Defining the role of a great CFO is getting harder as the role expands beyond financial duties, regulatory compliance, and risk management. The role of a CFO now includes preparing a company for future growth and driving business decisions, all while being a strategic business partner to the CEO and Executive team Here are 4 things to focus on to evolve from good to great as a CFO:
Synthesize Data Differently
A surprising among of CFO’s still make decisions based only on past experience or instinct. Recent research show that most finance leaders still depend on their gut feelings instead of on hard data. Others even neglect business drivers and data analysis. In order for CFOs to understand their business and to make well informed decisions, they need real time reporting, access to meaningful data, and actionable insights. However, synthesizing the data may not always be easy.
KPIs alone may not be sufficient to aid your decision making. So how can you transform your KPI strategy to achieve your goals?
Consider KPDs (Key Performance Drivers) instead of KPIs only. The problem with KPIs is that they focus on past outcomes rather than the future ones. KPIs primarily focus on historical performance that provide limited insight into predicting performance. However, including KPDs in your performance management will allow you to weigh certain outcomes that may be more critical to predicting future performance.
Use non-financial and operational KPIs. As a CFO, you need to take a holistic view of your organization and market to ensure that each department in the company knows what drives performance.
Qualitative inputs are also critical in helping you to make sense of the data and to build a narrative that your executive colleagues and board can get behind from a strategy and decision making perspective.
Lead in Digital Transformation
Whether it’s automation or migrating to the cloud, businesses that aren’t leading in digital transformation are slowly (then quickly) falling behind. The pandemic has accelerated the need for digital transformation. Companies that had already made investments in digital were able to bridge the transition to a distributed workforce more effortlessly than their peers. However, there are other clear benefits to investing in digital transformation.
Investing in digital technologies means that a business is more likely to:
Meet its expected ROI
- Increase revenues
- Meet its business
- objectives more effectively
- Save money
- Increase data security
- Eliminate tedious tasks and improve employee morale
The pandemic has taught us that a distributed and productive work environment was possible all along, despite the resistance to change shown by most executives around work culture. But it didn’t take a pandemic for some executives to have already invested in these human capital changes. Some leaders wait for the tide to force change while others experiment and lead. If you want to be a great CFO, challenge your self imposed beliefs to experience gains and outpace your competitors. If you develop unique and compelling elements of your organization, you’ll be able to better attract talent to your company, identify more/better capital sources, develop strategic advantages to increase revenue, and be in a position to invest more heavily due to a reduced cost structure.
Be a True Business Partner
To be a great partner to the CEO and your fellow Executives, you need to shine when it comes to forming and keeping business partnerships throughout the organization. The job of a CFO now includes more than financial reporting and strategy. CFOs also have to focus attention on business partnership across the enterprise with the heads of technology, marketing, sales, legal, and operations.
New research has shown that there is a direct correlation between the rate of revenue growth and the success of collaboration between functions within an organization.
To be a great performing CFO, you need to synthesize information differently, be progressive, lead digital transformation, , and be a true business partner to the CEO and your fellow executives. The ability to lead your company to long-term success requires you to grow your skill set in these core competencies.