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The Changing Role of The CFO

by internationaldirector

By Lewis Miller, Chief Financial Officer, Frank Recruitment Group






When I began my career in finance almost 20 years ago, the CFO was a very different position to the role it is today.

I started out in the Big Four (when it was the Big Five) and spent the first 12 years of my career working with many different CFOs across a broad spectrum of industries and countries. Since moving into the role myself, I’ve held a number of CFO positions in listed and private equity-backed businesses.

Without wanting to generalise, as there are always exceptions, it’s fair to say that the CFO role has changed significantly over the past 20 years.

The core tasks that have always fallen within the remit of a CFO include the safeguarding of assets, cashflow management, understanding and protecting against risk, financial reporting, interpreting performance, and general financial planning and analysis. These are and always will be at the heart of the CFO’s responsibility.

When I started out two decades ago, this was pretty much the extent of the role. What you tend to find now is that these responsibilities are the foundation of the job; there’s actually much more to it today, and these pillars are what’s expected as a minimum from a CFO. These fundamentals have to be robustly in place, and any CFO that can’t successfully deliver these is probably in the wrong role. Achieving these things should take up much less of the CFO’s time, with the remainder spent assisting the CEO and wider C-Suite on running the business tactically and strategically.

The modern CFO’s role is therefore much more about helping shape the strategic agenda of the business and executing it. This may include being responsible for all merger and acquisition activity, leading the change management agenda, and taking on operational responsibility. 

Being able to deliver this successfully requires the CFO to have strong relationships across the business and to be able to collaborate successfully with other board members. Every single business has two common constraints; a finite amount of time and a finite amount of cash. A common thread with the most successful businesses today is that they are able to make the right judgement calls around how to use these limited resources in the best possible way. Or, if they make a bad decision, identifying that fact quickly and addressing it.

The right CFO will be a great communicator, be able to listen and understand perspective of others as well as succinctly articulate their concern, enabling them to have healthy debate with their peers that ultimately results in the best decisions being made.

As a result, it’s fair to say that a CFO is far more involved at boardroom level than they were 15-20 years ago. It’s been interesting to see just how valued a modern CFO has become and how a good CFO’s opinion and judgement will be trusted and taken seriously on all matters—not just those that are directly linked to their functional expertise.

Leadership skills are also critical to the success of a modern CFO. Managing people has always been a key part of the job but being a leader within the business is much more important. Just as the CEO should be doing, the CFO should also be able to inspire and motivate the business. Reporting the numbers is one thing, but a CFO needs to think about how they can use these numbers to tell the story of the business and inspire and motivate people.

The need to be able to do all of these things have, in turn, changed the way in which a CFO needs to build their own team, and shape their function. First and foremost, you need to surround yourself with a capable financial team who you trust, freeing up your time. You also need to make sure you have the rights tools, systems and processes in place. There’s no point having a great team if they are spending most of their time manually processing things. You need to create a framework that enables people to spend at least 75% of their time on where they can add the most value.

One of the best pieces of advice I could give to any new CFO would be to spend the first couple of months thoroughly understanding what makes the business tick and how it fits together. This doesn’t just mean figuring out who does what; you need to really getting under the skin of your value proposition, the markets in which you operate, the biggest challenges and opportunities, the culture and what motivates the staff and your peers. You simply can’t get a complete view of your business from looking at a spreadsheet. Speaking with the departments directly involved in any pressing decisions will give you a far better appreciation of how any plans may affect them, as well as the knock-on effects to other areas.

If you don’t know what makes the business tick, you could unintentionally have an adverse impact on the business. In times of underperformance, a CFO’s natural reaction is to cut cost. But this will only ever get you so far. If you truly understand the business, the best option may actually be the polar opposite—invest. You may have a tricky six months as you pull this off, but it could fundamentally be the right thing for the business long term.  You won’t know this if you don’t have a strong enough understanding of the business.

Always ask yourself ahead of any changes: what will the long term impact be?  Your aim should always be to leave the company in a better position than it was in when you joined. And that’s not just about numbers. If your replacement’s first job is to try and re-organize and re-motivate people, you have fundamentally failed, regardless of any financial performance.

It’s definitely an exciting time to be CFO.  The expectations of the role have fundamentally changed and the digital revolution has enabled the CFO to step up and take on this new challenge.

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