CEOs rely more on CFOs to develop strategy, support growth and operations initiatives, according to exclusive interviews with Ernst & Young LLP
New York, 12 June 2012 – As companies in the Americas look to future growth, chief financial officers (CFOs) are ever more deeply involved in setting strategy alongside top executives and are relied on to help support that growth, according to a series of one-on-one in-depth interviews with CFOs of top Americas-based companies conducted by Ernst & Young LLP and compiled in a new report issued today, “Views. Vision. Insights. The evolving role of today’s CFO.”
Participating CFOs, from companies including Nike, Coca-Cola Enterprises, Ralph Lauren, Xerox, and Archer Daniels Midland, also revealed that they are taking on more responsibility beyond finance, and as a corollary they report very high satisfaction in their careers. At the same time, some readily confess to being interested in roles beyond finance, including as chief executive officers.
"Both here in the Americas and around the world, the role and responsibilities of CFOs are rapidly evolving. Their organizations are giving them wider scope and demanding that they have a broader set of skills in addition to fundamental skills in finance and expertise in investing and managing capital," said Tom McGrath, Senior Vice Chair, Markets at Ernst & Young LLP. "Ernst & Young conducted these interviews not only to examine and understand how the CFO role is changing, but also to share the insights with a wider business audience and provide actionable strategies for developing the next generation of CFOs."
Ernst & Young LLP conducted the interviews to gain perspectives from CFOs based in the Americas about the ongoing research findings by the global Ernst & Young organization in Europe, the Middle East, India, and Africa (EMEIA) and to corroborate findings in EMEIA that suggest the CFO role is increasingly strategic and valued in organizations.
“These conversations convey the seismic changes in the CFO’s role and responsibilities since the 2008 financial crisis,” said Myles Corson, Markets Leader for the Financial Accounting Advisory Services practice at Ernst & Young LLP. “CFOs are thoughtful and entrepreneurial – even visionary – on behalf of their organizations, but they remain focused on maintaining the integrity of the finance function and its mandate, including risk management, compliance and controls. In all cases, their involvement in their businesses is broad, their contributions to their organizations manifold, and the scope of their responsibilities growing.”
The study, involving CFOs representing companies in industries including airlines, consumer products, manufacturing, and financial services, also provides helpful perspectives on what finance executives who aspire to the group CFO position can do to prepare themselves for the role. “Today's CFO requires more breadth of experience and versatility than ever before and the next generation of CFOs must possess a vastly broader set of skills than its predecessor. Finance skills remain fundamental, but other key developmental areas for aspiring finance leaders now include experience in corporate development and strategic M&A, in international markets, and in the commercial side of the business,” added Corson.
The report serves as a supplement to the 2010 report, “The DNA of the CFO: A study of what makes a chief financial officer,” by the global Ernst & Young organization, which polled 669 CFOs of leading companies in Europe, the Middle East, India and Africa to examine the role and responsibilities of senior finance directors, and its 2011 report, "Finance forte: The future of finance leadership," which polled 530 group CFOs and their direct reports.
Additional findings include:
- CFOs are increasingly contributing to organizational strategy and operational decision-making, as well as meeting unprecedented demand for their unique perspective and discipline. While boards and external stakeholders see CFOs as a vitally important objective voice on financial performance, they are also managing or materially supporting operational functions, including information technology, investor relations, real estate, and strategic M&A. Some are even involved in commercial activities.
- Fully two-thirds of respondents in "The DNA of the CFO" believe that managing costs has become more critical in the economic environment after the financial crisis, putting it at the top of a list of issues commanding their attention. But companies are increasingly turning their focus to profitable growth – both in developed markets and in those that hold the promise of rapid expansion.
- Another major insight from the “Views. Vision. Insights” study indicates that CFOs are no longer expected to merely execute the business strategy handed down from the CEO and board of directors; instead, they are increasingly asked to develop strategy in existing and emerging growth markets while managing the ongoing demands of the finance function role. In turn, some CFOs believe their role is evolving from serving as a “chief skeptic officer” to a “chief growth officer” as they become major participants in the conversation about growth and business strategy.
- One of the biggest challenges facing the contemporary CFO is the paramount need to communicate complex issues in ways that a variety of audiences can understand when making important decisions about their role or stake in the company. These audiences include investors, financial analysts, customers, partners and employees. In today’s 24/7 world where stakeholders demand accurate information and transparency in real-time, the pressure is on the CFO to be a world-class communicator.
Ernst & Young LLP conducted the interviews between August and December 2011 and follow-up conversations continued through May 2012. Respondents were CFOs from ADT, Archer Daniels Midland, Baker Hughes, Coca-Cola Enterprises, Delta Air Lines, Guess?, LyondellBasell, Molex, Navistar International, Nike, OfficeMax, Quintiles Transnational, Ralph Lauren, TD Bank Group, Tetra Pak, S.A. de C.V., United Stationers, Votorantim Metais, W.W. Grainger, and Xerox.
To read the full report and watch related question-and-answer interviews with McGrath and Corson, please go to www.ey.com/viewsvisioninsights. Access our thought leadership anywhere with EY Insights, our new mobile app by visiting www.eyinsights.com.
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