As the CFO role blurs, how can future finance leaders find focus?
Redefining the path to a CFO appointment
As disruption unfolds, transparency issues gain reach and regulation spreads, the world is in flux for finance leaders. How organizations deliver value is being reset for a digital age. Forcing the blur is the increasing amount of risk, connected and volatile markets and the rapid advance of technology. To reinvent itself for a new age, the finance function is transforming into a data-driven decision center, where smart people and smart machines help make better financial, strategic and operational decisions.
The role of the CFO will, as a result, become more complex and more unforgiving, but with new dimensions that make it ever-more interesting and rewarding. Organizations will look to CFOs to offer innovative solutions to business issues, when in the past creativity might well have been discouraged. CFOs are no longer just seen as the “No. 2” in the organization, but as the partner of the CEO and board.
To have the potential to reach this role, aspiring CFOs must have a clear development strategy that addresses current needs and future concerns. However, the traditional linear career path has already been disrupted by shared services centers, which now manage a majority of transactional finance tasks. This trend will continue as robotics, automation and artificial intelligence (AI) adoption becomes more widespread.
Ambitious finance executives are going to have to be determined and creative in defining their route to the top. They will need to embrace uncertainty and take calculated risks in their career planning and how they build their personal brand. Incumbent CFOs will also need to think differently about how to coach high-potential staff from finance or elsewhere to build the skills to become CFOs of tomorrow.
Strengthening innovation and creativity in the CFO role
A relatively recent evolution of the CFO’s role has been the need for innovation and creativity. They are being asked to find innovative solutions to key business issues, such as designing and delivering new digital business models – and this at a time when regulatory scrutiny and the need for proactive risk management is increasing. CFOs have always had to find the right line between risk and reward. However, achieving the right balance between the two has become more delicate yet less distinct as CFOs have become more involved in strategy development and driving growth.
CFOs also need to be more imaginative and adaptable in how they manage their own careers, which also involves greater risk. Acknowledging, addressing and cultivating this innovation dimension of the role means thinking and planning differently about the career path, which includes taking more calculated risks. Finance leaders need to identify, welcome and leverage different perspectives from outside the function, globally and across sectors. Among the sample of 173 finance leaders at large organizations (with annual revenue greater than US$5b) in our survey:
- 64% have “worked in more than one sector”
- 53% have “significant experience working in different international environments”
- 43% have “significant business experience gained in roles outside finance”
As we discussed in Do you define your CFO role? Or does it define you? The disruption of the CFO’s DNA, what constitutes finance leadership is becoming more diverse as incumbents respond to a range of pressures, from digital to data. As a result, it is now more likely than ever that the career development path to a senior finance role will flex and shift, based on variables that include market context, personal ambition and the expressed or implied expectations of key stakeholders in the process, such as CEOs to supervisory boards.
In this report, we discuss two critical areas where finance leaders can focus to position themselves for a CFO appointment in these changing times, which we define as “capabilities” and “leadership” (see “Tomorrow’s finance leader”). We offer guiding principles in both of these areas to help aspiring CFOs steer their route to the top.
We hope you enjoy reading it.
- Hanne Jesca Bax
EY EMEIA Managing Partner Markets & Accounts, Ernst & Young Nederland LLP
Tel: +31 88 40 71325
- Robert Brand
EY Global CFO Agenda Leader
Tel: +1 201 872 5692
- Rick Fezell
EY Americas EY Vice Chair — Accounts
Tel: +1 312 879 6568
- Annette Kimmitt
EY Asia-Pacific Accounts Leader
Tel: +61 3 9288 8141
- Tony Klimas
EY Global Finance Performance Improvement
Tel: +1 212 773 5949