What Does A CFO Do? The Evolving Role and Responsibilities

Thirty years ago, when I was a freshly minted graduate entering the corporate world, the chief financial officer (CFO) role was fairly straightforward. CFOs were often number-crunchers who operated behind the scenes while strategy and decision-making were left to the rest of the C-Suite. But during my many years spent in this function, I have seen a significant shift in CFO duties. The role of the CFO has fundamentally changed from a support function to one of strategic relevance. Today’s CFOs drive the direction and success of their organizations—a necessity in our ever-changing business environment.

What Does a CFO Do For a Company?

CFOs oversee a company’s accounting and finance operations, while using financial data to influence organizational strategy.

Historical CFO responsibilities—like bookkeeping, financial planning, and compliance—continue to be mission critical and belong to the finance function. While relevant, these tasks are now taken for granted by CEOs and seen as the expected minimum. Today, CFOs should possess more diverse skills than the technical accounting background of the past. The modern CFO must use the company’s financial context to guide operational decision-making in partnership with the CEO.

The CFO Role: 4 Key Areas of Responsibility

Given the role’s evolution, the modern CFO must possess skills and competencies in four areas:

1. Leadership

To be an effective business partner, a CFO must have strong leadership skills. In addition to their advisory duties, they often lead company-wide transformation programs and must be able to translate detailed information into clear, concise, and accessible messaging. Creating a top talent pipeline to ensure the finance function is staffed with the right people is also critical.

2. Operations

CFOs should possess a strong understanding of the company’s business model and industry to provide an independent perspective. They should constructively challenge the commercial and operations teams, ensuring that business decisions are grounded in solid financial criteria. CFOs must navigate complex data and provide analytics and predictive scenarios that drive action and decision-making. They should also identify opportunities for top-line growth and profit improvement, not just through traditional methods of cost control, but through processes such as product line/regional profitability analysis and benchmarking against industry peers.

3. Controls

In an increasingly global and volatile business environment, it’s the CFO’s responsibility to ensure adequate risk assessment and mitigation, as well as legal and regulatory compliance. CFOs need to manage risk as the business executes on its strategies and initiatives, while maintaining strong internal controls and financial reporting processes.

4. Strategy

The CFO supports strategy development, prioritization, funding, and execution. The finance skill set applies to building predictive modeling, analyzing macroeconomic trends, and incorporating non-financial information. The CFO must also communicate the strategy and progress to external stakeholders and investors.

How to Be a Successful CFO

A successful CFO possesses the financial acumen and emotional intelligence to understand an organization’s unique needs. With an inquisitive mindset, a desire to innovate, and excellent communication skills, great CFOs translate hard financial data into a great narrative—one that resonates with the board and drives profitable behavior across the company.

Based on my experience, here are four actions that differentiate the best CFOs from the rest:

1. Earn a Seat at the Table

A CFO needs to be a visible leader and an influencer. Curiosity is mandatory: A previous CFO boss of mine would turn up to meetings uninvited, just to learn more about what was happening in the business and challenge decisions taken without the necessary finance input.

2. Embed Finance Throughout the Company

The most effective finance teams I have worked on had dedicated finance analysis and support attached to important functions like commercial, operations, and manufacturing. This configuration opens up dialogue between finance and operations and fosters a better flow of data among business areas. It also makes the functions more accountable for their financial metrics and allows the finance department to provide more insightful commentary through a better understanding of the business.

3. Champion Automation and Technology

Access to timely, accurate data enables finance productivity and decision support. Automated reporting and analytics allow more time for forecasting and predictive analysis. Technology plays an increasingly important role for the CFO, but its effectiveness depends on the data quality and on robust, integrated technology infrastructure. To succeed, CFOs must champion digital technology and lead enterprise resource planning (ERP) implementations and cloud-based solutions. Under-resourcing is a common mistake I see in large-scale ERP implementations. ERP projects require the best and brightest finance talent, but underperforming finance professionals are often “parked” here.

4. Focus on Results, Not Efficiency

CEOs generally want more for less. They now increasingly assess their company’s finance function in terms of effectiveness (its ability to deliver what the business needs) rather than efficiency (its cost in serving the business).

Do You Have the Right CFO?

Your ideal CFO is a valuable business and strategic partner to your CEO. What each company needs may vary, but the right CFO is a service-oriented leader who drives company performance through influence and proactive engagement across the business.

You can’t overestimate the importance of a strong CFO. According to the 2014 Accenture High Performance Finance Study, high-performance businesses:

• Are more likely to be highly satisfied with their finance function across most dimensions.
• Tend to have CFOs with growing strategic influence. For example, finance leaders of high-performance businesses report a stronger influence over business analytics, business transformation initiatives, and the strategic planning process.
• Have finance leaders who are more engaged in assessing technology investments.

However, it can be challenging to assess your CFO’s contributions. McKinsey’s 2018 report, The New CFO Mandate, finds that CFOs and their peers have different views on where finance leaders add the most value:

Some CEOs also see shortcomings in the CFO skill set. According to KPMG’s 2016 survey, The view from the top, here are the top CEO concerns about finance leaders’ skills:

As the CFO role expands, so will expectations of business leaders.

3 Ways to Prepare for the Modern CFO Role

To gain the right skill set to fill the role of CFO, finance professionals should pursue a career path that develops their experience in different areas. Here are three actions an aspirational CFO needs to consider:

1. Gain a Breadth of Finance Experience

Roles which offer exposure to a business’s commercial and operations functions can widen a finance professional’s experience. Depending on the nature of the company and industry, it may be advantageous to take roles outside the finance function.

2. Develop a Global Perspective

A global view can be gained through international exposure, especially in emerging markets. This experience can help manage through the volatility and complexity often associated with these regions.

3. Enhance People Skills

Transformation initiatives and major change programs offer leadership opportunities and the chance to strengthen team-building skills. These experiences help professionals develop communication and influencing skills to deal with internal and external stakeholders.

Increased expectations for the CFO mean greater demands on the whole finance function. In my experience, the best CFOs recruit the brightest talent and work hard to retain them. They prioritize coaching, mentoring, and leadership development at all levels of the finance organization. They spend time on succession plans for key roles in the organization, but also ensure the right balance of technical, analytical, and leadership skills within their team. And ultimately, these CFOs judge their own capability on the strength of their team.