In the corporate world, as in the natural world, environmental change leads to evolutionary change in its citizens. Over the past several years, the increasingly challenging and uncertain business environment has spurred the evolution - and expansion - of the chief financial officer's role in organizations around the globe.
CFOs are increasingly involved in setting the strategy to safely navigate their organizations through tighter credit markets, more complex regulation and unstable trading conditions. As part of its ongoing research into the CFO role worldwide, Ernst & Young has surveyed more than 900 leading CFOs and finance directors and conducted a series of in-depth, follow-up interviews. One of the main findings is that as the CFO's job has evolved, so has its shape.
How has it changed? There is substantial agreement among CFOs in all regions that while their roles and responsibilities vary by organization, six principal activities fairly represent the contribution of today's top finance executives. (The graphic on page 18 depicts the interdependency of the responsibilities and the way they feed into one another over time.) The six are:
Ensuring business decisions are grounded in solid financial criteria;
Providing insight and analysis to support the CEO and other senior managers;
Leading key initiatives in finance that support overall strategic goals;
Funding, enabling and executing the strategy set by the CEO;
Developing and defining the overall strategy for the organization; and
Representing the organization's progress on strategic goals to external
Setting Corporate Strategy
In the wake of the financial crisis, a CFO's finance skills remain abosolutely essential. if anything, the crisis has reinforced the need for CFOs to pay close attention to core factors: managing liquidity and the capital agenda, controlling cost, maintaining internal control and delivering robust financial information.
As explained by Xerox Corp.'s CFO Luca Maestri: "Core skills in finance are the foundation. They are non-negotiable. Together with the core financial skills, companies are looking for operational experience, strategic experience and people management. But if you're no good at financial analysis, you cannot be the CFO. That goes without saying."
However, even though the CFO must maintain a laser focus on vital finance responsibilities, many are filling an increasingly larger role in setting corporate strategy. The...