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Five CFO Skills that will Help Finance Leaders Meet Today's New Challenges

The post-pandemic world, when it arrives, will transform many aspects of business as usual. Workforces have shifted and many will stay remote. Supply chains disrupted by the pandemic have found new footing. Companies have reworked budgets and strategies to exist in a more digital-first world. And CFOs have played a key role in guiding these changes.

In this new and unpredictable business world, companies have to continue to evolve in order to seize new opportunities and meet challenges. Key to that ability will be CFOs and finance teams that can deliver analytics and actionable insights to shape and support strategy and decision making.

Already, the COVID-19 pandemic highlighted the CFO role at the heart of companies as they rushed to ensure liquidity given rapid market changes and adapt to almost daily changes as required. Almost 60 percent of finance executives and CEOs say the pandemic has changed the CFO role, and 72 percent say the role was increasing or significantly increasing. This finding comes from a June survey of more than 1,100 global executives that accompanies The CFO of the Future, a report from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

Once considered a numbers-only role, finance is now balancing traditional responsibilities with growing demand for data-driven analysis and insights, strategy, risk management and other key business functions. As the roles of CFOs and other finance leaders are being redefined, so, too, will be skill sets that CEOs seek in finance leaders.

The direction of this changing skills trend is clear from data in a CFO study from organizational consulting firm Korn Ferry. It finds that, at the 1,000 largest U.S. public companies, the portion of CFOs who are certified public accountants (CPAs) fell to about 36 percent last year, down from nearly 50 percent in 2014. The same study also finds that almost half (45 percent) of the CFOs surveyed say the two capabilities most critical to the future of the finance function are operational information (such as reporting and analytics) and strategy enablement — both beating out more specialized finance skills.

Against that backdrop, here are five skills — some emerging, others more traditional — that finance needs in order to become the strategic guide that the CEO and entire C-suite requires:

1. Diversification

Access to data and key insights are now fundamental to business success and helping companies identify new market opportunities, improve customer experiences, drive business planning, and support change and innovation. As a result, CEOs will turn to finance leaders who not only have finance experience, but also wider operational and strategic backgrounds with a broader mix of business experience.

2. Data science familiarity

CFOs will need to understand how to harness data — beyond the numbers — to explain why strategies are the right ones, and to explain the reasons and context behind those decisions. Ilya Strebulaev, Professor of finance at Stanford University Graduate School of Business (Stanford GSB), told Finance Director Europe:

“We now live in a sea of data and have the technology to evaluate that data and make decisions about consumers, competitors, markets, and much more. CFOs must understand how to use all of this data — not just financial data — to understand the business and drive decisions. The companies that don't won't survive.”

3. Technology understanding

Technology will play an important role in the ability to make data timely, accessible, and relevant. New secure, cloud-based financial management systems, in-memory databases, visualization, and mobility are enabling finance leaders to move beyond just analyzing historical financial data to accessing real-time insights about business performance. Even better, it's making it easier to deliver these insights to other business leaders, further strengthening those partnerships.

Looking ahead, CFOs will increasingly use advanced analytics to run predictive models and develop better forecasts. Understanding technology and systems — and whether they are capable of enabling greater efficiencies, agility, and insights — will be critical.

4. Better collaboration with CIOs

The importance of CFO partnerships with the CIO is clear from ACCA's and PwC's 2020 report Finance Insights — Reimagined that calls out the importance of collaboration between finance leaders and those with the remit for information management and the technology that underpins it. The report states:

“Clearly, the CFO has a significant role to play in the management of data across the entity. The relationship between the CFO and those responsible for data and information technology is key. This is certainly an area that is evolving but one that CFOs of the future ignore at their peril.”

Stanford University's Strebulaev emphasizes the importance of the CFO-CIO partnership in creating a more data-driven organization, but says it will require learning how to better understand each other. Working more closely together, they can also evaluate what technologies and financial systems are required to support CFOs and their teams' expanded responsibilities. He explains:

“CFOs need to partner closely with CIOs on this data-driven revolution and help them understand what kind of data they need. The challenge in the past has been that they often speak different languages, so improving that communication channel will be important.”

In a survey of more than 670 global finance leaders, 68 percent say that effective collaboration between CIOs and CFOs is limited by the fact that IT and finance don't speak the same language — meaning terminology and jargon specific to a particular functional domain — while 66 percent say that IT executives are reluctant to collaborate with their finance peers. This data is from Workday's global Finance Redefined: Workday Global Finance Leader Survey, conducted by Longitude.

5. Ethics and trust

The ability to apply an ethical lens is a strong attribute of the CFO, and the finance community, indicates The CFO of the Future. In the report, CFO Gwen van Berne, of RIPE NCC, comments that:

“Ethical standards are important and will become more and more prominent for the CFO as it is an important element in the storytelling. You need to be able to defend how you are making money and what kind of key performance drivers you are using to drive your business.”

This thought is backed up by Gina Mastantuono, CFO, ServiceNow, who wrote:

“Financial and business expertise are table stakes. It's interpersonal skills, such as empathy, curiosity, courage, and creativity combined with business acumen, that takes a finance organization from an essential function to a strategic business partner.”

Given the rapid pace of change, a failure to develop appropriate skills poses a serious threat to finance teams. In PwC's Finance Insights — Reimagined study, more than half (55 percent) of survey respondents said their role could be obsolete within five years without appropriate skills development. Fortunately, reskilling and addressing such gaps are becoming a priority for the function. PwC's research found that 17 percent said it's an issue they're actively working on now, with a further 15 percent planning to do so.

The past year has been socially, politically, and economically transformational. Businesses have never before faced complete shutdowns that forced them to change where and how they operate.

Yet, every challenge brings with it opportunity. It could be argued that there has never been a more opportune time for the office of finance to have an impact, with CEOs increasingly looking to the finance function to help shape business direction and strategy.

If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced part-time CFO to help your company improve operational processes, cash flow, as well as profit margins, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.

CFO Growth Advisors (CGA) specializes in unique and highly effective growth strategies that are tailored to help companies in the San Francisco Bay Area grow more quickly and efficiently while improving sales & profit growth. Contact us to learn more.

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