In today’s world, strategic financial leadership is in high demand and CFOs must demonstrate that the finance function is equipped to manage performance through periods of growth, stagnation, and contraction. As a result, CFOs are increasingly playing a key role in developing and implementing strategy within their companies and partnering with CEOs to creatively design growth opportunities for the future. Successful CFO leadership requires a deeper understanding of strategy, increased leadership skills, and an ability to effectively communicate financial acumen and knowledge to non-financial colleagues.
The roles of a “value-added” CFO include:
- Expand leadership skills and increase capacity as a trusted advisor.
- Develop more effective operational strategies for building value in and managing operational risk throughout an organization.
- Communicate and apply best practices for profitable growth.
- Think creatively and design opportunities to position a company for the future.
CFOs and the finance function should act more strategically and more commercially, improving performance by delivering insight to decision-makers. This role has typically been described as “business partnering,” with the CFO acting as a catalyst or value integrator.
Successful business partnering is highly sought after, but rarely achieved. Much too often, finance acts as an “observer” of performance during periods of growth and profitability, so that business results are more likely to be driven by market conditions than finance’s ability to help decision-makers optimize market opportunities.
The heart of business partnering rests in practical economic theory and the effective allocation of scarce resources to achieve financial objectives. The essence of a CFO as a good business partner is someone who:
- Facilitates transparency of financial performance across their organization.
- Works with commercial leaders to drive improved performance.
- Ensures business decisions are grounded in sound financial analysis.
- Ensures business decisions endure processes that drive robust financial challenge and accountability.
- Provides analysis and insight to prioritize the allocation of scarce resources to areas where value can be generated.
- Manages the finance function in operating from an efficient base, allowing the best resources to focus on analysis to support strategic and commercial operations that add value.
The CFO’s role has gradually extended to include an element of responsibility for ensuring that resources are in place to deliver the financial targets determined by the corporate strategy, as well as ensuring the entire organization understands that strategy and has access to sufficient information to execute it.
Therefore, it is important for the CFO and finance function to be positioned appropriately within an organization in order to be able to influence decision-making and action. Additionally, finance professionals must have an advanced level of communication and influencing skills to ensure that their voice is heard and their advice is valued and acted upon.