What is the performance of the CFO
The new role of the CFO - What it takes to be successful in 2021 and beyond
The fact that leadership roles evolve over time is nothing new. In view of changing market conditions and customer needs, companies have always had to adapt their strategy, which in turn creates new responsibilities (or even completely new roles) for teams and managers alike.
But rarely has a function undergone such a profound change as that of the CFO in times of the corona pandemic. Within a few years, the classic role model of the CFO has evolved from a financial strategist - a role that is challenging in itself - to the central driver of digital transformation, talent development and corporate innovation.
A global CFO survey by McKinsey in 2018 found that in just two years the number of departments reporting to the CFO has increased by an average of 50%. The proportion of CFOs who said they oversee their company's digital activities has also doubled.
For today's CFOs, this not only means a larger area of responsibility, but also significantly more responsibility. But this responsibility also results in enormous potential. CFOs are now in a better position than ever to drive sustainable and far-reaching change in companies, from technology and talent strategy to working capital optimization. At least if they can develop the skills it takes to face these new challenges effectively.
What do CFOs have to achieve today?
When CFOs are no longer just pure financial geniuses and strategists, what are their roles? There are several answers to this question.
Modern CFOs are:
Closer to teams and processes than ever before: Even before the corona pandemic, CFOs were more closely linked to their teams - they played a more active role in talent strategy, personnel development and team composition. The pandemic has accelerated this change again. Many CFOs report that their biggest challenge in 2020 was keeping employees and teams on track in times of rapid change.
Chief Transformation Officers: CFOs have always played a role in transformation initiatives, but more when it came to securing the necessary financial resources. Today they guard more than the “money pot”. You are part of the transformation process yourself - from strategy development to performance monitoring. In McKinsey's most recent CFO survey, 44 percent of CFOs said the leaders of transformation initiatives report directly to them - and more than half of all CFOs also reported that they were actively involved in developing the transformation strategy.
Chief Performance Officers: Closely related to the fact that the CFO's job is not done with the completion of a transformation project. Today, they are increasingly responsible for measuring the performance of transformation initiatives, as well as keeping an eye on overall financial performance and risk management.
Still financial strategists: These new tasks have not replaced the core role of the CFO - they are added to his area of responsibility. Everything CFOs have done so far, they have to continue to do, only with significantly less time and limited resources.
Five skills CFOs should have
If you want to be successful as a CFO in view of these new responsibilities and tasks, you also have to develop your own skills. Only those who develop the following skills have a good chance of fulfilling their new role as a future and transformation strategist:
A mindset that questions the status quo
Today's CFOs have to constantly question processes, software and tool sets in the company. To do this, they need both the right attitude - i.e. they are open to changes, ask the right questions and rethink existing processes - as well as the necessary transparency in order to understand exactly where there is potential for improvement.
An approach to continuous reforecasting
The corona pandemic has impressively shown the rapid pace at which business conditions can change. Reports on the monthly or quarterly closing are no longer sufficient. To stay up to date, CFOs need to move away from structured forecasting and take a more agile approach that allows them to constantly ask new questions and adapt the forecast to changing business conditions. This in turn can help them proactively drive change and seize new opportunities.
Strong technological skills
CFOs today are under more pressure to take on a strategic role in technology decisions. For many this is a big change - and accordingly requires new specialist knowledge. But if you build up technology expertise, you can derive immense advantages from it. From process mining tools that uncover process problems in finance and beyond, to automation that can aid them in making routine financial decisions, there is a huge range of exciting options for CFOs.
Be a good listener
Of course, every manager should be able to listen carefully. But for today's CFOs, that's more important than ever. In order to best support their teams, they need to listen to their challenges - and not just respond to requests for new tools, but work closely with the teams to discover the points of friction and inefficiencies that limit their effectiveness.
Keep an eye on the entire company
To effectively drive strategic change, CFOs need to look beyond finance and keep pace with changes across the organization. Only then can CFOs - with complete transparency and understanding of what their company needs to be successful - enable the right transformations with the right technology and the right strategy.
Your role as CFO is changing. But how, that depends on you.
These different profiles and requirements make the work of CFOs more complex than ever. However, this doesn't have to be a scary role model that is simply imposed on you. See it as an enormous opportunity to redefine your role as CFO and to become the strategic transformation driver of your company.
What that looks like is entirely up to you. Perhaps you are turning away from the traditionally risk-averse attitudes of many CFOs and driving innovations much more proactively. Or you can use the new digital possibilities to extend your influence far beyond finance and to drive changes company-wide that help, for example, with the optimization of working capital.
Whatever you want to achieve and whatever your company needs - in view of the profound change and economic uncertainties, now is the perfect time to reinvent yourself. With the right tools, skills, and most importantly, a vision of where you want to head your business, you can drive sustainable and meaningful change in finance and beyond.
To find out how Celonis can help you better understand your business processes and uncover potential for optimizing performance, discover ours Execution apps.
Celonis believes that every company can unlock its full execution capacity. Powered by its market-leading process mining core, the Celonis Execution Management System provides a set of instruments and applications, the Celonis Studio as well as platform capabilities for business executives and users. The Celonis EMS offers help companies manage every facet of execution management from analytics to strategy and planning, management, actions and automation.
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