skills to get ahead of the curve
