The traditional career path is no longer enough. ACCA’s Jamie Lyon outlines the new must-haves for high-fliers
Are all bets off when we consider what the future CFO role will look like and what career experiences tomorrow’s CFOs will need?
ACCA and IMA (Institute of Management Accountants) explore this question in one of the largest ever global studies of current and future CFO career paths. The conclusions are set out in the report Future pathways to finance leadership, which traces the career routes that current finance leaders have taken and addresses the critical question for those seeking to join the next generation of CFOs: how do I get there? More than 750 CFOs, FDs and C-suite finance leaders took part in the survey.
The bottom line is that optimal career experiences are already being defined, a reflection of the changing role of today’s finance leader, as well as broader technological, social and economic trends impacting business and the finance function: faster business change, rebalancing growth across markets, the changing footprint of the finance organisation, and the proliferation of information and data.
Traditional linear routes through the finance function to CFO are less important and new stepping stones are emerging. As the CFO role rebalances between its traditional stewardship responsibility and the need to help the organisation create value, so the capabilities, experiences and skills required will change. Not that the finance leadership rulebook needs to be entirely rewritten: our research reveals a story of evolution, not revolution. So what are the words of wisdom from current CFOs on the career experiences that aspirant finance professionals should get under their belt?
Future CFOs will still need a strong financial understanding and should target career experiences that give them just that. As many as 95% of current CFOs agreed it was important that future CFOs have experience in financial and management accounting. Almost half of them have had six or more finance roles during their career. The finance fundamentals are not changing, but the context is.
The future CFO role in supporting strategic growth is more valued. Current CFOs cited strategy formulation and execution as the most important area in which future CFOs should have experience. Over the next decade the business landscape will be entirely reshaped by market volatility, globalisation and transformational innovation, and deep business understanding will be highly prized.
How organisations regress, correlate and extrapolate data to drive better decision-making is the next big opportunity for tomorrow’s finance team as data grows and the multiplicity of information presents challenges to business decision-making. Today’s CFOs see insight and analytics as a key priority for how finance can add value moving forward.
Current CFOs said experience in risk management was the third most important area for future CFOs to address, and risk management challenges were seen as the second most important factor influencing the CFO’s future role.
Merger and acquisition (M&A) activity was cited by current CFOs as the fourth most important experience area. As well as experience in structuring deals, such activity can also help expand skills in change and project management. Funding, capital market experience and investor relations are core future finance capabilities for CFOs of larger businesses too.
CFO aspirants need roles that broaden their stakeholder engagement and they must seek to cultivate relationship management skills. But the emerging powerhouse stakeholder in an age of brand disloyalty is the customer. Therefore, the future finance organisation will need to cultivate a customer-centric culture.
While next-generation CFOs will need a wide range of skills, a number of standout management capabilities are needed. The top four skills identified in our survey were leadership, communication, strategy and change management.
Regulation was cited as an important influence on the future CFO role. Future chiefs need to be confident operating in a regulated environment and adept at managing legislative and tax requirements. We can also expect a rise in integrated reporting, more involvement of finance in reporting on corporate performance, greater use of financial and non-financial data, a recalibration of investment assessments to account for environmental or social impacts, etc.
Tomorrow’s CFOs need to be technologically adept and to understand how solutions can drive better finance delivery and workflow. The convergence of social, mobile and cloud technologies may revolutionise practices. Other developments include plug-and-play technology and access to real-time information that allows CFOs to cut data many ways to gain an instant integrated view of business performance.
The future CFO will need to manage the different demands between mature and emerging markets, and align strategies accordingly. They will need to be adept at working in the global business environment, leading teams that are diverse and virtual across mature and emerging markets. Cross-cultural, cross-market business and finance experience will be highly valued.
Jamie Lyon is ACCA's head of corporate sector insights
This is an edited version of an article in the January 2014 edition of Accountancy Futures, ACCA’s twice-yearly research and insights publication