Managing Job Creep in the CFO Role

If you are a CFO, it’s not an illusion.? You are doing more.? Your job is expanding.

The result of doing good work is more responsibility with all the benefits and trials that go with it.?

In the past 12 months Deloitte, McKinsey, EY, KPMG, PWC and CFO.University have all written about the growing role of the CFO.??

“The CFO role isn’t just changing, it’s expanding” - Deloitte?

This edition of the Future of Finance Leadership will cover 6 of those areas; ?some are long-term trends and others due to recent changes in? technology and shifts in?functional capabilities.?? We have included options for you to grow your capabilities in each area.?

“CFO may stand for chief financial officer—but long gone are the days when the CFO’s purview was just finance.” - McKinsey?

1. Strategy Assessor to Strategic Advisor

The CFO has always been a key player in corporate strategy.?? The traditional role assessed the financial impact the company’s strategy had on the financial statements and well-being of the company.? In short, interpreting the capital requirements, cash generation and earnings potential of the business plan.? This remains a critical role of the CFO, but rather than just assessing the strategy the CFO is now expected to drive new strategic options.??

This evolution can be attributed to various factors, including:

• Increased use of data for decision making with the rapid growth of data storage and analytics tools
• Compliance needs increase from both internal stakeholders and external sources
• Risk Management, a logical extension of governance and internal controls
• More complex solutions require cross functional collaboration whose common denominator is finance.

Creating a long-term plan happens through a process that involves gathering information, using that information to develop a plan and putting that plan into action. It can be broken down into four simple steps: Market Intelligence, Planning, Execution and Adjustments.

Learn more from this 3-part series on planning,

Preparing A Strategic Plan – Kicking Off Your Planning Process .

In addition, the course below on strategy builds on the other two core competencies in the Leadership Pillar, self-awareness and team building, with an emphasis on creating sustainable organization, Strategy & Culture: Introduction to Strategic Leadership .

2. Top Line Growth Is a Top Priority

In the past the CFO’s role could be defined as the Custodian of the Balance Sheet and the Cost Control Cop.?? Direct involvement in top line activities such as, new products, product pricing or supplier pricing was almost nonexistent.?? That is no longer the case.? Given the broad exposure CFOs have to the business and the recent adoption of the adage, “If you aren’t growing, you are dying”?CFOs have been thrust into above the gross margin activities.?

For example, CFOs and their teams are moving beyond the cost plus pricing model by using data and analytics to better understand the value each customer gains from its products. This allows the pricing team to differentiate pricing and service packages between customers, adding more value to the customer while growing the company's revenue and margins.?

The CFO Talk series on pricing includes two gems that will help you proactively improve pricing at your business: Pricing Excellence and the CFO with Lynn Guinn .

and The CFO Pricing Pyramid with Anne Warren

Another adage, this one from the commodity trading industry, “Bought right is half sold”, describes the relationship between sales and procurement.?? ?Often these departments are physically located in different parts of the office, figuratively one group might as well be on Venus and the other on Mars.? As companies recognize the importance of coordinating sales, procurement and their supply chain it’s frequently the Chief Financial Officer partnering with the Chief Operating Officer to make this happen.

The coordination of these 3 functions combines a number of growing disciplines; risk management, hedging strategies and margin management as described in this article, In a Volatile Economy, Purchasing Practices Need to Change .

3. AI as a strategic finance weapon

“This year, everyone coming in here will have prompt engineering training to get them ready for the AI of the future” - Mary Erdoes, JPMorgan Chase & Co.

AI, and in particular Generative AI, has occupied both the news and finance leaders over the past 18 months.? The promise of delivering better insights, improving cycle times, creating more fulfilling work and even lowering costs has added AI research and development to the other responsibilities CFOs are charged with.?

AI thought leader Tobias Zwingmann says business leaders don’t need to ‘bet the farm’ on AI but they must help their teams get started with how these new tools can augment and improve their work. ???He claims the best way to learn AI is to start using it. ?Finance chiefs should be making time available for their teams to use AI and put aside a budget for investment in the tools and training - note what JPMorgan Chase is doing.?? ?Tobias suggests beginning with simple but meaningful use cases to find your footing and some successes.??? As the AI acumen of the team grows more meaningful time and resources can be invested.?

In this 9 minute video from 2024 Data, Analytics and AI Predictions and Prescriptions for CFOs - Tobias ?describes some misconceptions and opportunities about AI CFOs can leverage in developing their AI strategy.?? ?

In their role as curator of critical information for their company, Chief Financial Officers must create processes and develop systems that filter out noise and focus only on the most important, actionable information. The plethora of data being created is growing at astronomical rates making this role much more crucial and much more difficult. ?In the four part series I put together with Peter Chisambara we share how CFOs can take a practical approach to integrating artificial intelligence (AI) into their operations, For Chief Financial Officers: A Practical Approach to Using Artificial Intelligence .

“The finance team is uniquely positioned to unlock generative AI’s enormous potential for the entire enterprise. … Many of Gen AI’s unique superpowers—combing through complex data, spotting inaccuracies, identifying opportunities, and generating high-quality business forecasts and reports—are precisely why finance should be the tip of the spear on Gen AI adoption and execution for the entire enterprise.” - KPMG

4. Risk Management, no longer a simple call to your insurance broker

For years the CFO’s key supplier triumvirate included their CPA/Chartered Accountant, Banker and Insurance Broker.? ?The insurance broker guided the CFO in insurance coverage, which covered what were thought to be the key risks in the business.?? The fallacy in this thinking is many of the key risks in a business are not insurable.?? ???

The pandemic, supply chain woes and a mini financial crisis over past few years have highlighted the need for better management of total risk, not just insurable risk.?? Growing risk in cyber-attacks, satisfying compliance requirements and even the adoption of AI are presenting ever more challenges.?? Many companies are looking for the CFO to fix them.?

Here are some resources you can tap into to develop in your role as Risk Manager:

The CFO’s Role in Managing Cybersecurity Threats and Risks, concludes with, "A successful cybersecurity solution has multiple layers of protection where the people, processes, and technology all complement one another to create an effective defense from cyber-attacks."

In this CFO Talk, John Thackeray highlights the The 7 Key Elements of Enterprise Risk Management keys elements of risk management CFOs should be familiar with.

Don’t be Vulnerable - Properly Assess the Risks in Your Business, describes the objectives of a risk assessment, the categories of risks to be managed and the types of controls that can be put in place to manage the risks.

5. Compliance, a value added activity

“CFOs have always had tax and compliance as key focus areas.?The evolution in recent years is to move beyond that compliance focus to balance risk management with business growth objectives.” - Amy Spurling, CEO and founder of Compt?

Simply following regulations is no longer enough in today’s fast-paced world.? The CFO must understand the connection between risk and reward—actively looking for ways to reduce risk while capitalizing on chances to grow and thrive.

In a swift and dynamic environment where business is often conducted at what seems like the speed of light, maintaining transparency is essential and having good business controls is fundamental.

Contrary to the notion that they are restrictive and binding, good business controls can bring numerous benefits to your company as described in this article,

Restrictive? Hardly. 6 Ways Good Business Controls Benefit Your Company

The implementation of sustainable business models presents several aspects to consider. Among them, new skills that must be acquired to meet the requirements, complying with reporting obligations, complications arising from using non-financial indicators and compliance with the different global and local regulations stand out. In his series, The CFO and Sustainable Finance , Gustavo Porporato Daher addresses the skills CFOs must develop to get the most out of these initiatives. Here is Part I in the series:

6. Talent Development

Talent has become the main differentiator in CFO success.? This is one of the reasons CFOs are taking on more of the training responsibility for their teams and partnering closely with CHROs and corporate learning and development teams to create and deliver the programs they need.

It’s hard to come up with any negatives to a good professional development program.? The benefits are easy: ??

• Attract the best candidates
• Increase employee retention rates
• Foster continuous learning
• Bridge future skill gaps
• Improve performance

Companies that invest in their employees' growth through training programs, mentorship, and advancement opportunities create a conducive environment for employee retention.

CFOs who emphasize the development of their team are winning ?the talent retention battle.?? Additionally, professional development focused on the team is a huge capability multiplier.

In Instilling A “Just Skill Me” Mindset at Your Company , Julie Winkle Giulioni writes, “People are keenly aware of the massive shifts in business and society. And after the past few years of instability and dramatic flux, we have a visceral understanding that success today, as well as sustainable success and relevance tomorrow, depend upon ongoing learning and skills development….The first step involves moving beyond our old, deeply entrenched “limited learning” mindsets toward a way of thinking that’s more expansive, possibility-filled and unbounded by traditional developmental structures.”

Talent’s growing importance to business success has been profound.? In an amazing 50 year shift the tangible vs intangible components of the S&P 500 index have flipped.? ?The market value ratio between tangible and intangible assets, which was nearly 5:1 in 1975, has more than reversed and now sits closer to 1:9, tangible : intangible.? A large share of intangible value can be attributed to human capital, or talent.?? The measure of human capital value is a whole new discipline that, no doubt, will rely heavily on the resources and imagination in the CFO suite.?? For a deeper dive on this topic, read The New Frontier – Talent as the Central Theme to Resource Management .

Dr. Solange Charas, a leader in the human capital measurement field describes the CFOs growing role in talent management in this CFO Talk

Congratulations on accomplishing more in your expanded role. ? Your career depends on it and your company depends on you.? Please use the resources included in this newsletter to better navigate your growing role. ?You will need new and more resources to remain successful.? Fight for them.??

CFO.University is here to help you.?

Resources used in preparing ?this newsletter:

• CFO.University .? “The Evolution of the Chief Financial Officer ”
• Deloitte. "CFO Signals: What North America's Top Finance Executives Are Thinking – and Doing "
• McKinsey & Company. "The new CFO mandate: Prioritize, transform, repeat " ?
• PMNTS.? “JPMorgan: All New Employees Will Receive AI Training ”
• Harvard Business Review. "The CFO’s Changing Role: Building the Future " ?
• PwC. " ESG Regulations And Your Company ." ?
• Ernst & Young. " Why Investing In The Current CFO — And Their Successor — Could Yield Big Returns "
• KPMG. "CFO Balancing Act " ?
• The CFO. “Risk Management: The Name of the Game for the Modern CFO ”
• ?Sage. “The Evolving CFO: Turn Compliance Into An Opportunity”
• Thunderbird. “10 Reasons why employees stay in a company ”
• MentorcliQ.? “ What Is Talent Development? 6 Key Benefits and 4 Activities ”

Post Script

Thank you for subscribing to the Future of Finance Leadership. The objective of the newsletter is to help you grow professionally by making you, your team & your business better. To the extent it is doing that, please share it liberally. To the extent it is not, please let me know. ????????

All the Best,

Steve Rosvold

Chief Learning Officer, CFO.University

CFO.University is a convenient, practical and performance enhancing development platform for CFO's, FDs, accounting, finance and treasury leaders.

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Julie Winkle Giulioni Dr. Solange Charas Peter Chisambara CPA, ACMA

John Thackeray Gustavo Porporato Daher (Ph.D.)