The Future of the CFO – From Bean Counter to Business Leader

The role of CFO is virtually recognisable since the start of the 2000s. These c-suite executives have evolved from backroom bean counters to tomorrow’s business leaders. It’s an evolution that’s been turbo-charged by the 2008 financial crisis, growing regulation, and the COVID-19 pandemic.

CFOs have become the second-in-command to their CEO, taking on a strategic role in succession planning and overseeing commercial and transformation strategies. They’re a bridge between the company and external stakeholders, providing credibility with potential investors and financial institutions.

At FD Capital, we’re seeing a rise in demand for CFOs with the portfolio to become business leaders within organisations. CFOs are navigating growing regulatory requirements and increased scrutiny from investors, alongside demands for greater sustainability and changing consumer behaviour.

We’re exploring the future of the CFO and what you should look for in candidates who can lead your company into the future.

The Role of CFO – Post-Pandemic

The pandemic threw CFOs from the comfort of their financial departments into the thick of crisis management. Their focus shifted from a long-term view to managing day-to-day situations through strategic leadership and financial management. CFOs found themselves at the forefront of cash flow issues, supply chain crises, and changing government regulations.

COVID-19 also shone a light on the need for companies to step up their digital transformations, particularly following the ‘great resignation’. While the position has changed in the last two decades, the future of the CFO will look drastically different by the end of this decade.

CFOs are leading the way in modernisation, increasing calls from companies for financial executives who are digital natives and familiar with automation and AI. The rapidly changing investor market has led to CFOs stepping up to take a more public role in their companies. Many CFOs are tipped to step into their CEO’s shoes, providing a seamless transition to the top job.

Companies are increasingly headhunting CFOs with a view of succession planning if they find the right candidate. Changing responsibilities and an increasingly strategic role are turning CFOs from bean counters to business leaders with their own public profiles.

Technology Transformation

Future CFOs need to come to the table with a more multi-disciplinary skill set than ever before. Their responsibilities have become more diverse, from navigating regulations on areas like net zero and incorporating data analytics into financial planning. While technology is not an obvious responsibility for a CFO, they’re uniquely positioned to oversee digital transformation.

CFOs have traditionally been known as ‘bean counters’, giving them the experience and knowledge to implement analytical systems and data forecasting. Tomorrow’s CFOs can utilise technology to access real-time data for better decision making and to reduce manual labour.

Investing in AI and automation, alongside data analysis, will give companies an edge over their competitors. Not every CFO will come with technology experience, leading them to become more of a generalist in the field, building a team around them. However, a CFO shouldn’t be afraid to challenge the status quo and think outside the box.

Real-time forecasting and data-driven insights enable CFOs to behave proactively. Tech-savvy CFOs are putting cyber security top of their agenda by investing in digital transformation and enterprise planning systems.

Today’s CFOs are playing a crucial role in overseeing technological transformation, from determining what software to invest in to integrating systems company-wide and supporting remote working. CFOs need a strong relationship with the company’s Chief Technology Officer or Chief Information Officer.

Companies and CFOs who fail to evolve will find themselves quickly falling behind the competition. A well-positioned CFO will put a digital transformation strategy in place that delivers results without eating into the company’s profitability. CFOs will search for an economically sustainable way of driving value creation through technology.

Growth Drivers

The role of CFO has changed drastically since the pandemic. Companies now have that uncertainty behind them with CFOs focusing their attention on driving growth by shifting to value creation. It requires CFOs to switch from the rear-view mirror thinking of the pandemic and towards a broader vision. Their influence is growing across every aspect of the business, particularly with external stakeholders.

It’s why CFOs are increasingly adopting a bird’s eye view while remaining on the ground operationally. Companies are now moulding the CFO role to suit their circumstances, giving them as broad of responsibilities as the company requires.

CFOs are becoming business leaders by acting as a bridge between the organisation and external partners, from supply chain manufacturers to private investors. Today’s CFOs are in a unique position to shape their company’s actions and strategies to achieve its long-term goals. The title ‘Chief Financial Officer’ no longer reflects the expansive nature of the role.

Efficient CFOs will streamline processes to maximise value creation through digital transformation and exploring potential commercial opportunities. AI, automation, and data analytics provide CFOs with an avenue for value creation by leveraging real-time data.

Sustainability and Stakeholder Engagement

Two newer responsibilities that have made their way into the inbox of today’s CFOs are sustainability and stakeholder engagement. Companies are finding themselves under heightened scrutiny with environmental, social, and governance (ESG) issues topping the list for stakeholders, investors, and employees.

CFOs at public companies or those planning for IPO are focusing on improving the company’s ESG positions to boost their public image. ESG investing is becoming increasingly mainstream with investors raising ESG-related issues with companies from the outset.

While overseeing the ESG agenda is not top of the CFO’s inbox, they’ll be actively involved in how the company is presenting its sustainability credentials to stakeholders. CFOs are acting as business leaders by working closely with other departments on ensuring ESG compliance and reporting, primarily through establishing KPIs and utilising data analysis.

The CFO will determine the financial viability of transitioning to more sustainable manufacturing and operations. Tomorrow’s investors are only interested in companies that can put forth a positive investor story that has sustainability at its heart.

CFOs are being put in a position where they must determine whether sustainability investments are worth making short-term financial sacrifices for a longer-time gain from investors. Companies that take proactive steps towards ESG now will gain benefits further down the road by being industry leaders.

ESG includes decade-defining issues that CFOs will have to grapple with in the coming years. It requires CFOs to account for ESG within their long-term financial planning and when considering talent acquisition and development.

Talent Acquisition and Development

CFOs are increasingly becoming business leaders by taking an active role in talent acquisition and development, including developing their own teams. Future CFOs need the people and communications skills to build diverse teams that go beyond just financial management to include digital specialists.

It’s no surprise that CFOs are starting to come from less traditional backgrounds. Gone are the days when being an accountant was a pre-requisite to becoming a CFO. Candidates from non-traditional backgrounds can bring a fresh approach to the role with a different sense of creativity to innovate the organisation. Financial executives hoping to step up to the role of CFO need to broaden their horizons to develop their skills in digital, communication, and regulatory fields. Tomorrow’s CFOs should be unafraid of stepping outside their comfort zone and encourage more diverse views.

CFOs are acting as business leaders internally and externally. They’re taking on a more hands-on approach to management, engaging with colleagues to encourage diverse thought and innovation. Talent development, acquisition, and retention calls for CFOs to engage with their colleagues and give them a sense of purpose. Value creation isn’t just about increasing profitability but also about focusing on human capital.

Acting as a Bridge

CFOs as business leaders act as a bridge, filling the gap between the company and its external partners while also offering a bridge to the future. A capable CFO provides the company with an internal option when it comes to choosing its next CEO. CFOs seeking to take the step up to the top job will develop their skills and experience throughout the company to position themselves to take on the role.

Many companies choose to headhunt their CFO when they have succession planning in mind. The CEO-CFO partnership is crucial to the success of the company, particularly if the CEO wants to position the CFO to take on their role. It’s a win-win scenario, presenting CFOs with an opportunity to gain exposure in different areas of the business to expand their understanding.

Business leaders, including CFOs, need to adopt a broad 360-degree view of their company’s financial and operational strategies. CFOs who work alongside their CEO to gain experience will become more credible business leaders and develop a broader vision for the company both in their role as CFO and any further career development.

Tomorrow’s CFOs Beyond Finance

Part of a CFO’s role as a business leader involves stepping up to take a more strategic position within the organisation. It requires candidates to have operational experience and broader business knowledge. Candidates are increasingly applying for CFO positions from more diverse backgrounds, bringing a wealth of experience with them to the role.

Strategy formulation and execution are singled out as the most important experience for future CFOs to have by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accounts (IMA) in their 2013 report. The necessity of these skills has only increased in the last decade in the aftermath of the pandemic and changing economic circumstances.

CFOs are increasingly choosing to specialise in sector-specific experience with candidates coming from beyond traditional financial management. Tomorrow’s CFOs are the most diverse yet. Marketing, sales, and operations are all ideal learning fields for candidates with their eyes on a CFO position. CFOs find themselves operating with these departments daily as business leaders, making strategy and value-creation decisions in partnership with them.

Investor Story

The CFO is at the forefront of creating an engaging investor story that boosts the company’s public image and attracts attention from potential stakeholders. It’s their responsibility to translate data and forecasting to stakeholders in a way that provides clarity and presents the financial position without bias. Communication skills are vital as CFOs move from being bean counters to business leaders.

They’re expected to talk the same language as their stakeholders, whether it’s supply chain manufacturers, angel investors, or consumers. Tomorrow’s CFOs will be expected to spend less time punching numbers into spreadsheets and more time promoting their company’s investor story.

It’s one of the challenges today’s CFOs are facing as the role evolves to take on a greater strategic and operational role. Many don’t have the formal training for this and are instead learning on the job. Communication skills are one area you want to develop when progressing towards the role of CFO.

Developing your communication skills as a CFO enables you to put context onto financial performances and data analysis, translating it for internal and external stakeholders. These skills are crucial in building relationships, including for CFOs who seek to develop a public image for progressing their career.

From Number Crunching to Tomorrow’s CEO

The role of CFO should be renamed as ‘Chief Future Officer’ as so much of the role now exists outside the traditional financial parameters. It’s too narrow to describe the position as simply being ‘Chief Finance Officer’.

These executives have gone from number crunching to becoming tomorrow’s CEOs. They’re exceptionally well-positioned to be a driving force within their organisation, from investing in technological transformation to developing ESG strategies and leading on value creation.

CFOs are in a unique position to experiment with technology and strategies to bring their organisations through this time of economic upheaval and digital transformation. They now play a crucial role in shaping the future of their company with a bird’s eye view of its finances, operations, data analytics, and strategy.

FD Capital is the UK’s leading financial recruitment agency, offering traditional recruitment and headhunting services to connect your company with financial executives and CFOs. Start the recruitment process today by contacting our team at recruitment@fdcapital.co.uk to unlock your business’s potential with a CFO.