When the rules of the game change, people need to adapt. Some will rise to the challenges and opportunities ahead, and others will not. But when it is not just the rules but the game itself that changes, it takes real talent and skill to come out on top.
This is the scenario that CFOs around the world are currently facing. With greater economic uncertainty, cost pressures and business challenges, to say nothing of a more onerous regulatory environment, it is easy to understand why today’s finance executives are only too keenly aware that tomorrow’s juggling act will become even more complex.
Traditional skills are now simply the entry ticket to the playing field. To succeed in the future, CFOs need to adapt their abilities to reflect a more uncertain, dynamic and global game. They will also need to balance many new and conflicting priorities, reacting swiftly to emerging issues as soon as they arise.
So how will the game change? A recent IMA and ACCA report, The changing role of the CFO, spells out nine key issues and emerging priorities.
The first and most obvious is regulation. CFOs have an increasing personal stake in, and accountability for, regulatory compliance. But they will also have the opportunity to shape the future, and perhaps bring the steady accumulation of regulatory burdens to a halt by implementing processes that will negate the need for even more regulation.
The second is globalisation. Tomorrow’s CFOs will need to adapt to different rules and regulations if they are to support the expansion of business into new markets. The tactical issues will need to be combined effectively with good cultural and cross-border working relationships.
Technology is the next key game changer. Large and complex data – ‘big data’ – provides challenges as well as significant opportunities for analytical insight. CFOs need to be at the heart of this data revolution; that means spending less time on recording and verifying the numbers, and more time on making the data connections and explaining the number implications.
Then there is risk management. This is one of the key challenges for the modern CFO: complete risk avoidance is not an option. The board, external investors and other stakeholders will look to the CFO for ever greater assurances over the financial viability of the business’s strategy.
Transformation is the next area of change. The imperatives to reduce costs, improve efficiency and become a better partner to the business mean that CFOs will need to ensure that finance is a catalyst for change. Outsourcing and shared services will figure highly in this re-engineered world.
Stakeholder management will demand more time. CFOs will increasingly become the face of the corporate brand. Indeed, they already fulfill this role with investors, but they will have a broader circle of stakeholders to please in the future – banks, tax authorities, external auditors and the media.
There will also be a greater role to play in strategy validation and execution. Finance professionals will need to make greater connections between the strategy of the organisation and its finance and risk processes.
Reporting will expand from the traditional to the ‘triple bottom line’. Financial reporting will be joined with social and environmental metrics – something that can be a balancing act today, let alone tomorrow.
None of these changes can be achieved without the effective management of talent and capability. Finding the right people with the right skills at the right time will become increasingly challenging.
For tomorrow’s CFO, the skill will lie in balancing the challenges created by the changing rules while anticipating the more fundamental changes in how the game is played.
This article first appeared in Accountancy Futures, Edition 6, 2013