The accounting and finance functions are the crux of any business. As new technologies continue to emerge and disrupt businesses at an enterprise level, it’s only logical that the role of the finance leader evolves, too — and it has.
CFOs are now expected to have skillsets that weren’t necessary for their role in years’ past. But as the lines of control continue to blur between finance, operations and technology, CFOs need to become more forward-thinking, business-minded and technologically-savvy.
Much of this used to be considered subjective in nature, however, a recent study found on CFO.com was able to define the evolution of the CFO in an objective way.
The study looked at the differences between CFOs who departed a company from the new CFOs that took their place. According to the article, “The chosen sectors are currently at the front of digital disruption, where continuous change, constant adaptation, and rapid innovation has become part of everyday life.”
This information is important for not only the individual currently in the role of CFO, but for any accounting or finance professional looking to become a finance chief at some point in their career.
I summarized some of this information to share with you the 3 Ways the CFO Role Has Evolved below!
1. See the Strategy.
It’s imperative that a CFO has the ability to see a clear strategy for the business. The CFO works so closely with the CEO and all other executive-level leadership—that they should be among the decision makers to build the vision for the company’s future plans 5 years, 10 years and even further out. 40 percent of the existing CFOs in the study had “strategy experience” prior to taking the position over 24 percent of the former ones.
2. Know the Operations.
It makes sense that the CFO should know the ins and outs of the business, however, often times, a CFO is focused on high-level quantitative decisions including risk and compliance, and they don’t necessarily seek out opportunities to learn the day-to-day operations. According to the study, 36 percent of the new-generation finance chiefs had prior operating experience, where the same was true for just 20 percent of the ex-CFOs.
3. Be Business Savvy.
Many CFOs have earned varying degrees throughout their education and tenure as accounting or finance practioners. However, nowadays, more and more CFOs are getting their MBA and other degrees in more business-related fields. The study says 55 percent of today’s CFOs have MBA degrees over 44 percent of their predecessors. While this is likely not a deal breaker, having good business sense whether through a degree or experience is key.
Overall, accounting and finance professionals interested in becoming a CFO at some point should consider making a lateral move outside of the finance function, outside of their company, and even outside their sector in order to build the strategic and operational experience necessary for the role.
What are some other ways the role of the CFO has changed? Comment below and let us know!