Company boards increasingly want chief financial officers to go beyond their traditional remits, bringing them into areas such as HR and IT.
BIE Executive, a professional services advisory, surveyed 225 chief financial officers (CFO) at varying stages of their careers, as well as managing directors, chief executives and other senior leaders, to gain a holistic view of what businesses need from a CFO.
The report showed that the CFO had gone beyond their normal sphere of operations during the pandemic and had become involved in commercial contracts, operational effectiveness and business survival.
All the CFOs and boards surveyed recognised the importance of equality, diversity and inclusion (EDI), and environmental, social and governance (ESG) initiatives. However, most admitted that these key topics took a backseat during the pandemic.
But the report showed boards were now placing increased importance on both EDI and ESG, and they expect the CFO to play an active role in driving improvements and the overall ESG agenda, rather than just reporting progress.
Eoin Canty, research director of finance search at BIE Executive, and report co-author, saw CFOs increasingly championing diversity in search processes.
“It is clear that there are many competing priorities for the CFO’s time, but most said their companies value ED&I initiatives as a means to improving diversity of thought among their finance leadership and wider boards of directors,” he said. “This is definitely now back on the agenda with the CFO central to both strategising and communicating these priorities to stakeholders.”
The newly expanded role of the CFO was less well-received by aspiring CFOs, with 92% of those responding believing that promotion was now harder and that they would need to move companies in order to secure a C-suite role. The report authors attribute this succession disconnect to remote working during lockdowns, plus the challenge of side-stepping from finance to secure experience in other areas.
Canty said: “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.”
Once in-role, few CFOs reported training up a successor as a priority, with many suggesting they would recruit the next role externally.
Canty added: “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. 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.
CFOs quickly took the lead on practical issues such as furlough schemes and shifting colleagues to home or hybrid working. This has provided an opportunity for the HR director and the CFO to form a tight working relationship” – Amy Luke, BIE Executive
“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,” he said. “Succession planning and talent development must once again be a focus for CFOs and boards.”
During the pandemic 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%).
Most CFOs welcomed the broader role, with the survey revealing that 91% felt it was a positive step. Some 56% believed the finance function was now viewed more favourably as a result, and 37% said the pandemic had positively impacted their careers.
Post-pandemic, boards are now looking differently at what they want from a CFO. The report showed that longer-term skills were 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 was still viewed more highly.
Another co-author, Amy Luke, director of finance search at BIE Executive, pinpointed risk management as an area of increasing importance for CFOs. She said: “Boards are demanding more and more from their CFOs. The survey found that an increased understanding of risk and better risk management was high in priority for board members. They are looking to hire people with a strong appreciation for risk management but also the leadership skills to improve the risk function, both by investing in technology and increased reporting, and through driving a culture that is more risk-aware. Often these individuals have a financial audit background, but they have the commercial and operational acumen to bring real value and service to the role.”
Luke added that HR was an increasing area of focus for CFOs. She said: “Over the last decade, we have seen an increasing trend for CFOs to take a more active involvement in the people agenda. The pandemic has accelerated this, with CFOs quickly taking the lead on practical issues such as furlough schemes and shifting colleagues to home or hybrid working. This has provided an opportunity for the HR director and the CFO to form a tight working relationship.
“ But it goes further than this, as people are a top strategic issue for companies today – how do they attract and retain talent, how do they improve ED&I opportunities, how do they look after the wellbeing of their workforce? This requires leadership from the very top and investment, and the CFO is perfectly placed to drive this. CFOs must consider people as central to their strategy if businesses are going to deliver sustainable performances in the current climate.”