What To Expect From The CFO?

Chief Financial Officer (CFO) is one of the instrumental roles within the executive team of an organization. This is an endeavor to highlight the key aspect of this role so, and an agreement could be set between expectations and deliverables. Excellence and satisfaction is the underlying objective. Successes of the business are the success of the top team who bring the whole organization together to the market place, and likewise, most of the failures are predominantly the failure of the executive team. Without bringing in the blame game, it’s mostly a team thing. For a top team to be successful, it requires clarity of the vision and a roadmap to get there. Understanding performance and achievements through the journey become a compass, and business insights become the calibrator there; the role of a CFO becomes vital. Their jobs are not to give veto or endorse any decision already taken by a team or an individual; their role now needs to be a more integral part of the decision making process. Less with past more with future, less in silo more within a team and in between managing the present if not day to day.

In short role of the CFO is to manage business risk and surprises in the process of creating, communicating, and delivering shareholders value. It’s no more a Flag raising responsibility rather becoming an enabler of the organization moving towards the journey of excellence.

This article has three segments, foundation, greatness guide, and conclusion.

Foundation

CFO leads the finance and accounting function through ensuring compliance, control, and becoming an advisor to the business. To manage the core CFO does the following things, which are the foundation of the finance function.

1. Finance: Managing finance is the core job of a CFO; finance means money, and money attracts a lot of focus and attention because every function in the organization fights for more resources, and one part of the value creation comes from optimizing the utilization of resources. That’s why CFO’s key role in the business is to minimize risks around finance and allocate resources where it’s necessary and give better returns. Lack of finance may hinder growth, and easy access to finance may destroy the business model and perspective. The difference between the money in the business and money in the bank must be understood.

2. Catalyst for productivity, profitability, growth, and sustainability: CFOs are expected to prepare, translate and interpret the KPI, Income Statement, Cash Flow, Balance Sheet, Balance Scorecards. CFO’s roles become more of a chief performance officer, and they ensure capital and tax efficiency as their own key performance criteria.

3. Decision support: CFOs help the organization to set decision criteria in different functions of the business from different perspectives. They become more like a translator and connect activities through doing business analysis, scenario evaluations to ultimate business value creation. Speed and accuracy become critical here; an on-time decision-making capability is one of the superior competitive advantages. Sometimes it beats innovation if not implemented faster and at the right time. Many organizations complain about slow decision making; it’s because lack of clarity in decision-making criteria. CFO should educate the organization as a whole on the decision-making process and basis for it.

4. Protector of trust capital: They would implement a controlled environment where authorities are delegated with the freedom to the competent people within a framework to ensure the right decisions are taken by the right people while risks are mitigated. Also, CFOs need to highlight the value of investor, regulator, and customer trust towards the organization and the value of these components in creating the long-term value of the organizations or in business valuation. Through compliance, it must be established, and it saves a great deal of time, and it’s like a dividend; on the other hand, lack of trust is the highest rated tax that no one notice, lack of trust makes organizations dysfunctional. CFO must establish a health check mechanism through its audit and compliance function within the transactional and decision-making processes.

5. Harness the value of intangibles: CFOs need to translate the value of process, brands, motivated workforce for a sustainable organization. They should be advocates for long-term investments in people process and capital assets.

6. Standard-bearers of business strategy: CFO’s should be the standard-bearers of business strategy, the game plan to win in the completive space, or making the competition irrelevant. The highest value could be delivered if the vision is being realized, calibrated, and celebrated.

7. Architect of systems and processes: Having the bird’s eye view of the business CFOs play a role for process transformations, organization change, and automation and management systems. A link between vision strategy and operational plan must be established, and CFO can drive the initiatives.

Greatness Guide

Not all CFO’s are equal, there are good CFOs, and there are extraordinary and even great CFOs, great CFOs mold themselves according to the business need and they set a vision for their function and also for themselves. Great CFOs transform their roles into a mission. With great detail in the design, they move ahead in the era of volatility, uncertainty, complexity, and ambiguity.

Management Guru Jim Collins said, “Good is the enemy of great” and it is no exception for any company or function or even a role. Great companies endured the recessions and disruptions, and great professionals and executives experienced the same in their life. Greatness endures and goodness perishes as the saying goes “when the going gets tough, the tough gets going”.

Greatness always doesn’t require a gigantic task; it comes from a few disciplines practiced over time.

  1. Great CFO is cash flow focused, which captures the essence of Income Statement and Balance Sheet daily, weekly, monthly.

  2. A great CFO doesn’t break the law; he or she uses the law as a competitive advantage. Great CFOs focus on creating level playing fields and take it to the next level.

  3. A great CFO becomes a translator of difficulty and complexity into simple processes or maps. They help organizations to work on systems. Simplicity is their way of doing things.

  4. A great CFO doesn’t only control but becomes a business advocate, they make it easy for others, and they create a passage for others so they can work more on their key areas, not on papers.

  5. A great CFO understands not only the time value of money but also the value of the right timing. They are willing to go the extra mile if the business needs that. They are customer-focused.

  6. A great CFO is not only concerned about the cost of the product but also the cost of not taking the decision in the right time.

  7. A great CFO is more of solution-oriented; he or she looks for a solution when notice problems.

  8. A great CFO is value-driven, strategy-focused, and leader first when managing big challenges and priorities.

  9. They harness a partnering mindset instead of a policing mindset.

  10. Great CFO’s keep the basics right even when in the face of overwhelming distractions, mostly in the time of growth.

  11. Great CFOs are designers of value. They can crack the code of success and engineer that into the business they are in.

  12. A great CFO doesn’t compromise in hiring the right talent in the team; they keep a healthy pipeline.

  13. A great CFO turns every cubicle into a cockpit, he or she believes in “if you expect inspect”.

  14. Great CFO’s know in an information age you don’t win by a magic formula rather by a set of core competencies that is difficult to build overnight with money only.

  15. Great CFO’s know there is no sacred secret in business; rather, it’s an era of open excellence in the application.

  16. Great CFOs are not only Chief Financial officer but also Chief Focus officer, they bring back clarity and focus in the organization whenever it deviates.

  17. Great CFOs are highly networked individual and they continuously learn and update with new trends

  18. Great CFOs move outside their comfort zone to integrate other business areas; they continuously learn and manage their own growth.

  19. Great CFOs become the advisors the Board of directors, and sometimes a mentor to his or her peers.

  20. Great CFOs learn to engage the organization in times of need, to drive a sense of urgency with a higher purpose.

  21. Great CFOs take care of the pain points of the CEO and act as his or her deputy without a title.

Conclusion 

Clarity and granularity of a role are fundamental to high performance, we may start early half prepared, but if it stops there, it becomes dangerous. The reality is that many of the professionals are living dangerously not only in finance but in business. This is not an exhaustive list of all aspects; rather, it is a wakeup call. I wish a richer fulfilling professional life by becoming a true business partner in the organization.

As a business partner, the role is to create a balance within the winning team. With the right leadership capabilities, CFO’s can help the CEO to bring the team together with resource mobilization, clarity, and accountability or attention to results. No business can succeed without a great team, and no team can become great without accountability, and without accountants, there is no accountability. CFO is the driver of accounting and finance functions. The role is evolving with the digitization and evolving as a strategic business partner. That’s the one thing you should expect from the Chief Financial officer.

 About The Author

Munshi Abdul Alim

M.Com, MBA, FCMA

Independent Business Consultant

Contributor, The InCAP

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