The role of the modern CFO

aksaroya —  25 September 2012 — Leave a comment

By James Bonner, independent sustainability consultant

In light of significant developments and changes in the global economic landscape in the last few years, an understanding of the role and profile of the modern Chief Financial Officer (CFO) in organisations has become increasingly prominent. Studies such as the ‘IBM Global CFO Study’ from 2010, and the 2009 ‘The CFO’s new environment’ report by CFO research services and ACCA, have considered the views and inputs from CFOs from around the world providing an insight into the roles, responsibilities and perspectives of the group and how their function has evolved/shifted focus in reaction to the current global economic conditions.

Both studies highlight some common themes, in particular that the role of CFOs has moved to being increasingly focused on organisational strategy development, risk management and mitigation. As such, writing for Forbes.com in his review of the IBM survey, a commentator stated that ‘although the importance of core finance tasks hasn’t diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns.’ He furthermore remarked on the expanding role and reliance on CFOs by asserting that ‘their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.’

Reflecting this progression of CFOs from being managers of the financial systems and controls of organisations, to having more holistic strategic and facilitator responsibilities, Deloitte have developed quite a nice typology of the ‘Four Faces of the CFO’ which categorises the various, and quite diverse, roles the modern CFO is expected to fulfil. The model comprises of two ‘traditional’ personas of the CFO: the ‘steward’ (focused on risk management, accounting practices, and asset preservation) and the ‘operator’ (responsible for ensuring an effective and efficient finance operation is maintained). Additionally there are two more contemporary and modern roles CFOs are expected to provide and are encapsulated under the persona of a ‘strategist’, with a role to utilise their financial perspective to shape decisions pertaining to the long term direction of the organisation, and the expectation to be a ‘catalyst’ who through leadership and communication induces behavioural change and accountability throughout the organisation.

Source: http://www.deloitte.com/view/en_US/us/Insights/browse-by-role/Chief-Financial-Officer-CFO/Four-Faces-of-the-CFO-Chief-Financial-Officer/index.htm

As depicted above, these ‘four faces’ highlight the different roles, and the general area of focus, of each area of a CFO’s responsibility. The challenge for the modern CFO is to appropriately balance the analytical roles of the ‘steward’ and ‘operator’, with the increasing expectation and requirement to undertake the more expansive remits as a ‘strategist’ and ‘catalyst’ in their organisations. By fulfilling this variety of quite diverse roles, CFOs are likely to become increasingly central to the overall function of a business.

This blog post intends to primarily support ACCA’s Accounting for the future session ‘Inclusive and Integrated – the future role of the CFO’ on Tuesday the 9th Of October by introducing some perspectives on the expectations of the modern CFO. This issue, the engagement of CFOs with wider stakeholders, and the benefits of doing so, will be discussed in greater detail in the session. Additionally, a number of other presentations during the conference relate to the themes covered in this blog post:

Monday 8 October
09:30 – 10:30 Thinking alike: getting boards in tune with their stakeholders

Tuesday 9 October
12:30 – 13:30 Inclusive and integrated – the future role of the CFO

Wednesday 10 October
12:30 – 13:30 Evolution of the annual report

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