CFOs shed their old image*

Chief financial officers have moved far beyond their former role as super-accountants to become valued strategic partners

*This is an expanded version of a summary that first appeared in the May 2007 issue of CAmagazine.

The profile of the CFO as a narrow-thinking beancounter is officially extinct, according to a recent survey of Fortune 1000 CEOs. It has been replaced by a new species of visionary strategist.

The survey, conducted by the Financial Executives Institute and executive search firm Heidrick & Struggles, drew responses from 152 CEOs in a variety of industries. (See box.) It showed that nearly all of the respondents view the best CFO as a strategic partner and an analytical thinker who is immersed in areas ranging from business development to investor relations, management information systems, mergers and acquisitions and external communications.

“The ideal CFO is more of a business partner to the CEO than accountant," says FEI president-elect Philip B. Livingston. "Today, CFOs need to know, for example, how to motivate people, how to maximize the return on information technology and assess the strategic value of M&As, in addition to possessing the traditional financial analysis and technical accounting knowledge."

CFOs as strategic business partners
FEI and Heidrick & Struggles were not surprised to hear so many of the respondents think of their CFO as a strategic business partner. But they were pleasantly surprised to learn that 91% of the responding CEOs look to their CFO for strategic input. “Across all industries and in a variety of company sizes, the CFO is now valued as a strategic thinker and integral part of the senior management team,” says Rucker McCarty, partner-in-charge of the CFO practice at Heidrick & Struggles. “In addition, ‘ideal’ CFOs provide a necessary financial perspective on the organization, while keeping their sights on the company’s business goals. As the CFO’s role continues to expand, we look forward to seeing more CEOs valuing the CFO with strategic ability who can partner with the management team.”

CFO’s roles and abilities
Today’s CFO is helping to shape the future of the business and contributing to the organizational mission in a variety of ways, McCarty says. “The CFO’s quantitative skills are just one area of a diverse and increasingly important skill set. Today, CFOs are resolving difficult business decisions unrelated to finance, helping to manage the future of the company and developing key strategies for the business. Yet the CFO perspective has not necessarily become that of the CEO – the CFOs ability to appropriately challenge the CEO helps provide a diversity of opinions on the senior management team.”

While they are excelling in their current positions, 72% of CFOs are currently grooming a successor, says McCarty. “In other words, a majority see a promotion in their future and are establishing a succession plan to ensure a smooth transition. In addition to all of their other contributions, almost two-thirds of CFOs are handling corporate information technology.”

McCarty also notes that today’s CFOs are able to take on a broader range of responsibilities because almost three-quarters have experience in non-financial areas of business. Thirty-six percent (36%) are being groomed for general management positions. In fact, one third of all responding CEOs said that if they were to leave the CEO position tomorrow, their CFO would be considered as a candidate to replace them. “And why not?” says McCarty. “The CFO essentially acts as the CEO’s partner, and, in many cases, is the most logical officer to succeed the CEO.”

When CEOs and boards look for CFO candidates, they look for a combination of skills that will ensure the CFO can make the maximum contribution, says McCarty. “First and foremost, they want analytical thinking ability – not surprising, since the CFO will be shaping the future of the company by developing long-term planning, resolving non-financial business decisions, and challenging the CEO in appropriate ways.” The survey also shows strategic planning and leadership ability are strongly desired qualities. Other valued traits include objectivity, creativity, communication skills, business partnership and people development skills.

Great opportunities
The survey makes it clear that today’s CFOs have more opportunities to build skills and make a contribution to the organization. They also have greater opportunities to move into general management and into the CEO’s position. As the demands upon the CFO position become greater, the recruiting and promoting emphasis is on ‘high performers’ or ‘best athletes’, McCarty says. “Your skills and abilities will be far more important the titles of positions you’ve held or the industries in which you’ve worked. You will be valued for a broad range of skills and encouraged to develop your strategic planning, management and communication expertise. You will be called upon to play a greater role than ever before. The decision-makers will recognize you as the embodiment of the new CFO – multi-functional, equally talented in financial and non-financial areas, and prepared to succeed in whatever challenge you face. But you must be prepared to face the challenges unique to the CFO. The old skill set and formerly marketable qualities are now as inadequate as the adding machine.”

  Today’s CFO: Facts and figures