In a changing economic and competitive landscape with varying industries that Southern California can claim, the role of the CFO is changing, and changing quickly. If you were to guess the CFO’s most important area of expertise, what would you say? Once, it would have been numbers. CFOs were financially minded first and foremost.
But as businesses and market conditions change, so too do the roles of every member of the c-suite, and the CFO is no exception. In fact, a KPMG study produced last year that surveyed CEOs globally, we found that the CFO is indeed exceptional, because compared with any other executive in the organization, the CEO expected the CFO role to change the most. High expectations, indeed, and unfortunately one in three CEOs say their CFOs are not equipped for the challenge.
How, then, can we equip our financial leaders to not only accept that challenge, but surpass expectations?
In short, tomorrow’s CFOs need to become Modern CFOs.
The Modern CFOs need to manage capital, of course, but they also need to be versed in strategy, analytics, operations and talent management. In short, they need to help drive business change. It’s a daunting task, but it isn’t out of reach.
Driving business change may seem like an unfathomable thought for a CFO, but the best piece of advice is to start in your own backyard. Beyond managing numbers and the relationship with the markets, a Modern CFO should be able to look at the finance and accounting organization and make sure it’s streamlined. The good news is that many CFOs are already equipped to do it.
Today, CFOs have unparalleled access to data. They report to regulatory bodies and conduct management reporting for the entire organization. With all of that information being pulled through the finance department, a deep analysis could provide immense business insights and value – exactly what the CEO is looking for.
It’s important, though, that the data is analyzed appropriately. Part of the reason CEOs are expecting more is that technology has made many of the reporting functions easier, freeing up time for analysis and business insights. While once management reporting was 80 percent gathering information and 20 percent analyzing it, automation means that ratio can be flipped, putting more of a focus on understanding the data instead of just reporting it.
The Modern CFOs need to manage capital, of course, but they also need to be versed in strategy, analytics, operations and talent management. In short, they need to help drive business change. It’s a daunting task, but it isn’t out of reach.
A thorough understanding of data can lead to better business knowledge, including better thinking about product profitability, or insights on the management of operations. And that business knowledge is what inevitably drives transformation.
Talent management, on the other hand, is an integral skill to making transformation happen. Driving change means leadership, and that means hiring the right high-caliber leaders. As in any organization, Modern CFOs are only as good as the people supporting them, so they can in turn, support the CEO’s vision.
So to answer the question: who is the Modern CFO?
In the minds of CEOs, that trusted advisor must have intellectual curiosity, must have leadership skills, must not be overly conservative about disruptive technology, and must aggressively seek out the business insights to help make necessary changes that drive the business forward.
Above all else, the most effective quality in a Modern CFO is adaptability.
Mark Hutchins is the Office Managing Partner for KPMG’s Los Angeles office.
