Together with the structure and approach of companies, the role of today’s CFO is evolving. Similar to other management positions over the past few years, this corporate function has extended beyond the core responsibilities of audit and compliance, financial reporting, treasury, planning and capital structure. Now we witness many CFOs playing a stronger role in portfolio management and capital allocation on a corporate level. It is not uncommon for CFOs to be voted more confident in communicating with investors or the board of directors due to their vast outlook across multiple levels of the company and valuable insight into its financial operations and objectives. An in-depth look at the anatomy of a millennial CFO reveals the following qualities as necessary prerequisites for successfully leading the organisation forward:
To understand what makes a great CFO right now, we need to follow the trend of shifting away from raw numbers to comprehensive analytics. Some of the newly forming variables listed by Business Insider are people management and disruptive technology. Where this was a role oriented toward transactions, it is becoming apparent that analytical readings are far more important to cultivate efficient business partnerships in this day and age. The CFO of the future will, therefore, be able to provide the insights to move a company up that chain.
Smart Risk Management
Companies are finding themselves at a turning point, where modern technologies are impacting their existing business models. These technological advancements pose a real and very pressing risk with levels that are unprecedented. While in the past navigating this risk was associated more with the role of the CEO, today the CFO is expected to assist in the strengthening of the business model and providing strategies to mitigate the present dangers.
Today, it is no longer sufficient for companies to have an established working model – the pressing need for embracing and implementing innovation across the entire chain is more than apparent. What this essentially means is that CFOs can no longer rely on traditional return on investment and capital alone, but rather, they have to look at corporate metrics, consumer sentiment and pattern and use them to enable company evolution and the creation of value across the entire organisation.
Integrated Human Capital Management
The highly social landscape of the market in today’s digital age means that people and the business skills to manage them are critical to the future of the CFO. Traditional finance functions have not considered strong leadership skills and human capital management as part of the formula that drives businesses forward, or at least not to the extent that companies rely on in the 21st century. Targeting and eliminating unskilled finance staff or inefficient organisational structures are two of the thresholds that millennial CFOs are expected to address early on.
Change Initiatives in a Political Context
The CFO is the voice and face of the organisation and as such must have his vision aligned with the new business models that governments are trying to implement. This alignment requires building a strong network of partners in areas of interest, such as union regulations and minimum wages laws. All corporate change initiatives that the millennial CFO is looking to realise must consider the political impact, amongst other things. Understanding and using non-financial information is critical to driving the financials of the company. This knowledge goes to show the increasing importance in focusing on analytics and social tendencies outside of the company in value creation. Skills like this are now primarily for a knowledge-based economy, where intangible assets and intellectual property are more important than compliance and balance sheets.
When looking at the anatomy of the millennial CFO, the thing that stands out is the structured framework required to fill in the gaps by training new workers and cultivating the competencies the company needs. Driving talent acquisition and retention become two of the key aspects that the rapidly changing role of the CFO should focus on to maximise the transformative shifts in the market.
Written by Paul Podbury @Locomote