The CFO: the role, the skills and how they are evolving

It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.

Charles Darwin

 

This quote got us thinking about a trend we've been observing: the evolution of the CFO role. 

At EMASPHERE, we work with many CFOs (Chief Financial Officers) every day. This has led us to one conclusion: finance professionals who manage to optimize their company's performance have something in common. They embrace the new practices and standards of their profession, starting with digitization. 

To best support CFOs and finance professionals, we've taken stock of these changes. To take an in-depth look at how the CFO role is changing, we'll cover: 

• the traditional characteristics of the CFO role;
• the soft skills (interpersonal skills) sought in CFOs; 
• the hard skills (technical skills) CFOs can't do without.

The CFO's traditional responsibilities

The Chief Financial Officer role is one of the most firmly established in companies.

Traditionally, it comes with responsibility for overseeing: 

• general accounting tasks; 
• budgets and forecasts;
• cash management...
  
  

The fundamentals of the CFO role

CFOs also work closely with their CEOs. They report directly to them and advise them on strategic decisions and financial management. CFOs are also the ones who set KPIs and budget forecasts.

CFOs' work cuts across the whole organization, so they need to remain impartial. For example, they must stay neutral when deciding between spending requests from different departments.  

Their big-picture view gives them a key role in the company, where they spread new standards in:

• financial management best practices; 
• corporate finance;
• relations with the board of directors; 
• investor communications.

These historical responsibilities still apply, but they are giving way to new skills.  The digital transformation of organizations is reshaping the role. On the one hand,  employers are asking these finance executives to develop their soft skills (interpersonal skills). On the other, CFOs are building hard skills (technical skills) with a firmly digital focus. 

Why is the role changing? 

If the role is changing so quickly, it's largely because the digitization of companies is driving it. This digitization shows up in the following ways:

• the growing role of digital tools (CRM,  ERP, EPM, HRIS…); 
• the multiplication of accounting and operational data flows to process;
• and also changes in the  economic context, a fortiori after the public health measures imposed due to Covid-19.

As organizations digitize, the importance of tools becomes clear.  You need not only to choose the right digital tools, but also to make sure they're compatible. Digital solutions reveal their full potential when they're interconnected. By working as a digital ecosystem, they  can drive the organization and the professional toward greater efficiency. Data, meanwhile, has become essential for Chief Financial Officers who want to track their company's performance closely and draw useful lessons for their organization. 

Finally, Covid-19 has undeniably changed the way we work. According to a recent global McKinsey survey, companies' adoption of digital products has leapt forward. In just a few months, the share of digital solutions grew as much as it would have in 7 years. Organizations have therefore stopped talking about digitization: they've been forced to take action.  

The way CFOs view their careers is changing. According to the 2015 edition of Michael Page's finance director opinion barometer, a few years ago  many Chief Financial Officers saw their position as a stepping stone to the CEO role. Since then, there has been a shift: a growing share of CFOs see the position as an achievement in itself. Nearly 70% of respondents say they're satisfied with the broader responsibilities of their role.  

The Digital CFO: essential soft skills

According to recruitment firm Michael Page, soft skills are the top criterion employers look for. Our study on the most sought-after soft skills for Digital CFOs in 2021 highlighted the importance of: 

• leadership; 
• communication;
• cultural fit. 
  Leadership

Leadership (in other words, the ability to lead people) is the most sought-after soft skill highlighted by our study. In terms of appeal, it narrowly beats communication skills. 

On this point, one of the key takeaways from our study is the need to adapt your leadership style to the circumstances and to your team members' personalities. It's about drawing on one of the 6 commonly recognized leadership styles, rather than adopting a single leadership approach.  

Communication 

97 out of 100 people believe that a lack of alignment within a team affects the outcome of a task or project (source: ClearCompany barometer). To fight this misalignment, communication is the obvious solution. 

Recruiters know it well: 4 types of communication stand out in the job postings analyzed in our study on the Digital CFO profile.  

1. Written communication
2. Verbal communication
3. Communication adapted to the audience (CEO, executive committee, talent...)
4. Communication in several languages (native language and English at a minimum)
   
   
   

Cultural fit

Cultural fit means hiring a candidate who is aligned with the company's values from day one. It isn't, however, the only factor to consider when hiring (well). 

Enculturability, defined by researchers at Berkeley and Stanford, should also be taken into account. Enculturability means hiring people who are highly adaptable. Candidates don't need to match your company culture in every respect from the moment they start. Instead, they need to show (and prove) that they can quickly make that culture their own.  

In an ideal world, hire profiles that are aligned with most of your values from the start, but who can also quickly adopt your company culture.

The Digital CFO: hard skills 2.0

As we mentioned above, CFOs' hard skills are affected by the digitization of their companies. Digitization adds a new dimension to the Chief Financial Officer role, bringing it closer to that of a Digital Chief Financial Officer.

Our study on the most sought-after skills for Digital CFOs in 2021 highlighted the importance of three hard skills: 

• supporting change across the company; 
• the CEO-CFO partnership; 
• an appetite for data. 
  
  

Decidedly digital skills 

Reading the list of hard skills revealed by our study, something may have caught your attention. Perhaps it felt familiar? Or maybe you thought "nothing new under the sun" when you saw change management and the CFO-CEO partnership on the list? 

If you thought an appetite for data was the only new technical skill, let us set the record straight.  

Supporting change 

Supporting change isn't limited to new processes that need to be improved or adopted. It also includes building an ecosystem of tools, which calls for CFOs with broader skills. To best support other C-level executives, they need to analyze and understand offerings for business solutions (HRIS, CRM, ERP) and reporting (BI, EPM). To be clear, the idea isn't to turn finance experts into IT managers. Rather, it's about relying on their ability to ask the right questions of the departments requesting these solutions. In this way, CFOs strengthen their central role in the adoption of these digital tools. 

  Find the right tool for your company. Choose from our customers' favorite tools: download our selection of the best tools for finance teams and/or the best tools for business leaders.

The strategic CFO-CEO partnership  

The strategic partnership between CFO and CEO has evolved. Modeling information is now one of its pillars. This adds a new dimension to the relationship between the two executives. To guide their leaders, CFOs now need to combine: 

• a global view of the company; 
• advisory skills; 
• reporting capabilities (management information).  
  
  
  

An appetite for data 

The digitization of organizations has caused the volume of data generated to explode. Data is now available on an unprecedented scale. The challenge therefore lies in: 

• centralizing this large volume of data; 
• managing the variety of its sources;
• understanding and analyzing this data. 

This will probably sound familiar: financial and operational data (HR, sales, production data,  etc.…) is an integral part of a CFO's responsibilities.  

On the one hand, CFOs need to systematize, centralize and share information before their stakeholders can benefit from it. 

On the other, CFOs need to interpret this data to offer an actionable reading of it. This is where reporting (in the sense of both representing data and generating reports) really comes into its own. To learn more about these benefits, read our article on improving company performance through reporting.  

Become a Digital CFO

To keep developing your practices, you'll have noticed that data, and a fortiori data visualization, have become indispensable.  

Whatever your level of expertise on the subject, EMASPHERE lets you automate the creation of your reporting. Built by a CFO for CFOs, our performance management solution offers features designed for you:  

• 60+ software applications that EMASPHERE connects to; 
• 50+ preconfigured charts ;
• drill-down functionality, so you can  get right down to the detail of the data;
•  data consolidation;  
• personalized access, tailored to users' needs, preferences and access levels.