The CFO will increasingly become the most important C-level ally of the CEO, a recent study by KPMG highlights, but CFO's must rise to the challenge. According to the firm, this CFO will need to become a jack-of-all trades, thus to be the ‘renaissance’ CFO. The job expects someone to manage an ecosystem of expanding complexity, whereby they think and operate globally to leverage big-data through analytics for profitable growth.
In its survey* titled ‘The view from the top’, professional services firm KPMG asked 549 global executives, from companies with more than $500 million in revenues, about their views on the role of CFOs in the coming years. Of respondents, 44% were CEO and 17% managing director. Around a third (31%) of respondents has been a CFO at some stage in their career.
The survey highlights the key personal attributes that, according to the respondents, make for a strong CFO performance. Leadership tops the table, cited by 45% of respondents as important, followed by attention to detail and process at 41%. Execution ability comes in third at 34%. The least important attributes are negotiation skills at 7% and communications skills at 6%.
To meet the challenge, CFOs will need to develop themselves in a number of key areas. The most important is global experience, cited by 48%, followed by experience with transformation and innovation at 34%. Length of tenure, industry experience and pan-industry experience all rate in the low 30% by respondents. The least important attributes are technical and analytic skills (8%), agility with new technologies (8%) and experience in a commercial non-financial role (15%).
To manage all of these dynamics requires an individual that KPMG dubs the ‘renaissance CFO’, “an individual who builds on the wisdom of the past, embraces the technology of the present and imagines the innovation of the future.” While the skills and abilities required cut across functional areas, the person will also need to have considerable leadership capabilities and have strong interpersonal skills to manage across various stakeholders.
The consulting firm considers a number of key capabilities that the CFO is required to have mastered to be best suited to the role. The CEO respondents all highlight how the strategic acumen of their CFO has been pivotal in the development of business wide strategy. The key factor CEOs rank is putting performance and growth first at 35%, followed by governance at 30%. Driving efficiency and value comes in third at 16%. The CEOs see the least added value of the CFO in innovation at 7%. When it comes to explaining how CFOs can use financial information to strengthen the alignment between financial planning and strategy, three words come up consistently: translate, interpret and communicate.
The second key skill cited by the report is a strong analytics focus. Half (49%) of CEOs cite that applying financial data analysis bring the most value to their organisations. According to the CEOs, this means making the most of technology to find the most profitable markets and customers and figure out how to connect them with their business. This is approach goes beyond traditional sales and marketing, by bringing data analytics to bear on the entire value chain. The use of data also includes the identification of new financial operating models (43%). Other ways of creating value include the use of regulation to the advantage of companies, cited by 48% of organisations.
Operationally minded CFO
More than half (56%) of respondents believe that CFOs will become more important to organisations and their CEOs in the coming years. This is followed by COOs at 47%, and CIOs and CTOs at 44%. CHROs come in last on the list, just one in five (20%) believe that their role will grow in importance in the near term.
The reason for the growth in prominence of the CFO role can be linked to a number of factors, including the need for companies to manage their expanding complexity, as well as find ways to take advantage of new regulations affecting many industries while achieving profitable growth through leveraging financial data and analytic. The need for CFOs to have a strong functional grasp of operations is thereby highlighted.
* The survey consisted to two studies. Study 1 surveyed 371 executives from North America, Europe, South America, Middle East and Africa, while study 2 surveyed 178 executives from Asia and Australia.