The Changing Role of CFOs

Deep transformation of businesses due to technology is leading the CFO to morph into the chief performance officer of the organisation. The role is, therefore, transforming from mere reporting of performance and strategy to driving it.

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”, is a quote attributed to Charles Darwin. The quote stands the test of time and is all the more relevant now with the accelerated rate at which we are witnessing change today.

Businesses big and small are seeing significant changes in how markets grow or shrink, how customers behave and even in how employees go about their work.

People working in finance are witnessing how digital transformation is changing the way work gets done through innovative use of Data Analytics, Machine Learning and Artificial intelligence. It is no longer just about automation of work but more about doing work that is really useful.

In such a scenario, we need to rethink traditional roles and responsibilities to make real change possible. The CFO who has traditionally been viewed as a person who measures and monitors the finance function needs to look beyond these roles, to adapt to a very dynamic environment.

CFOs are the new CPOs

As a Chief Performance Officer (CPO), the CFO is capable of aligning the entire company to work towards delivering value to the end customer. With the coming together of automation and easier data flows within a company, the CFO is in a unique position to move from being someone who reports performance to someone who leads performance. This will allow CFOs to move from their current roles to leaders driving strategy across the company.

In collaboration with the operations, technology and HR teams, the CFO can now drive change at a faster rate through the organization. This will need CFOs to be able to communicate effectively across teams to enable them to perform.

Identifying various areas where performance can be measured and defining time-based goals will be the starting point to get everyone together to achieve the final objective of delivering better value.

CFOs will need to understand what various teams bring to the table before trying to identify areas where they can collaborate to improve performance. This understanding will also help in prioritizing performance improvement areas.

Let us consider the case where the organization needs to make a decision on new technologies that need to be deployed for improving business. Conventionally, CFOs would track costs of deploying any new technology and forecast possible returns from the deployment, based on their knowledge of the business.

The new CPO should also be able to strategically advise HR as to the costs of training versus hiring, with knowledge of current HR trends in the market. S/he should also be in a position to give the organization an overview of how technologies are evolving and track obsolescence to enable informed decision making.

Ideas for new product development based on external market trends and customer preferences can also be initiated by the CPO. Along with the shift to the digital era, workforce attitudes also have undergone phenomenal change.

Millennials form around 35% of the workforce worldwide now. In India, almost half of the employees are estimated to belong to this generation. Born between 1980 and 2000, millennials grew up with social media and are digital adopters and innovators.

With this workforce, organizations have to relook at their employee engagement plans to keep employees motivated. Millennials and the next generation ready to be employed – Gen Z – look for more challenges in their work, faster rewards and prefer flexibility over fixed office timings.

Understanding the impact of this generational shift will allow companies to take measures to adapt their policies to improve overall performance.

CFOs can initiate the change required to work effectively with these new generation employees by suggesting concrete measures for teams across the organization. There is immense scope for the CPO to align the entire organization’s people strategy by presenting solutions to deal with the challenges that companies face with respect to hiring and retaining employees, today.

The capability to enable teams with strategic inputs are key to the shift to being a CPO. The CPO should be capable of laying out a long-term plan indicating areas where investment is needed and areas where budget controls should be implemented.

This will require deep business understanding and communication skills over and above the monitoring and control functions that were part of the earlier job description. All this will mean that as CPOs, the capability to lead multiple teams will be an essential skill for CFOs.

Sound action plans to optimize company performance can only be implemented if the CFO is able to work cohesively and get everyone to agree with the outcomes. This calls for people skills that need to be built and nurtured by CFOs to be true leaders. But with changing times, it is important for CFOs to step up and take lead, as CPOs.

This article has been written by our guest author, Sanjeev Jha, CFO – India and Director on Board at Kelly Services