The expanding skill set of today’s CFO

January 21, 2020 | Aoife Flynn 5 Mins read

In the traditional business model, the CEO is expected to be a charismatic leader. The face of the business and the source of motivation and optimism for staff members. CFOs have traditionally held a supporting role. Naturally more reserved, conservative and risk-averse, they prioritize return on investment and saving money. In recent years, however, Chief Financial Officers have begun to occupy an expanding role. Many are taking on new responsibilities outside of the finance function. Whilst others are accepting growth opportunities and even moving into CEO roles.

 

Why are today’s CFOs becoming CEOs?

 

Today’s CFOs are being called upon to step into the CEO role as a result of the uncertain economic climate we find ourselves in. Of all the C-suite executives, CFOs are the most versed in risk management. A skill which has become essential in the weathering of financial storms. As financial uncertainty reigns, business leaders become more focused on bottom lines and margins. Modern CFOs are best equipped to respond to these pressures.

Many companies turn to the CFO during times of financial focus where the financial health of the business could be at risk. These include turnarounds, mergers, and acquisitions. According to McKinsey & Co, in the UK, over 70 percent of CFOs who became CEOs did so under those circumstances. For example, Vodafone’s CFO Nick Read became the group’s CEO to oversee the acquisition of Liberty Global cable assets and the merger with Idea Cellular in India.

Which leads us to another circumstance during which expanding the role of the CFO makes business sense. Which is when companies expand into global marketplaces. When a business spreads its roots across borders, the common language becomes numbers. And this is where the skill set of the CFO lies. If you’re wondering whether you’ve got what it takes to expand your CFO role to include some CEO duties, this is what a great CFO who is ready to step up looks like.

 

 

What does a great CFO look like? 

 

Identifies growth areas

 

One of the most important aspects of the role of the CFO is the ability to identify and go after growth areas. For this, you must be strategic, creative and good at problem-solving, with a heavy dose of risk aversion.

It’s important to be able to enthuse about these growth areas with shareholders to bring them on board before influencing business decisions in line with strategy. You will need attention to detail when it comes to resource allocation. For example, increasing the number of team members in a certain market to support projected growth in that region. You also need a keen eye for tools and new technologies that will help the business grow. In the case of global personnel expansion, this could be a global payroll technology that will manage your expanding payroll processes with minimal disruption.

 

Advanced investment mindset

 

Rather than maintaining a tight grip on cash flow no matter what, exceptional CFOs look past the immediate benefits of saving money to understand that the return on investment for a little expenditure can be a successful long-term growth strategy. The best CFOs identify and act on the need for increased spend on personnel, technology or training.

Of course, a masterful CFO has a firm handle on performance measures and controls to ensure that every business decision offers a return for the company’s bottom line. In the case of global headcount spend, global payroll technology empowers finance departments with consolidated reporting and analytics that are critical for informed decision making.

Fact focused

 

To that end, the finest CFOs are fact-focused. Decision-making is based on the careful and thorough analysis of facts provided by the financial reporting services on offer. CFOs should bring a data-driven approach to the executive team, leaving their emotions at the door. A global payroll technology can offer unmissable insights into global human resource costs, essential for successful strategic decision-making.

Marketing know-how

 

In this challenging economic climate, it is becoming more common for businesses to need even bigger investments to increase their sales year on year. Whether that’s an investment in stock or services, as the CFO, you must understand how the CMO and marketing team can help with leveraging this investment. You must then support them financially so that they can achieve this goal. Here, modern CFOs need a level of customer focus they may not have committed to before. As with all investments, marketing spend must be carefully monitored for its return. The results dictate the future strategy.

As you rise through the ranks of your modern finance team to become tomorrow’s business leader, you will begin acquiring these essential skills that facilitate the expanding role of the CFO. But what’s the difference between an outstanding CFO and a successful CEO?

How does a great CFO become a CEO? 

Expand beyond the CFO role

 

For a CFO to become a CEO, you must summon the ability to step outside of the confines of CFO role. It’s not enough to simply be a CFO in the CEO’s seat. You must not only manage risk but look for innovation. You must develop social leadership, an ability to commune with team members and board members. You must display optimism and courage, even in the face of diversity. And you must hone your eye for detail to focus not only on numbers but on customer experience. When Indra Nooyi, former CFO of PepsiCo became CEO, she visited grocery stores every week to check how products were looking on shelves and offer feedback to the design and marketing teams.

Adapt to modern business function

 

CFOs looking to become successful CEOs must understand and take part in the modern business model. That means adopting a more collaborative and less hierarchical approach to decision-making. You must seek and accept a more creative and innovative way of working.

This involves being open to non-data insights when setting business strategy and making business decisions. Former CFOs need to learn the importance of instinct and intuition, used in conjunction with facts and data. You must be open to change. Displaying adaptability is essential in riding the wave of running a modern business. In particular, learning-agility allows you to apply past learning to brand new experiences for superior problem-solving. Modern CFO turned CEOs must be future-thinking, always looking to take the next step to stay ahead. One example is in investing in global payroll software to bridge the gap between the Finance and HR functions.

The social side

 

For a CFO used to working only with the left side of their brain, one particularly tough transition when moving into a CEO role is learning to use the right side of their brain at work. This means mastering the ability to relate to people and form productive relationships. You must be able to disseminate changes throughout your organization, delegate appropriately and motivate your employees. Many CFOs find this is an area they need training in and turn to the CFO Leadership Council for training.

As a CFO looking to take a step into a CEO role, first, master the essentials of CFO excellence before diversifying your skillset. Many CFOs who have successfully made the transition gained experience in other silos during the earlier part of their careers, for example as COO or CIO. This is an invaluable opportunity to broaden your skills and gain a more holistic view of the running of a business.

For more information on reporting and analytics available on the Payslip Platform contact us today!

 

logmein logo

Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.

Colin Smith

Payroll Manager, LogMeIn

With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.

Ana Kelly

International Payroll Manager, Phorest