Till the last decade, CFOs (Chief Financial Officer) across organizations were involved only in the financial functions of the organization in the narrowest definition of the phrase. In such scenarios it was not surprising to see that a lot of CFOs were Chartered Accountants (CAs). To understand the composition of the current CFOs we need to first look at how the role for a CFO has evolved. The job of the CFO is broadening far beyond its financial area into a role that is much more “strategic” – in the broadest sense of the word. Successful CFOs are overturning outmoded perceptions of finance as “business prevention units” and are now repositioning their role as an enabling partner to the organization’s business.
The qualities of a “Strategy Developer”
For a lot of CFOs, their day-to-day contribution focuses on providing insight and analysis to support the CEO and ensuring that business decisions are grounded in sound financial criteria. This hence goes beyond being an “information provider” or “aggregator presenter.” Their commercial understanding and analytical skills mean that this proactive, yet supporting role is a vital part of understanding how different decisions will lead to certain outcomes. Another major change for CFOs in the corporate world is the fact that now CFOs act as the face of the company on all issues related to overall financial performance. Hence good communication skills that form the backbone in building trust among an expanding universe of stakeholders is considered a critical aspect of the CFO’s make-up. Depending on the background, relationships with external stakeholders, such as investors, analysts and the media, are a challenge for many. Indeed, these “softer skills” seem to be an issue for many CFOs. Asked where they need to enhance their skills and knowledge, most CFOs point to communication and influencing as the most important area for improvement. The basic requirements of CFA (see box) lean heavily towards management accounting. Currently in the international corporate arena less than 1/3rd of the CFOs are Chartered Accountants. This representation can only go down in the future. Future CFOs are more likely to be management accountants or an MBA in Finance.