The CFO's Expanding Role in Strategic Planning

The business environment has changed radically in recent years, heralding the arrival of new roles and titles in the C-suite — Chief Analytics Officer (CAO), Chief Data Officer (CDO) and Chief Internet Evangelist (CIE), to name a few. These redrawn org charts highlight the extent to which companies today are looking to digital technologies and transformations as key drivers of profitability and growth.

How has this impacted the role of CFO? What are CFOs doing in response — and what are some common challenges and opportunities? Read on to find out.

Understanding the New Normal

From afar, it might not seem like that much has changed for CFOs — certainly not, at least, in terms of the title. But scratching just beneath the surface makes it clear that the day-to-day reality for leading CFOs today is vastly different than it was in the past. Indeed, it's not an overstatement to say that the role of CFO has been totally overhauled and, in nearly every instance, expanded in the last few years.

Today CFOs are not only caught up in broad-based transformation processes, they're also expected to drive them. Increasingly, that means having a larger footprint in strategic planning processes across the organization, contributing insights and collaborating with cross-functional business leaders to generate value.

CFOs are responding to these new strategic imperatives in a number of different ways. Tatum's recent CFOs’ Pathway to Growth Study uncovered a number of surprising ways the role of the CFO continues to be transformed. The study, conducted in partnership with The CFO Leadership Council, brought together insights from more than 300 leading CFOs and finance leaders representing a wide range of industries.

Monetizing Non-Financial Data Is Critical

Long gone are the days when CFOs were as isolated as lighthouse keepers, operating as number-crunchers who simply reported on backward-looking financial metrics like net revenue, accounts payable and working capital to a handful of senior leaders in monthly, quarterly and yearly meetings.

These metrics still matter, of course. But they're increasingly valued only insofar as they can be interpreted within a far more complex, inter-relational ecosystem of information — a blend of both financial and non-financial data — and used to make forward-looking, predictive decisions. That's why tracking, measuring, reporting on, growing the value of and investing in non-financial data are commonly part of CFOs' performance evaluations at leading companies today.

Yet, getting the most value out of non-financial data can be tricky. For starters, it's generally unstructured, running the gamut from indicators of brand perception to social media trends, supply chain data, product quality issues and much, much more — at the end of the day, any data point that can directly or indirectly impact financial performance falls into this bucket.

Are CFOs actually prepared to capture, analyze and generate meaningful insights from this data? To answer that question, let's turn to some surprising findings from Randstad's research, which suggests that talent and training are top of mind for CFOs, presenting both a challenge and an opportunity.

CFOs and Talent Management

Among the more interesting findings of Tatum's study is that, out of all the business-critical challenges confronting finance functions today, those CFOs consider to be most pressing are all, at least in some way, talent-related. "Sufficient forecasting, planning and analysis skills or related technology" was the leading concern, followed by "automation of routine accounting/finance activities," "sufficient analytical skills or related technology" and "succession planning."

Taken together, these responses indicate that CFOs have an opportunity to play a larger role in strategic planning around talent management processes. What's more, doing so would seem to confer considerable benefits for CFOs.

For one, taking the reins on talent management is a chance for CFOs to future-proof their own departments while significantly improving operating efficiency. For example, onboarding someone with the tech savvy to automate repetitive manual processes means less burdensome work for everyone on the team and more time spent generating value-added insights that can move the business forward.

It's also an opportunity for CFOs to reach out and build strong ties with leaders from the HR function — in other words, to engage in the sort of cross-functional relationship-building that goes to the heart of the CFO's new strategic mandate as a business leader.

Key Takeaways

Tatum's recent study suggests that there are a number of shared challenges, as well as untapped opportunities, confronting CFOs today. However, the difficulty of deriving actionable insights from non-financial data and the CFOs' own concerns about talent management appear to be linked — and solving for the the latter may hold the keys to the former.

The study also strongly suggest that inaction is not an option for CFOs who want to not only survive, but thrive. Ultimately, forward-thinking CFOs must identify where within the organization it makes the most sense to intervene, build relationships and generate insights that deliver meaningful results.

Want even more insights? Check out some of the key findings from our recent CFOs’ Pathway to Growth Study, or click here to learn more about all of the ways Tatum can help drive your business forward.