What will boards need from CFOs over the next five years?

• Author: Bloxham, Eleanor
• Position: BOARDS OF DIRECTORS - Chief financial officers

As directors and chief financial officers work together in this new decade, they face a very different world than the one of a decade ago. Then, boards of directors were quite hidden from public view and they didn't participate in oversight of the finance function the way they do today. Nor were they as involved in compensation matters or in nominating their own members.

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At that time, many CFOs chose the external auditor--and many more had internal audit reporting to them. Global sourcing was less prevalent and accounting changes less rapid. "Earnings management" was commonplace and did not have the general disapprobation it does now. And the Internet was in its infancy.

Looking ahead, boards and CFOs face a landscape of even greater challenges. The workforce is different and the expectation of companies' behavior is greater. Corporations are expected to behave in a way that supports environmental and social, as well as economic, goals.

To wit, a year ago a report issued by the Committee for Economic Development stated: "The report concludes that corporate boards and the leaders they select must integrate relevant societal concerns, such as environmental and human rights considerations, into corporate strategy, to strengthen long-term competitiveness and the sustainability of both the corporation and the society in which it exists."

Today, stakeholders are more vocal and more likely to band together. The speed of change continues to accelerate. And with all these changes comes a world in which boards and CFOs have less and less strict control.

In this environment, here are questions and answers that should be on the minds of the finance executive related to boards and their needs over the next several years.

Q: What have the last few years revealed about what boards need from CFOs?

A: It depends on the board. The stock exchange rules mandated some financial competency on boards earlier in the last decade. The last few years have shown, however, that some boards still don't have the financial acumen to do the heavy lifting required. Even if a board has a member with an accounting background, the board may still lack strong diversified financial and economic skills.

Another issue, separate from the formal background of directors, has to do with personality. Many boards lack enough members with an analytical and/or a curious predisposition. Over the last few years, this has meant the board has needed a lot of education and, in some instances--as the...