September 6, 2022
There was a time, not so long ago, when relatively few CFOs made the leap to CEO. As a 2015 paper by Korn Ferry noted, “A strategic mind-set, strong financial acumen and a close working relationship with the board, although they are characteristics of the best-in-class CFOs, will be insufficient to transition successfully to CEO.” Chief among those characteristics, and the most noticeable gap for CFOs, was “people agility, which is consistent with their need to develop more social leadership skills to influence, engage, and inspire others.”
Things have changed significantly in the past seven years. Since the COVID-19 pandemic began in March of 2020, more CFOs than ever have become CEOs — 29 percent of them, according to one study. “The widened path for CFOs,” an article on CFOdive.com noted, “is part of a conservative response by companies looking for a steady hand to help them navigate unfamiliar terrain.”
As one C-level coach told Deloitte, the CFOs who successfully transition to CEO “are able to articulate a strategic vision” and “can articulate what the future might look like.” They’re also “great at seeing around corners.”
And while most CFOs don’t become CEOs, they’re now expected to be much more closely aligned with the top boss — which requires adopting qualities that eventually allow some of them to land the top job. No longer just analytical bean counters, today’s CFOs must “understand what your CEO is about —their personality, priorities, operating style and how they want you to communicate with them,” a Deloitte report explained. It went on to describe the main traits CEOs look for in CFOs, including the ability to be “an adept influencer” and “a strong communicator,” as well as “a tireless change agent” who knows how to “get the right things on the CEO’s radar,” offers solutions to problems, is “independent-minded and supportive” and challenges the business when numbers don’t support strategy.
“In virtually every company we look at, the CFO is becoming the second most important C-suite executive,” David Axson of Accenture Strategy told Forbes. “An effective leadership team depends on the CEO and CFO being a great double act.”
One non-profit CEO quoted in the Forbes article likened yesterday’s CFO to a fullback in football who was merely expected to be “a great run blocker. Today you are expected to be a competent receiver, pick up the blitz and occasionally run the ball.” A CFOs responsibilities, he said, have similarly expanded. “Being great at finance and accounting is no longer enough.”
Accenture reported in 2018 that 81 and 77 percent of CFOs, respectively, believed “value creation” and “organizational transformation” were among their core duties. “Someone has to drive change and encourage innovation within the C-suite — and at many companies, that person is the CFO,” the report stated. Four years later, that’s even truer. And the “key leadership skills for effective CFOs” described in the report — including pragmatism, effective communication, an entrepreneurial spirit and resiliency — are more crucial.
A Role Beyond Just “Finance”
As ServiceNow CFO Gina Mastanuono told Information Week last year, “As CFOs, we recognize that we can’t just live in the financial world. We must be business strategists, capable of leading our organizations through a crisis like COVID, but also understanding how we will come out strong on the other side by strategically supporting innovation.”
But the article in which she was quoted focuses on CFO-CIO relationships rather than CFO-CEO ones. As you might imagine, the former is far more (though not entirely) tech-focused than the latter. In a 2019 survey conducted by Dell, an internal write-up summarized, “Ninety-six percent of survey respondents reported that CIO and CFO collaboration is critical to IT transformation success. However, a disheartening 89 percent cited significant barriers – ranging from outdated ideas about the role of CIOs to obsolete reporting structures – to collaboration.”
Just as CEOs need the guidance of CFOs, today’s CFOs must forge strong relationships with CIOs — those with the technological expertise to keep pace with the competition in an increasingly tech-centric business culture. Because all companies are effectively tech companies these days, luddite leaders are increasingly less desirable — or tenable. As Ernst & Young found in a 2020 survey, “As well as protecting their people and their communities, innovative and bold companies are also pioneering new business models, accelerating digital priorities and transforming how they work.” Success on all of those fronts requires a strong CFO-CIO partnership.
“There are so many important C-level relationships,” Chris Stephenson, national managing principal and leader of product innovation at the accounting and advisory firm Grant Thornton, told Techtarget.com. “But if you want your organization to invest in the right places and have the most impact, [the] CIO and CFO must work together and speak the same language.”
Deloitte director Khalid Kark expounded on the subject, saying, “If the CIO isn’t able to get the funding and strategic investment parts right, they’re going to be viewed as primarily tech managers. To be strategic and to think about value that’s being driven through technology investments, CIOs need to understand and work with their CFOs.”
Strategic Partnerships Abound
Whether it’s CFOs and CEOs or CFOs and CIOs, a common theme is strategic partnership. That means open communication, complementary skill sets and a shared vision. Without those things, among many others, modern companies have little chance of surviving — let alone thriving. In light of that, the pressure is on CFOs to make sure they’re fulfilling the greatly expanded duties of their role.
“In some ways, CFOs had it easier when the job was simpler… just report the numbers and help the boss avoid mistakes,” Jack McCullough wrote in Forbes earlier this year. “Today the job is much harder, and the expectations of CEOs have never been higher. But the rewards – financial and otherwise – of being a CFO are tremendous, and it is an exciting and fulfilling way to make a living, as long as you can meet the demands of the person in the corner office.”
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