Whether organizations are in the midst of navigating economic hardship or releasing quarterly financial results, the actions and words of the Chief Financial Officer (CFO) are often front and center. But, as organizations tackle other enterprise challenges and initiatives, the CFO remains a pivotal figure not only in partnership with the CEO but also in collaboration with other leaders in the C-suite.
In this first of a four-part series covering the CFO role, discover the top ways today’s CFOs meet heightened expectations to act as strategic business partners to the CEO and C-suite.
The modern CFO
Where the CFO was once mainly responsible for reporting on the organization’s financial health, the role has evolved into that of a strategic leader touching every aspect of the business. In fact, the CFO role is so vital to organizational success that it has become a leading route to CEO. According to one estimate, 8.1 percent of 681 Fortune 500 and S&P 500 company CFOs were promoted to CEO in the first half of 2022 alone.
The modern CFO partners closely with other senior business leaders to guide company growth and make better-informed business decisions. As Ingrid Gentry, CFO of Bardstown Bourbon Company (BBCo), told ForceBrands in an exclusive interview, “Finance leaders are typically the only people who see the whole of the business, so it is not surprising that CFOs are asked to expand their scope beyond analysis and reporting, to strategy setting, operating decisions, enterprise risk management, and more.”
How the strategic CFO partners with the CEO and C-suite
According to Gartner research, more than 80 percent of CFOs have strong relationships with their CEOs. It’s likely that the strength of those relationships is built on a solid foundation of collaboration, trust, and open communication.
Here are four key ways the modern CFO acts as a strategic partner to the CEO and the C-suite:
Supporting strategy development and execution
As CEOs set business strategy, they rely on the CFO as a right-hand partner in forecasting the risks and returns of that strategy. Successful CFOs build finance functions capable of forward-thinking financial reporting that tells an accurate story of company performance, liquidity, and risks. With insights from this reporting, the CFO can work closely with the senior team and determine the feasibility of strategies for M&A activity, hiring, customer engagement, supply chain, and many other areas.
Leading digital transformation
As one of the leading challenges of modern business leadership, digital transformation is a priority for many organizations, regardless of industry. More often than not, CFOs are in a position to initiate, manage, and approve the adoption of new digital technologies and processes. A recent Accenture survey revealed that 72 percent of CPG CFOs said they have the final say in the technology direction of their organization.
Of course, CFOs aren’t alone in helping to usher in digital transformation. They must also partner closely with other members of the C-suite, for example, the Chief Technology Officer (CTO) and Chief Information Officer (CIO).
Driving higher ROI
CFOs are often highly analytical thinkers with an intimate understanding of their company’s financial health, which puts them in a unique position to see opportunities for ROI improvements that may not be so clear to others. To help the CEO and senior team take advantage of those opportunities, CFOs add value to the C-suite by challenging the status quo, pushing back on conventional thinking, and sponsoring operational change efforts that boost both efficiency and profitability.
Managing stakeholder communications
Today’s CEOs must answer to more than company investors, and CFOs provide data-driven advice to ease this responsibility. As one CEO wrote on CFO.com, “Working with so much uncertainty, the CEO prioritizes agile communication with all critical stakeholders. The CFO is a vital support for this.” CFOs hold the reins for financial and scenario planning, and therefore, can help CEOs manage a range of stakeholder relationships, including with board directors, customers, and regulators.
The unique and evolving CFO role
The CFO role isn’t the only one in the C-suite to undergo a significant transformation in recent years. But, it does hold a unique position in helping the senior team manage company performance and growth. Stay tuned for the next post in the series — the role of CFOs in assessing organizational risk.
Interested in exploring more about the CFO evolution and what skills and competencies are required of today’s financial leaders? Download our Force Multiplier Report on the rise of CFO and executive finance roles.