The evolution of the role of the “Chief Financial Officer” and its upskilling

François de La Rochefoucauld said that “The only constant thing in Life is Change”. It is probably one of most suitable phrases to illustrate the evolution of the role of “Chief Financial Officer” (CFO) over the last few years, as well as in the challenging times ahead of us.

This is a role I have a lot of affinity for, as it has been present, in a way, directly and indirectly, throughout my professional life. In fact, for many years, I saw this function (and its evolution) from the “outside”, that is, I followed those who performed it, always analyzing it from the “outside in”. At other times, I have had the opportunity to carry out the responsibilities that typically characterize this role.

During this assessment of the same function, from different perspectives, I immediately noticed several differences, (i) not only about what would be the CFO's own expectation in the fulfillment and performance of its responsibility and its function/role in the Organization, comparatively, with the expectations of their “C-level” (“C Suite”) peers, (ii) the gap / mismatch of skills and abilities that the CFO should incorporate Versus the skills typically assigned to the CFO, among other aspects.

Let's go by steps. A few years ago (probably not as many as we can imagine), the CFO was seen by the Organization as a “more experienced accountant”, whose main responsibilities would restrain only to the collection and recording of historical data, the sharing and submission of historical financial statements and other reporting maps, including treasury management. For his part, the CFO said that his role was to ensure the adequate safeguarding of the Company's assets, to present appropriate financial statements through adequate financial reporting risk management, performance indicators and respective financial planning, including budgeting. Very objectively, what the Organization often expected from the CFO was the mere presentation of financial statements on a timely manner and without errors. Apparently, that's where the CFO brought the most value.

However, in the last decade, as a result of the financial crises that occurred, the CFO started to work side by side with the CEO, not only ensuring the effective execution of the tasks and responsibilities mentioned above, but above all by the "upgrade" of other fundamental tasks, such as the design of restructuring and turnaround plans, transformation plans, in order to reposition the Companies towards a more competitive and sustainable business, including the fulfillment of inherent objectives and performance indicators.

This moment was crucial, as the CFO gained a new life - he started to play a fundamental role in the design and execution of the Company's Strategy, at the same time, it was crucial to maintain high levels of operational efficiency and resilience throughout the Organization, processes and people. This effectively brought new challenges, such as technological transformation, talent management, leadership, among other aspects. The ultimate aim would be to contribute to a greater creation of value in Organizations and in Society in general.

Globally, the CFO role was and still is perceived as being based on numbers, prudence and rationality. However, numbers have already been replaced by data (“Big Data”), prudence for adequate risk management and rationality began to have greater pressure on his thinking, due to the increasing occurrence of non-controllable factors, being most importantly, the uncertainty associated with the disruption that takes place at all levels, including the speed of its impacts. The decision-making process has thus become too complex, being even more challenging to reach a more sustainable and value added proposal.

The CFO of the future will necessarily have upskilling that allow the person to have something close to a crystal ball. The CFO will once again have to “upgrade” his set of skills and competences, in order to produce a more reliable output related to business projections in multiple scenarios of the Organization, derived from a context and circumstances that are constantly changing, which are characterized by high levels of uncertainty. Otherwise, the CFO is at risk of becoming obsolete.

This new CFO should be a better communicator and “strategic thinker”, pursuit change as a fundamental of sustainable value creation, thus leading the transformation, through rigor, integrity and strategic vision.

Overall, the CFO will have to upgrade/upskill to a set of skills and competences related to:

- In the analytical management of data ("Big Data"), in which the interpretation of relevant data will produce fundamental effects for decision-making, equipping organizations with the necessary resilience for the surrounding context;

- Assuming an unprecedented risk management. The speed at which previously successful business models become obsolete and lose space to new startups that quickly become competitive is astonishing. This, coupled with evolving consumer profiles, also in constant flux, requires the CFO to work alongside the CEO in order to navigate risk appropriately;

- Adaptation to new technologies – the identification and effective implementation of relevant new technology within organizations will be crucial for their sustainable success;

- Lastly, but no less important, is human capital management. Technology has enabled the replacement of routine and low-value tasks (formerly performed by employees) with infinitely faster processing. However, many value-added tasks remain necessary in this changing context. Thus, there is a need for leadership that allows people to adopt the necessary and fundamental skills for the future success of organizations. Moreover, more than ever, CFOs will need to be truly charismatic and inspirational, leading by example and assuming a significant role in talent management within the organization.

In summary, the CFO should have sufficient awareness of the constantly changing environment that surrounds themselves, the organization, and society as a whole. This awareness is necessary to embrace a new digital culture, its skills, and tools, to have access to reliable real-time data that enables the organization and its managers to make quick and accurate decisions regarding its strategic business direction.

As such, it is imperative that they are able to identify the skill gaps in the Organization necessary for it to achieve sustainable value creation and that they can then plan and gradually bridge the gap in skills between the present and the future. As Socrates said, “The secret of change is to focus not on fighting the old, but on building the new”.