Financial Leadership: What It Takes to Be a Modern Day CFO

It is the job of this C-level executive to safeguard the company’s finances and make strategic choices that increase revenue and set the trajectory of the business towards success, creating value for its stakeholders. Making strategic decisions to achieve the company’s objectives, the CFO plays a critical role in identifying and evaluating the drivers of organizational change and formulating plans to optimize the company’s financial performance.

In addition, the modern day CFO is often more front-line facing than other executives, interacting with investors, stakeholders, and regulatory bodies. They act as a key adviser to the CEO, providing financial insights that can inform the company’s overall strategy and decision-making.

Yet, technical competence isn’t all that’s needed to meet the requirements of this position. The CFO must also possess strong leadership skills, strategic thinking abilities, and excellent communication skills to effectively pass on complex financial information to various stakeholders. Moreover, the CFO must be able to navigate the complexities of the business landscape and stay abreast of emerging trends, threats, and opportunities in the marketplace.

Shaping oneself as a competent CFO requires a wide range of skills beyond merely a firm grasp of finances. It goes without saying that a financial executive of this primacy holds solid ground in accounting for a few financial markets, but there are a few other skills that they must possess to succeed in their profession.

A Closer Look at CFO’s Role

The Chief Financial Officer (CFO) role is crucial to any organization’s success. The CFO oversees all of the company’s financial aspects, including risk management, financial planning, and driving strategic changes.

The CFO is the highest-ranking financial officer in an organization, responsible for managing financial risks and ensuring the company’s financial stability. They work closely with the CEO and the board of directors to develop and execute financial strategies in line with the company’s strategic goals.

Moreover, their extensive responsibilities include financial planning, budgeting, financial reporting, cash management, risk management, and investor relations.

With the current wave of disruption and technological advancements, CFOs are increasingly taking on new responsibilities such as cybersecurity, data analytics, and digital transformation. As such, CFOs must stay abreast of emerging trends and developments to steer their organizations towards success in the ever-changing business landscape.

So, What Traits Do Modern Day CFOs Need to Have?

In order to be successful in their positions, CFOs need more than just technical knowledge. A CFO should be driven by a deep interest in propelling innovation, identifying finance trends, encouraging open lines of communication, a commitment to lead with integrity, and a desire to work closely with colleagues throughout the corporation.

Success naturally ensues as a result of these factors:

Strategic Consideration

Having the capacity to think strategically is crucial for the position of the CFO. Financial executives that excel in their roles are those who can create sustainable long-term plans for the company’s finances aligned with its mission and objectives.

Leadership

The ability to lead is most essential for the C-level executive. CFOs need to inspire and motivate their employees, distribute authority equitably, and cultivate a culture of accountability throughout the organization. This requires working seamlessly across departments and driving the talent and culture agenda in finance, acting as a motivational change agent for all employees. Ultimately, the CFO must create an environment where each employee takes ownership of their actions, leading to greater success for the company.

Learning and Unlearning

In the dynamic world of finance and accounting, constant changes in financial laws, regulations, and policies necessitate adaptability. To stay ahead of the curve, CFOs must be willing to learn updated approaches and unlearn outdated ones. They can remain adaptable and thrive in the ever-evolving industry by continuously improving and innovating through learning and unlearning.

Ethics and Integrity

A CFO must also comply with legal and regulatory requirements and maintain the highest ethical standards. Moreover, CFOs can build trust and credibility with stakeholders by operating with ethics and integrity without compromising on the company’s best interest, which is essential for long-term success.

Communication Skills

For financial leaders, effective communication is another must-have ability. CFOs must be able to convey complex financial ideas in a simple and succinct way both to employees and stakeholders.

Disrupting finance leadership…

Apart from the traits above, there are other disruptive factors that financial leaders need to keep in mind. These factors often pose a significant challenge to finance leaders and require them to be constantly vigilant and adaptable to change.

We must stress the importance of addressing these factors since these define a successful C-level executive in the finance sector. And in the end, the more you acquaint yourself with them, the more you add to your Financial DNA, thriving in the face of disruption.

Factors Disrupting Finance Leadership:

Data and Analytics

All businesses, no matter how big or specialized, can vastly benefit from data and analytics. And it’s just as crucial as the way you do business, which you may not even realize is a crucial factor that can lead businesses to new heights.

Data and analytics are transforming the way CFOs approach business problems, enabling them to discover new opportunities and challenge organizational beliefs. This shift is causing finance leaders to rethink the role of the finance function beyond traditional finance-related data analytics.

CFOs can acquire a competitive edge in the long run by analyzing the possible impact of disruption on the company and determining what part they and the finance department will play in responding to it. This may entail guiding the organization’s analytics efforts or offering other essential contributions.

Digitalization

The transition to digital forms continues. Businesses that haven’t adopted this technology yet may find themselves left behind in the future. The digital revolution has altered the landscape for C-suite executives in the financial sector. It opens up new avenues for income expansion and creative problem-solving, but it also exposes businesses to more threats and challenges – it makes the organization susceptible to competition and incumbent digital leaders.

Financial executives who want to stay up with the trends must adopt a digital business strategy and increase their company’s agility.

Risk and Ambiguity

Market volatility, geopolitical crises, regulatory changes, cyberthreats, and other upheavals contribute to a constantly shifting risk environment that CFOs must navigate. CFOs already play a crucial role in risk management and expect to play an even more prominent role in the future. A recent poll found that all C-suite finance executives see risk management as a future must-have skill.

Therefore, CFOs need to invest in essential risk personnel and look beyond controllable risks to be successful risk managers. They should take the lead in managing strategic risk with other company executives.

Automation and RPA

As highlighted in my previous publications, particularly in the blog titled – Reasons Why Automation Is the Next Big Thing in Accounting, automation has emerged as a critical element that demands the attention of CFOs. Its significance remains unchallenged, and it is imperative for finance leaders to fully embrace its potential.

With the continuous exploration of new and innovative ways of automating finance processes, particularly those that are repetitive and time-consuming, to free up time for value-adding activities. CFOs must embrace Robotic Process Automation (RPA) to improve efficiency, reduce errors, and minimize operational costs.

DEI: Diversity, Equity, and Inclusion

A diverse workforce fosters more creativity and innovation because they bring a range of viewpoints, concepts, and life experiences to the table. An inclusive workplace also boosts worker retention, productivity, and engagement. Fostering diversity, adopting inclusive policies and procedures, and providing training and development opportunities that promote an inclusive environment can help CFOs take the lead in developing a culture of inclusion.

That’s why Finance executives (CFOs) must understand the value of fostering an inclusive atmosphere as firms place a growing amount of emphasis on diversity, equality, and inclusion (DEI). Offering flexible work schedules, sponsoring mentoring programs, and supporting employee resource groups are a few examples of how CFOs can do this.

In essence, finance executives who put DEI first can build a more efficient and long-lasting business better equipped to face future challenges.

Stakeholder Scrutiny and Regulation

Chief Financial Officers (CFOs) now have a broader role in stakeholder management, including balancing the expectations of investors, regulators, and other key stakeholders. This involves not only catering to these demands but also effectively communicating a cohesive story to external stakeholders, including activist investors. Building trust with stakeholders is essential to deliver better and more sustained outcomes, and CFOs play a crucial role in achieving this.

That being the case, CFOs must prioritize the most essential stakeholder connections, engage proactively, and deliver a consistent value proposition in order to successfully manage complicated interactions.

How are you embracing new technology and investing in risk management to drive innovation and growth for your company?