Date : 14-03-2015 Platform/Online Media:: Your Story Source
CFOs should think beyond numbers, and be strategic leaders
A CFO in this age is required to wear multiple hats. One of the must-have skills set for a CFO is communicating with colleagues and stakeholders who are not well versed with the finance ‘lingo’. This may look tricky but isn’t really. A CFO with a strategic bent of mind very well knows to navigate his way through.
Broadened role of a CFO requires him to think beyond just pure numbers and engage with various stakeholders. Leading companies expect CFOs to compliment their sound domain knowledge with exceptional communication as well. Belting out numbers to colleagues who are not number friendly is a case in point. These are better delivered in the form of a story. He should be able to explain the reasons, factors and rationale behind those numbers followed by the impact it will have on the business.
We are in the age where CFOs as accountants are making way for CFOs as business partners. The real challenge for Finance Leaders today is not improving their number crunching and financial analysis expertise but acquiring the professional and personal skills to understand the business drivers.
Almost all business situations require an active involvement from a CFO. To name a few, pricing strategy, market assessments, leverage, staffing mix, margin improvement, cost management efforts among others have a major financial aspect to them where finance can add value.
It indeed is a challenge to divide time between CXOs and other departments for complex targets and responsibilities. But, in the end it all boils down to a CFO’s ability to collaborate, reason and influence the leadership team. It is important for CFOs to free up their time for more strategic activities by harmonizing, simplifying and bundling all repetitive tasks.
In most organizations, personnel cost or people related cost is the largest portion of the operating expenses (OPEX). For instance, HR department is responsible for recruitment and talent pooling. Finance department can help the HR with required data and analysis. Both teams can strike a healthy harmony and together deliver the desired result. While from a financial perspective, CFOs would want to ensure that recourses are optimally allocated, HR ensures that right people are at right jobs. Bringing transparency on resourse allocation, cost data and achievement KPIs would go a long way in bringing credibility to performance linked pays. Optimizing personnel costs and resources requires proper alignment of responsibility across the organization. For any profitable business growth, both human capital and financial implications need to synchronize.
Business expansion is another function where a CFO’s contribution is crucial. One of the areas for support is in the approach to acquisitions. When acquiring new businesses, CFO’s can be part of the ‘SWOT’ team developing strategy, assessing targets and developing the business case. CFO’s can also actively support in due diligence, change management and business integration.
Speed is the essence in today’s business environment. Businesses are expected to react faster, be nimble and be less bureaucratic. CFO’s become agents of change, creating smarter work patterns throughout their organization that drive efficiencies. CFOs can build an empowered organisation while ensuring that the necessary controls are not compromised. This would help companies to be faster and be less administrative, bringing about more proactive culture and ability to think and act quickly to market needs.
CFOs are the guardians of good business practices and controls. What is important is to achieve a good balance between independence and collaboration. This is where some exposure or experience in business divisions would help CFOs to be a better listener and not perceived as saying ‘No’ most of the times.