In the face of all of these developments, how aspirant CFOs should plan out their own careers to successfully lead the finance function of the future. Views and perspectives of current CFOs on the skills and capabilities that will be of most value for future finance chiefs, this is their advice:
1. Know Finance Fundamentals:
Future CFOs will still need a strong financial understanding and should target career experiences that provide them with that understanding across various points in the finance value chain. 95% of current CFOs agreed it was important that future CFOs have experience in the core finance areas of financial and management accounting. Almost half of today’s CFOs have had six or more finance roles during their career, 80% have had a finance role in more than one organisation and almost three-quarters have finance experience in more than one industry.
As the breadth of the role increases, it’s unrealistic to expect future CFOs to deep-dive into every aspect of the finance operation, but critically they must be able to ask the right questions across the organisation. That’s a skill that best comes from experience gained across multiple finance roles. Experience in specialized roles will continue to be beneficial, but experience in mainstream roles in finance remains essential. Plan A should be to build this broad foundation of finance experience through the career.
2. Career Plan for the Next Big thing in Finance: Insight and Analytics:
How organisations regress, correlate, and extrapolate data to drive better decision making is the next ‘big opportunity’ for tomorrow’s finance team as data grows and the multiplicity of information presents new challenges to business decision making. The business will be more demanding on the insights needed from the finance organisation because the requisite technology should be in place to provide this. Current CFOs rate financial insight and analysis as the second most important area in which future CFOs need to have gained career experience. Future CFOs should plan experience in the area and actively seek out analytics roles, so they understand its value and application.
3. Get Risk Experience Under the Belt:
Future CFOs will operate in a business environment that’s high risk. From traditional financial risks to emerging risks such as online reputational risk or cyber risk, the risks business face will grow, change, and in some cases become more difficult to calibrate and manage. The future finance organisation will have a significant role to play in balancing carefully the investments that need to be taken against potential risk impacts, and plan out the different scenarios. Experience in risk management was identified by current CFOs as the third most important area in which future CFOs need to gain experience and risk management challenges were identified as the second most important factor influencing the future role of the CFO. It should be said that this isn’t a play for being risk averse. Rather it’s about being prepared to take calculated decisions having a better understanding of the risk implications. Risk experience is a must-have on the CV of future CFOs.
4. See Strategy and Business Experience as the New Baseline:
The future CFO role in supporting strategic growth will be increasingly valued. Strategy formulation and execution was identified by current CFOs as the most important area in which to have experience for future CFOs. Over the next decade the business landscape will be reshaped by a combination of market volatility, globalization and transformational innovation. In an environment where ‘commercials’ will change quickly, deep business experience will be highly valuable. Whilst most of today’s CFOs (61%) do not have experience outside of the finance team, future CFOs should seek out greater mobility in and out of the finance organisation, building the commercial qualities needed, and of course the internal relationships. Establishing commercial credentials early on in the career journey will be advantageous, but routes to and from the finance organisation must be planned carefully.
5. Become a Deal Maker:
With the re-balancing of global economic wealth, more businesses will look south or east to drive growth longer term. Some growth will be organic, but much is likely to be through acquisition and merger and other forms of business tie-ups, tapping into already established businesses to ease market entry and leverage expertise and market knowledge. Merger and acquisition activity was identified as the fourth most important area of experience for future CFOs to obtain. It gives specific technical finance experience in structuring deals, but also can help develop wider skills in change and project management. More broadly, we can expect funding, capital market experience and investor relations to remain core finance capabilities in the future for CFOs of larger businesses too.
6. Get Closer to Stakeholders, Become Customer-Focused:
The range of stakeholders with whom future CFOs will have to engage will be significant. The future finance leader will need to ‘talk the same language’ across a wide range of traditional finance and non-traditional finance relationships. CFO aspirants need to plan for roles that increase their breadth of stakeholder engagement and cultivate strong relationship management skills. But the emerging powerhouse stakeholder that future CFOs need to be mindful of in an age of brand disloyalty is customers of the business. The future finance organisation will need to be attuned to the needs of different consumers and develop a culture which is customer-centric. This will be an important milestone on the transition from back to front office for the finance organisation. The future CFO needs to be customer savvy and taking roles which provide greater customer understanding will be key.
7. Focus on the Management Skills that Matter:
While next generation CFOs will need to call into play a wide range of skills to perform the role successfully, there are a number of standout management capabilities that will be needed. The top four skills identified in our survey were leadership skills, communication skills, strategy skills and change management skills. Strong leadership skills will be essential because the success of the future finance organisation is very dependent on a strong united leadership vision and an engaged and skilled finance team, particularly as the finance organisation become more diverse.
8. Prepare for More Regulation and Broader Reporting:
It’s no surprise that future CFOs are likely to face more regulation. Regulation was identified as the third highest factor influencing the future CFO role. Future finance chiefs need to be confident operating in a regulated environment and should be adept at putting in finance structures and processes that manage legislative and increasing tax requirements effectively.
Alongside more regulation, we can expect ongoing changes in reporting requirements – growing interest in the concept of integrated reporting, more involvement of the finance organisation in reporting on different corporate performance measures, increasing use of financial and non-financial data, recalibrating investment assessments to account for environmental or social impacts and so on.
9. Get Connected
Technology transformation in the finance team hasn’t quite delivered on its promise to date. But there are developments on the horizon that may well shape the role of the future organisation and role of the CFO. The growing interest in the coming together of social, mobile and cloud technologies may revolutionise day-to-day business practices. Closer to home, there are other developments; possible use of robotic software in parts of the finance team to increase automation and better workflow, plug and play technology, and access to real-time information that provides finance chiefs with the ability to cut data many ways and which offer an immediate, integrated view of business performance.
For many future finance chiefs, real-time business information in the palms of their hands on mobile devices will be a reality. Technology and automation is identified as the fourth highest factor influencing the role of future CFOs. Tomorrow’s CFOs need to be technologically adept and understand the significant role technology can play in driving better finance delivery. They should also target roles which develop and utilise their technological understanding.
10. Expand your ‘footprint’
The footprint and construct of many future finance teams will continue to change. The future CFO will need to be able to manage carefully the different demands between mature and emerging markets and align their finance strategies accordingly. They will need to be adept at working in the global business environment, leading finance teams which are diverse and virtual across mature and emerging markets. From managing new reporting requirements to driving financial insight into new markets and new consumer sectors, or raising capital, the finance organisation of the future must be entirely aligned to the business’s needs.
Future CFOs that can bring cross- cultural, cross-market business and finance experience to the table will be highly valued. Time served in shared service operations may also be of benefit, both in terms of gaining core finance experience, but also understanding the centre – retained relationship dynamics.