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There was a time when a cutthroat, Wolf of Wall Street style CFO was not only par for the course, but preferable. Terms like ‘emotional quotient’ and ‘servant leadership’ hadn’t yet hit the CEO role, let alone the CFO role. But times, as Monsieur Dylan once said, they are a-changin’...
From PwC to McKinsey to recruitment research firms, the verdict is in: the CFO role is no longer just about the bottom line – and it hasn’t been for some time. But in recent years, with Brexit, leadership kerfuffling, cost-of-living rises, pandemic legacy issues dogging our every step, it’s now more than ever that the top fiscal dogs in every organisation must be more than just a number cruncher, or even a number strategist.
Christian Jennings, CFO at Virgin Experience Days, said that the pandemic meant finance operating with transparency to give reassurance.
“During the pandemic, finance quickly became the go-to team, and as CFO, I stepped even further forward in the business. The finance function needed to speed up cash flow forecasting and focus on stakeholder communications,” he explains. “People were looking to us for reassurance, and we had to be accurate, logical and transparent in order to give confidence that the business was going to be able to weather COVID-19 and look after their customers and employees in the process. We had to speed up our forecasting and make quick but well-considered decisions.”
So what did that mean for Jennings, whose previous roles at Zoopla and Moonpig put him in good stead for stepping into his role with Virgin?
He said he works with his team now to ensure the finance function is engaged and motivated as a team. Succession planning is important to him, and he is focused on developing his team so that any member could potentially step up into a managerial role – a move that speaks of true leadership, rather than just a myopic view of the calculator.
It would be great to see businesses future-proofing their finance teams by equipping the next generation of CFOs
The new CFO role – the soft stuff
An April 2022 McKinsey survey shows that the CFO role is rapidly evolving—expanding in scope, requiring new capabilities, and demanding greater collaboration with C-suite peers.
And the folks at PwC agree: in a recent article entitled For CFOs, investing in trust can protect the bottom line, the authors had this to say: “Trust is the new business currency for CFOs, influencing loyalty and buying decisions for customers, as well as employee retention. But it can’t be taken for granted. Our recent Trust survey found a jarring trust perception gap between businesses and consumers, with 87% of business leaders saying customers highly trust their companies when only about 30% actually do.
The authors continue: “The cost of losing trust far outweighs the benefits of gaining it. As a finance leader, investing in the basics—like affordable products and services and treating employees well—will be critical to translating trust into behaviours that can improve your bottom line.”
The new CFO role – by the numbers
A new report into these CFO role changes concurs with the above findings. Conducted by talent acquisition and research company BIE Executive, the survey results boldly declare that “boards are now looking for broader skills when choosing a CFO” – but are those who fill the role ready for this sea change?
BIE surveyed 225 CFOs from companies large and small, and CFOs across the gender spectrum as well as differing industries, and found that most of them welcomed the broader role, with 91% feeling it was a positive step. Some 56% believed the finance function is now viewed more favourably as a result, and 37% said the pandemic had positively impacted their careers.
Louise Britnell, CFO at the Co-operative Bank, told Executive Grapevine that she found the changes challenging, but welcome.
“It's a personal challenge for me because my natural comfort zone is in the stewardship side of the role,” she explains, “being the safe pair of hands rather than the strategist, but I’m enjoying the intellectual and commercial challenge that the strategic aspect brings.”
For example, says Britnell, the finance and treasury function is also taking a more active role in driving ESG.
“As CFO in an ethical bank, ESG has to be at the core of my thinking; how can we influence our customers, suppliers and other stakeholders to become more ethical, greener, or more socially conscious? How can we ensure our investments in ESG will deliver the right future outcome? We have just raised our first green bond and ESG is central to our strategic plan. Finance has a central role to play in generating data to support decision making around ESG.”
And while those changes were welcome for her, the push from the board has definitely added more responsibility.
“Although my role has always involved setting the strategy for the bank, the board is now encouraging me to be even more strategic in my thinking. As CFO, I still need to drive rigorous financial control, but I spend less time on the heavy lifting of finance and more on innovation, evaluating ideas and understanding the external market.”
So, what are boards looking for in particular? Well, the report showed that longer-term skills are now in greatest demand, such as strategic acumen (67%), and innovation and creative thinking (42%); with CFOs themselves only ranking these skills at 37% and 11% – believing that commercial and operational decision-making is still viewed more highly.
The report also showed that the CFO was at the forefront of tackling challenges across the business during the pandemic, with short-term cash flow, commercial contracts, operational effectiveness and business survival the top priorities. CFOs helped lead businesses through new challenges such as furlough, supply chain issues and customer retention, and many also took on responsibility for legal (54%), IT (53%) and risk management (43%).
What do CFOs have to do with ESG?
While strategy was important, ESG was the main – and massive – step change to the role in recent years, with all of the CFOs and boards surveyed recognising the importance of DE&I, and ESG initiatives. The report showed boards are now placing increased importance on both areas, and they expect the CFO to play an active role in driving improvements and the overall ESG agenda, rather than just reporting progress.
Ian Brimicombe, SVP in Group Finance at Burberry says that taking an active involvement in Burberry’s drive toward a more sustainable future has enhanced his role.
“Employees and customers want us to do the right thing and the sustainability agenda aligns our customers’ preferences, with our employees’ desires to work for a company which does the right thing and responds to increasing investors’ commitment to support responsible businesses,” he said.
“Everything is driving in the same direction demanding that businesses set ambitious goals in respect of ESG and ED&I; ultimately sustaining a strong business, society and nature. It also leads to wider conversations both inside the business and with external networks. Businesses are working together to address sustainability and there is much we can learn from each other.”
It appears that companies should be doing more to retain and develop their finance talent
How to recruit creatively for CFOs
While the push toward greater acceptance of ESG is most certainly a welcome one, most workers, including those in senior leadership, will be feeling the weight of cost-of-living crisis as well as all the other turmoil of recent years. So how do HR professionals keep their CFOs happy, increase internal promotion from within the finance team, and train up the next generation?
Eoin Canty, Research Director of Finance Search at BIE Executive, and one of the report’s co-authors, says that training up successors is important.
“During times of crisis many businesses created a core group of senior decision makers to make choices at pace. As a result of this, up-and-coming talent may not have had as much exposure to that level of the business. It’s harder to develop talent remotely.
“It appears that companies should be doing more to retain and develop their finance talent, because only 5% are being promoted to CFO internally, despite 50% of boards saying it’s important to have a successor in place.”
And Canty is right, according to the survey results, which indicated that established CFOs are enjoying their expanded roles, but aspiring CFOs say it’s made promotion harder, with 92% expecting to move companies to secure a C-suite job. Additionally, once in-role, few CFOs reported training up a successor as a priority, with many suggesting they would recruit the next role externally.
Amy Luke, Director of Finance Search at BIE Executive and a report co-author, summed it up succinctly, saying: “Senior leaders can support aspiring CFOs by understanding any skills they might be seeking to develop and offering short-term projects or lateral moves to assist with that growth.
“There is currently a whole community of finance professionals who feel they have not been given the opportunity to grow and are now seeking that development elsewhere. It would be great to see businesses future-proofing their finance teams by equipping the next generation of CFOs with these broader skills.”
