The Quick Read
- 61% of Chief Financial Officers (CFOs) expect increased involvement in business strategy beyond the finance function
- More than six in 10 also expect their role to involve greater collaboration with other functions
- All this is happening in a rapidly changing operating environment. As well as taking on greater political and economic reporting duties, CFOs are adapting to the digital world, with 71% anticipating change to their role as a result
Being a CFO has always come with many challenges, requiring a sound grasp of the technical aspects of accounting and compliance alongside the people and planning skills to run a department and communicate with senior executives at board level.
But it doesn’t stop there - the job is evolving at an unprecedented pace.
The American Express CFO Survey 2023 shows 71% undertake forecasting and planning, while 61% expect more involvement in strategy beyond finance in the future.
Our survey of financial leaders at large companies in France, Germany and the UK reveals that almost half of those polled were responsible for geopolitical and economic reporting, and more than four in 10 had duties for business continuity. It also found that more than six in 10 are responsible for scenario modelling to predict future business changes.
Inevitably, as the role expands, the need to work with other departments is increasing. Almost two-thirds of those polled anticipated greater collaboration with other functions in the future.
Another big change to the operating environment comes from technology. More than seven in 10 CFOs we spoke to expect digitalisation to change their role in the year ahead.
What’s the risk?
CFOs are having to grapple with very real risks in their role, not least economic challenges as 85% of finance leaders said their organisation would have to improve efforts to cut costs this year. However, in a rapidly changing environment, perhaps the biggest skills risk facing CFOs is one of stagnation. If they don’t move with the ever-evolving requirements of the job, they are in danger of becoming professionally extinct.
What’s the reward?
With their growing remit and responsibilities, CFOs now need to use their skills and platform to drive value. Cost-cutting can rarely be successful in isolation, and more than three-quarters of finance chiefs we polled were expecting to invest for growth. For those CFOs willing to adapt, the increasingly strategic and all-encompassing nature of the role provides an opportunity to place themselves at the heart of their companies like never before.
The Deep Dive
The Institute of Directors lists the responsibilities of a finance director as including duties as diverse as directing staff, controlling budgets and monitoring external contracts [1]. But anybody working in a finance role today knows it is far from being as simple as that.
Responses to our American Express CFO Survey 2023 reflected the many hats that financial leaders need to wear and the increasingly strategic nature of their roles. And the direction of change is only going in one direction, which is why CFOs must evolve, embracing new skillsets beyond the traditional staples of numeracy and people management.
1. Strategic thinkers
Once perhaps seen as an important but siloed head of accounts, the CFO is increasingly expected to have significant input in a range of key business discussions and decisions.
Of 156 senior financial decision-makers polled in our survey, 71% took responsibility for forecasting and planning, while 61% expected more involvement in strategy beyond finance in the future.
Despite current economic uncertainty and pressures to cut costs, 76% of the CFOs we spoke to also expect they will need to invest for business growth in the year ahead. There is a clear need for CFOs to be strategic thinkers, looking beyond immediate revenues to help the business explore new opportunities and new markets that could help deliver targeted growth.
And there are career benefits too: aside from working ever closer with the CEO to determine the direction of the business, being a strategic thinker can help CFOs make the jump to the top job itself: an earlier survey of finance directors uncovered a perception among respondents that FDs might be ideal candidates for CEOs of companies in financial trouble and in need of a turnaround, but they might not be best placed when it comes steering a company with a major growth strategy [2]. Becoming more strategic in their outlook can help CFOs make the jump to the top job in good times as well as bad.
2. Collaborative
An ability to work with other parts of a business has always been useful for CFOs but it is fast becoming indispensable. Almost two-thirds (62%) of those polled for the American Express survey said they anticipated greater collaboration with other functions in the future.
While keeping a sharp eye on costs remains critical for finance chiefs, successful practitioners of the role are now expected to go further by actively creating value for businesses. This often requires innovation and change, which can only be delivered in harmony with other departments.
CFOs must be able to influence and understand others at all levels and sections of a business if they are to make the most of their position. As their duties expand, financial leaders will have to work closely with previously distant functions to make the best decisions for the whole.
This surge towards greater collaboration comes against a backdrop of less face-to-face contact with other people. Almost three-quarters of CFOs see remote work as very or extremely important in the year ahead. Honing the specific skills of virtual communication will be invaluable.
3. Technology-driven
More than seven in 10 (71%) of CFOs polled for the American Express survey expect digitalisation to change their role in the year ahead.
The same proportion of CFOs is responsible to some extent for forecasting and planning, while 61% are responsible for scenario modelling to predict future business changes. And almost half think they will be doing more modelling, forecasting and data planning in the year to come.
The need for digital skills is in part driven by the other major talent trends for the role: demands to become more strategic and more collaborative require CFOs to have a grasp of data and forecasts with which they can back up decisions and inform conversations.
Technology itself of course plays a role too. The analytics now available in modern finance software such as ERP systems have enabled finance teams to have greater insights into how the business operates than ever before.
And as the technology rapidly changes, the role of the CFO is bound to be impacted: a survey carried out by Deloitte found that ‘accelerated business digitisation’ including artificial intelligence was one of the top strategic shifts CFOs said their companies were making [3]. AI could perform repetitive, time-consuming finance tasks with increased speed and accuracy, Deloitte said, while enhancing precision in budgeting and forecasting to enhance company-wide decision-making. For those willing to be technology evangelists, AI could prove an opportunity rather than a threat for CFOs.
Read the full American Express 2023 CFO Survey.
[1] Source: IoD, What is the role of the finance director, 2018
[2] Source: Directorbank, Grant Thornton, What Makes An Outstanding Finance Director, 2010
[3] Source: Deloitte, Why CFOs should have artificial intelligence on their mind, 2020