Over the years, as an observer of organisational structures, I have been fascinated by how the increasing importance of an issue is a predictor of a new role in the C-suite. In recent years, Chief Information Officers, Chief Information Security Officers and Chief Risk Officers have emerged as important roles, even as we stare at the first traces of senior roles for privacy, sustainability and mentoring become evident! Some traditional roles have faded away, but some are eternal.
Along with a few others, the Chief Financial Officer – one of the first roles to inhabit the C-suite and corporate boards – has grown more prominent over the years. The fact that money was, is, and will remain critical to organisations is the biggest contributor to this changing profile and dominance of CFOs. But there are several other factors that have contributed to their rising prominence. For example, senior finance professionals have an end-to-end insight into the company; the volatility of global markets and currencies has forced them to address ambiguity and uncertainty; they have fiduciary responsibilities that make them take a keen interest in the overall business; and given that most business priorities have a financial implication, CFOs willy-nilly get wind of emerging situations before others. Over the years, they have taught themselves how to be the voice of sanity without unbridled optimism, and in the true sense of the word, partner the Chief Executive in the running of the organisation. From a time when they had to be convinced about the perils of being a perpetual naysayer, or a ‘control fiend and a mere bean-counter’, CFOs today view their role as starting beyond the mundane. Presentations by them often have a slide, which refers to each of these attributes in the past tense!
Undeniably, there is a larger expectation from the CFO community today and going forward. This is beyond the strictly corporate boundaries and roles and is based on two big shifts: one, that the role of private enterprise is poised to grow rapidly and there is an expectation that the private sector must contribute to India’s overall growth; two, that the years of wisdom in the CFO community must be harnessed to contribute in greater measure at the national scale – in terms of policies and non-partisan advice.
In the context of this dynamic environment, the role of CFO must continue to evolve. What is the current function of CFOs and how can they continue to grow their impact? Given the competition amongst roles to stay relevant in an organisation, CFOs like other functions have to constantly recalibrate their roles to reflect the needs of the environment and, of course, businesses. A few obvious new trends that are finding their way into the CFO’s responsibility sheet include:
The need to understand and acknowledge other corporate functions. In an increasingly complex and volatile world, the comfort of accuracy is fading. The only way for a CFO to forecast for the business is to get under its skin – with its peculiarities, nuances, et al. And this requires appreciation for other roles along with recognition and acknowledgement of their importance. From seasonal variations in the price of an input, to the right time for recruiting employees, there is a science to almost every corporate activity and the CFO is expected to be on top of it.
The role of technology and the advent of digital. The pace of change in technology makes it very tough to stay one step ahead. In order to take technology related decisions, CFOs must be familiar with the role that technology can play and also its appropriateness for the business. In a digital world, the notions of assets have changed and cyber security demands a whole new world of familiarity from the CFO. They have to begin by knowing what questions to ask and are struggling to meet expectations.
The importance of being external facing. As you get senior, many answers lie in ‘connecting the dots’ effectively. This requires broad-based familiarity with the outside world, most importantly, customers. From being insular, several CFOs have begun to take an interest in a more public role.
The ability to influence and lead. This attribute is critical to play the role of an effective partner to the CEO as well as a responsible member of the Board. Traditionally, CFOs chose to use their veto powers on resources to wield influence. However, the ‘naysayer’ power has no takers anymore. Successful finance leaders have begun to focus on ‘softer skills’ to live up to the emerging expectations from their role.
And of course, all of this is in addition to the increasing traditional responsibilities around compliance, governance and complicated transnational taxation. But there is a larger expectation from the CFO community, going forward. This is beyond the strictly corporate boundaries and roles, and is based on two big shifts: one, that the role of private enterprise is poised to grow rapidly and there is an expectation that the private sector must contribute to India’s overall growth; two, that the years of wisdom in the CFO community must be harnessed to contribute in greater measure at the national scale – in terms of policies and non-partisan advice.
CFO India documents the success of CFOs over time, acknowledges it, and sows the seeds for the next horizon of achievements. Given the richness of India’s corporate landscape, and the nimbleness of its finance community, it is no surprise that our CFOs rival the best in the world. Spreading their best practices is an early mandate that CFO India chose for itself.
From a time when they had to be convinced about the perils of being a perpetual naysayer, or a ‘control fiend and a mere bean-counter’, CFOs today view their role as starting beyond the mundane. Presentations by them often have a slide, which refers to each of these attributes in the past tense!- Anuradha Das Mathur, Editor, CFO India
Coming to CFO100, where traditional awards choose a handful of people – our view is that India is replete with fine examples, and several of these would get overlooked if the numbers were severely restricted – and therefore CFO100 – an award that recognises a 100 outstanding finance professionals from around the country. Over the years, CFO100 has created a cadre of professionals who stand out.
Topping the CFO100 awards is the ‘Hall of Fame’, the proverbial icing on the cake. It inducts senior CFOs into the Hall each year, based on nominations and approval from existing Hall of Famers. Interestingly, the criteria for selection are largely based on leadership qualities. How often do other CFOs mention a CFO as a source of inspiration, mentorship, and guidance? Followership is critical to leadership, and this is a good test.
To lead the charge in terms of public contributions, a new expectation from CFOs, CFO India and KPMG collaborated to set up the CFO Board – a select group of CFOs who are non-partisan and with enough years of experience behind them to contribute effectively on policies with impact at scale. In the last 15 months, the CFO Board has met with a significant number of policymakers to share thoughts as diverse as procurement policies at one end, and the active promotion of institutional arbitration at another. This is undoubtedly the shape of things to come.
Our intention is to set the tone for the next phase of growth for the CFO community. Of course, they have to keep abreast of issues to do with finance, predict and manage risk, and ensure compliance and superior governance. But they must also respond to the broad trends underway – continue to hone their leadership skills and increase their active engagement on policy matters. Beyond that, the Chief Guest at CFO100, Dr Bibek Debroy had a befitting suggestion – he urged CFOs to think hard about what kind of citizens they want to be.
I think ‘active engagement’ – within and outside the company, with customers, regulators, industry bodies, employees and colleagues, peers, academics and other thinkers, policy makers, and finally, society at large – is the way of the future for CFOs. And welcoming this path with open arms will be prudent and meaningful.