INTERNATIONAL. The chief financial officer (CFO) of the future will change according to an EY global survey of 769 finance leaders. Aspiring CFOs must develop leadership and team-building skills, including strong relationships with the chief executive officer (CEO) and board, if they are to transition to a CFO role in the next five years said more than half of respondents (57%).
The changes are in response to a role that is increasingly becoming more diverse in scope and focus as incumbents respond to a full range of pressures, including digital, data, heightened scrutiny and ongoing uncertainty and volatility, finds the third part of The DNA of the CFO series.
Hanne Jesca Bax, EY EMEIA Managing Partner Markets & Accounts, says: “The CFO role, like many other roles, is at a turning point. As finance organizations face a more connected, globalized and heavily scrutinized future, tomorrow’s finance leaders need to think strategically about the know-how and experiences they will need to succeed in the future. Only those who will be quick and versatile in adapting the profiles, experiences and skills to the strategy, culture and maturity of a particular business or industry will have access to finance leadership roles.”
Developing the next-generation of CFOs
Finance leaders will increasingly be characterized by more right-brain attributes — such as empathy, innovation and imagination — that will help them inspire and generate loyalty, according to the study. Communication styles will also need to change to become highly adaptive.
Digital channels and formats — from tweets to blogs and beyond — will be important elements of the CFO’s communication toolkit to reach internal and external stakeholders effectively. Measuring performance against purpose will also increasingly become part of the CFO role, as organizations look to demonstrate to internal and external stakeholders the impact of purpose-led organizations.
Defining a career path that encompasses a wide range of experiences and roles to build capability in key areas in addition to finance will be a key success for the future CFO, according to the study. CFOs interviewed identified key initiatives to enable the development of next-generation finance leaders.
Offering emerging leaders the opportunity to lead a major transformation project has been recognized as the top initiative for developing the next-generation of CFOs by almost half of respondents (42%). Mentoring and coaching from group CFO or other senior finance executives (38%) and making talent development a key performance indicator for CFOs (38%) were cited among the key initiatives by respondents.
When looking at the breadth of skills, abilities such as “strategy design and planning” and “commercial experience and understanding of the drivers of business value”, emerged among the top three elements in equipping future finance leaders to transition to the CFO role, being cited as “critical” by the 47% and the 43% of respondents interviewed respectively. These new skills exceeded other more traditional skills associated to finance leaders, such as a breadth of core finance skills, from control to tax and audit.
Fast-forwarding female finance leaders
As the DNA of the CFO changes, so too will its gender makeup. According to two-thirds (66%) of the finance leaders surveyed, organizations will need to recruit from diverse pools of talent to find the next-generation of finance leaders.
More than half of female respondents (57%) and almost half of male respondents (49%) believe that not enough female future finance leaders are emerging; according to 62% of the respondents “visibility for women leaders who can act as role models for more junior employees” is the top strategy to increase appointments of female finance executives to the CFO position.
Bax says: “Diversity is key to high-performance and when it comes to the finance function women are still highly outnumbered. However companies are increasingly becoming aware of the importance of having a more balanced finance leadership. Creating development paths will be crucial for making the finance senior leadership accessible for women. We are optimistic that awareness around the issue will encourage more future women CFOs.”
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Photo Caption: Hanne Jesca Bax, EY EMEIA Managing Partner Markets & Accounts
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About the survey
The DNA of the CFO series surveyed 769 finance leaders across the Americas, Europe, the Middle East and Asia-Pacific from December 2015 to February 2016, and conducted one-on-one interviews with 22 CFOs.