The role of the CFO at a multinational has changed significantly in the last 10 to 15 years- it has now become a varied and complex role and a CFO's responsibilities are no longer confined to financial management. The CFO role now sits with the broader business leadership team and this person has regular interaction with key leadership figures such as the CEO and the CIO. Together, this group of people are tasked with delivering the mandates from the board and leading the multinational in whatever direction the strategy dictates.
It is a demanding an evolving role that requires a range of skill sets as well as a good degree of flexibility. An important part of the job is asking relevant, often difficult questions about how things are currently done and whether or not the process in place will serve the long-term future needs of the business. In this article, we will look at what some of these questions might be and how important it is for a chief financial officer to ask the question while also being a part of any answer.
Is it time for a change?
While this is a broad question, many CFOs who have taken a long look at how a multinational is doing things may well feel it is proper to ask if the current processes are what is needed to bring the multinational to the next level. It may be time to shake things up with some major procedural changes or it could be a case of just tweaking the business model to align to something a little different- and evolution as opposed to a revolution.
This change could relate to a variety of different things: products in the market, delivery of service, technology stack deployed, cash flow, compliance and regulation structure, personnel or go to market approaches. Simply raising the question can often be enough to get a very constructive dialogue in place with key stakeholders- out of this several initiatives can arise which take the company in a new and better direction. Asking the question is where the process begins, it may not be the most comfortable thing to do but it may turn out to be the necessary thing to do. A CFO cannot shirk or avoid these questions if they want to put in place a legacy and have a memorable impact on an organization.
Does our model still work?
The CFO has a responsibility to take a step back and view things objectively- this view needs to take account of the market in its present state and how the multinational is performing against a range of competitors. The CFO can examine the business model in detail and enter into a conversation with key stakeholders in the finance department to fully understand if the current model is working successfully now and also if it is likely to deliver in the future.
While it may be impossible to predict the future, such is the level of change in the global business environment, there are many resources and analyst views out there that can be of assistance in future market predictions. A good CFO will take advantage of all available resources to create a broad and detailed discussion around company direction and whether or not the business model in place will remain fit for purpose and capable of delivering on company objectives.
Is our technology an asset or a liability?
No discussion on business advancement these days can take place without an in-depth debate on the current state of technology in use at the organization. Key questions a CFO and other stakeholders should be asking of the management team include:
- Does it remain fit for purpose?
- Is it innovative and adaptable?
- Is it cost effective in the long run?
- Is it secure and reliable?
- Does it meet data protection and information security requirements?
- Is it user friendly, do staff enjoy working with it?
- Does it integrate and ‘talk’ to other systems?
- How long before it is likely to be obsolete?
- Is it behind the curve or ahead of the curve?
- Can it take us where we want to go?
The answers to these tough questions will help a CFO place the current technology stack in either the asset category or the liability category. While technology has advanced at a huge rate in the last decade, it is never an easy decision to get it right and the news is filled with stories of companies taking a risky gamble on the latest technology only to find out, that it did not live up to the hype.
Are we ready for the future?
CFOs generally have a reputation for being realistic and pragmatic- asking relevant questions should be second nature to them. The questions are never designed to make anybody feel uncomfortable, but the questions will always have one eye on the future and whether or not the multinational is ready to meet the demands coming down the line.
A cautious approach can sometimes be perceived as negative or lacking in ambition - this is usually not the case as it is more about being prudent and waiting to see what is happening in the market before doing anything too drastic. This is particularly relevant right now, as the world looks to see how the global economy bounces back after the recession brought about by the COVID-19 pandemic. It is fine to be optimistic and bullish in public, but privately there has to be a lot of concern around how quickly things will return to normal and the CFO has a duty of care to make sure that the multinational is prepared for a future that may not be as perfect as everyone hopes it will be.
They will caution against over optimism and ask searching, difficult questions about preparations for the re- activation of go-to- market strategies and business policies in a much-changed business landscape. Tough and uncompromising questions need to be asked of employees, suppliers and customers in order to get to the bottom line and create an actionable plan that is right for everybody.
Are we working together?
A CFO has a right to question unity and organization within a multinational, particularly in challenging times like the ones we are facing now as we re-emerge into the business world from a global pandemic. There is a lot of uncertainty and concern right now and this can sometimes result in unproductive behaviors such as focusing on individual responsibilities and losing track of the bigger picture.
An observant CFO should always be asking if the right level of inter-departmental collaboration is being achieved- or if business units are working in silos and focusing on their own deliverables, instead of trying to achieve unity. This unity is crucial for the multinational as a whole to emerge unscathed from the current economic turmoil and the CFO will see it as a duty of responsibility to ensure that all business functions do not lose sight of the fact that they need to align strategies and policies for the greater good of the organization.
Any tendency towards working in silos or focusing exclusively on individual responsibilities needs to be highlighted and addressed. This can be done tactfully and skillfully, nevertheless it requires courage and conviction to have these important conversations. A CFO needs to look at the organization chart of each business function and investigate if they're doing anything that could be to the detriment of another department, or simply not taking account of the needs and responsibilities of others. Any lack of unity may not have obvious immediate consequences, but history shows that when business units are not operating on the same page, it tends to result in consequences further down the road.
CFOs must be leaders at all times, but right now they're under a bit more scrutiny, as the business landscape copes with a shock to the system that was totally unexpected. This also represents an opportunity for CFOs everywhere to ask key questions, be bold and create a spirit of togetherness in a multinational to get them through turbulent times. Putting the right questions to the right people and asking everybody to move together in the same direction will likely prove to be part of the solution.