Those who step up boldly to the challenge have important opportunities to demonstrate vision and enterprise-wide leadership. Ambitious CFOs should address the following priorities.
Build consensus across the C-suite to better balance near- and long-term investments
Balancing short- and long-term investments is a defining challenge of the CFO role, particularly in Southeast Asia. The study noted that compared with 76% of global peers, 84% of respondents in the region agreed that today’s challenging market environment is increasing pressure on finance leaders to drive cost efficiencies and hit short-term earnings targets.
Long-term efforts focus on building sustainable growth, innovation and competitive advantage, while short-term efforts address immediate operational needs, financial targets and customer demands. Getting the balance right requires a collective C-suite effort. However, Southeast Asian finance leaders reported disagreements in the top leadership team like their global peers.
Tensions within leadership teams
65%of Southeast Asian finance leaders in the study reported tensions and disagreements within their leadership teams on how to balance short-term and long-term priorities.
In the process of elevating their leadership importance, CFOs are well-positioned to build consensus across the C-suite’s different perspectives and conflicting priorities. They can help resolve tensions by providing valuable insights to inform decision-making, navigating trade-offs and facilitating the alignment of decisions with the long-term value strategy.
Building consensus will require a CFO with the credibility and influence to challenge the CEO and executive team. But finance leaders are not always prepared to speak up when their opinion differs from the status quo or challenge their C-suite colleagues even in private. For respondents in Southeast Asia, the top two abilities that CFOs need to effectively influence the executive team’s decision-making are as follows:
- Use data-driven insights to inform decisions so that challenges can be addressed with evidence.
- Build trusted relationships with key investors or the board so that C-suite colleagues know the CFO has the confidence of these critical stakeholders.
CFOs are well-placed to build consensus across the C-suite by providing valuable insights that inform decision-making, navigating trade-offs and helping to align decisions with the long-term value strategy.
Balance risk with innovation and bold transformation
The study found that only a small number of CFOs in Southeast Asia are pursuing a bold finance transformation agenda. Despite significant room for improvement, only 14% of CFOs in the region are making bold, holistic changes to transform the function for the future.
CFOs recognize they need to build digitized finance functions that can proactively support their organizations in achieving sustainable, long-term growth. Their priorities are technology transformation, ESG data capture and assurance, and advanced data analytics. But the majority of Southeast Asian CFOs in the study are taking a medium-risk approach by making significant changes in one or two specific areas of the finance function but not embracing holistic digital transformation.
With many enterprise resource planning systems approaching end of life, CFOs have a perfect opportunity to demonstrate their ability to set a vision and drive transformation. By successfully rationalizing, harmonizing and streamlining their technology ecosystem, CFOs can drive efficiency and agility in the finance operating model. This will achieve much-needed cost reductions as well as provide data and commercial insights to elevate finance as a better business partner.
Shrinking the finance technology footprint is an important cost optimization move. Running too many systems results in higher maintenance costs not only in terms of license fees but also data integration. CFOs can leverage unified solutions that allow the integration of data used for different reporting across the enterprise. By seamlessly connecting as “middleware” across various systems, unified solutions support the speed, accuracy and agility that businesses need in the current reporting environment.
Develop required skill sets and mentor aspiring senior finance leaders
The aspiration of many CFOs for the CEO role raises two key considerations: the need for finance leaders to stretch their skills and the importance of developing new talent to fill the CFO role when incumbents move to a CEO position.
The study found that CFOs will be increasingly chosen for their strategic and inspirational leadership rather than pure finance domain expertise. More than two-thirds of Southeast Asian finance leaders said their companies are willing to appoint CFOs with limited finance experience. Businesses are now considering CFOs from business development, investment, analytics, operations management or legal and compliance pathways.
Required skill sets are also changing, with many respondents considering highly developed emotional intelligence as the top attribute for successful CFOs of the future. Half said they are updating the finance career path in the organization to include the new skills and experiences needed to succeed.
When it comes to prioritizing development of the next generation of leaders, almost two-thirds (64%) said they are investing enough time in mentoring aspiring senior finance leaders, compared with less than half (49%) of global peers. As CFOs prepare themselves for the CEO role, respondents said their greatest challenge is finding time to build knowledge and skills through exposure to external expertise and access to thought leadership.
To free up more time for their own professional development opportunities, CFOs could delegate more responsibilities to the next tier of emerging finance leaders. For example, CFOs could delegate financial reporting responsibilities to financial controllers. As financial reporting becomes largely automated, some finance roles could be repurposed to support the CFO in partnering with the business.
Despite the challenges of the finance function, there has never been a better time for CFOs in Southeast Asia to showcase their leadership skills and commercial acumen. Whether acting as a C-suite consensus builder, delivering successful digital transformation or embedding financial insights into business decisions, the CFO is becoming more prominent as an enterprise transformational leader. By delivering strategic results for their organizations and continuing to mentor future finance leaders, CFOs could find themselves in strong contention for the top job down the track.
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Summary
CFOs are under pressure to play a more strategic role as businesses continue to face economic uncertainty, challenging market conditions and new stakeholder expectations. By taking several key actions, they could become a strong contender for a future CEO position. These include building consensus across the C-suite to better balance short- and long-term investments and balancing risk with innovation and bold transformation. Adapting to changes in required skill sets and mentoring the next generation of senior finance leaders are crucial as well.
