“Today, finance professionals are increasingly expected to use financial insights to inform decision making, drive change and help businesses grow,” says Siobhan Ferreira, Associate Partner. “This shift has also given senior finance leaders like CFO greater diversity, influence and responsibility.”
If you are currently recruiting for CFO or looking to step up, it’s important to understand how finance leadership is evolving. Here Siobhan explains why this shift is happening; what to look for in a strategic CFO; and how to perform this role effectively.
What is a strategic CFO?
Unlike traditional CFO roles, the Strategic CFO role has evolved to be more forward-looking and advisory in nature. In a recent report, Deloitte1 described the Strategic CFO as advancing an organisation and improving its competitive position, by identifying what’s holding it back and using finance to move it forward.
To achieve this, CFOs must:
- Stay across all business strategy areas internally and market dynamics externally
- Be well-versed in organisational strategy and financial KPIs
- Take more of a leading role in the financing of operations
- Be actively involved in Board discussions, including dashboard analytics
- Bring a highly contextualised view of finance to inform decision making and risk.
While this shift has allowed CFOs to grow and take on a more impactful leadership role, first time CFO candidates must be able to align their experience with the growing expectations of the role.
“I’ve met plenty of senior finance professionals who are looking to step up into the CFO role, but with many job descriptions outlining the requirements of a Strategic CFO, they lack confidence in having the breadth of experience the need to be considered,” says Siobhan.
“But even without prior CFO experience, many of these candidates have had the opportunity to be strategic with their clients and/or internal stakeholders, and bring much broader experience to the role than they often realise,” Siobhan continues. “This highlights the importance of capturing those opportunities and that advice in their CV, and ensuring it's part of the value proposition they put to any organisation that they look to join."
What sets a Strategic CFO apart?
Extracting data-driven insights
Modern financial professionals have endless information at their fingertips – what sets the Strategic CFO apart is knowing how to extract insights and use this information to position the organisation for growth.
“Everyone has access to the same numbers, so the real skill lies in reading the story that emerges and knowing how to use it to add value,” says Siobhan. “As CFO, you must be able to take data from reports and dashboards; combine it with your understanding of the organisation and the market; and convincingly communicate relevant insights to your Board, shareholders and Executive team.”
Understanding the macro operating environment
In addition to having good strategic visibility across an organisation, as a CFO you need to develop a deep understanding of the strategic landscape outside of an organisation. This knowledge helps to articulate the threats and opportunities in the market, and how they align with strengths and weaknesses internally.
“A good strategic CFO can identify the factors that are likely to affect a business over the next 12 to 24 months,” says Siobhan. “They also have the curiosity to anticipate the impact these factors will have on the overall P&L and how and where to probe if something doesn’t feel right. Strategic CFOs go well beyond the financial lens but that ability to apply the financial ‘smell test’ cannot be underestimated.”
Serving as a trusted advisor
Many CEOs describe the CFO as their number two – and for good reason. “When the CFO has a solid knowledge of the numbers that encapsulate what’s happening both internally and externally, and an understanding of how that impacts the business, they become a valuable and trusted advisor to the CEO,” says Siobhan. “The CFO’s value increases if they can use that understanding to answer questions and address concerns from shareholders and other stakeholders, on behalf of the organisation.”
Building the right skills and experience
It takes a particular set of skills and experience to step up into the Strategic CFO and to perform this role effectively. If you are working towards your first appointment, it’s important to maintain your technical knowledge and proactively progress your leadership skills and capability. You must also develop a strategic mindset that allows you to look beyond the numbers and to think more broadly.
Seeking diverse professional experiences
“Taking on secondments or ‘stretch projects’ outside of finance can you help to develop your strategic thinking and get a feel for what other areas of the business are doing,” says Siobhan. “These assignments are important, because the more diverse your exposure, the broader the skills, experience and understanding you bring to senior leadership roles. These opportunities are also vital for building your network, and for being seen in a leadership capacity outside of finance.”
Tracking your achievements
In applying for a Strategic CFO role, it’s important for candidates to demonstrate broader strategic skills and thinking, and where they have added value in the past. “Being able to come into an interview with specific examples will set you apart,” says Siobhan. “Keeping a work diary can be a helpful way of collating the types of examples that you may later want to use.”
Continued, targeted development
Professional development doesn’t end with your appointment to CFO, and it needn’t take the form of an MBA. “Professional development in any leadership role is about looking for opportunities to learn and grow in areas that are strategically significant to your industry and to your organisation,” says Siobhan. “As CFO you may be interested in learning more about working with the public sector or investigating new standards like the mandatory sustainability reporting. What matters, is that you continue to be curious and grow the strategic value that you bring.”
To secure your next senior appointment or grow your talent pipeline for CFO, reach out to your local Gerard Daniels team.
SOURCES:
1 CFO Insights: Are you a strategic CFO? Seven essential questions
