By Jason Bramwell
While many of today's CFOs have taken the usual finance stepping-stones toward their executive roles, they believe tomorrow's CFOs will need new experiences and key skills to meet the evolving needs of business, according to a new report from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).
More than 750 CFOs, finance directors, and C-suite finance leaders worldwide were surveyed for the report, Future Pathways to Financial Leadership. The survey revealed the "classic" career path of current CFOs was largely domestic in nature, but that is already changing: 27 percent of finance executives have spent time in an international role, and 25 percent have worked in an emerging market.
Forty percent of CFOs polled began their finance careers in public accounting firms, and auditing firms continue to be a significant pipeline and entry point for the global profession. Slightly more finance chiefs (42 percent) started their careers in a finance role in business. Before becoming a CFO, 31 percent of finance leaders polled said their previous role was controller.
"We can expect a different premium to be placed on the capabilities that will really matter for future finance leaders", Jamie Lyon, head of ACCA's corporate sector and author of the report, said in a written statement. "The survey suggests you can't get away from the need for retaining baseline finance skills, but there are so many more capabilities future CFOs will need to bring to the table, too."
The following are the ten skills and capabilities today's CFOs believe will be of most value to future finance leaders.
1. Plan A – know your fundamentals. Future CFOs will still need a strong financial understanding and should target career experiences that provide them with that understanding across various points in the finance value chain. Ninety-five percent of current CFOs agreed it was important that future CFOs have experience in the core finance areas of financial and management accounting. Almost half of today's CFOs have had six or more finance roles during their career, 80 percent have had a finance role in more than one organization, and almost three-quarters have finance experience in more than one industry.
2. See strategy and business experience as the new baseline. Strategy formulation and execution was identified by current CFOs as the most important area in which to have experience for future CFOs. In an environment where "commercials" will change quickly, deep business experience will be highly valuable. While most of today's CFOs (61 percent) do not have experience outside of the finance team, future CFOs should seek out greater mobility in and out of the finance organization, building the commercial qualities needed as well as the internal relationships. Establishing commercial credentials early on in the career journey will be advantageous, but routes to and from the finance organization must be planned carefully.
3. Career plan for the next big thing in finance: insight and analytics. How organizations 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 new challenges to business decision making. Current CFOs rate financial insight and analysis as the second-most important area in which future CFOs need to have gained career experience. Future CFOs should plan experience in the area and actively seek out analytics roles so they understand its value and application.
4. Get risk experience under the belt. From traditional financial risks to emerging risks, such as cyber risk, the risks businesses face will grow, change, and become more difficult to calibrate and manage. The future finance organization will have a significant role to play in balancing carefully the investments that need to be taken against potential risk impacts and plan out the different scenarios. Experience in risk management was identified by current CFOs as the third-most important area in which future CFOs need to gain experience, and risk management challenges was identified as the second-most important factor influencing the future role of the CFO.
5. Become a deal maker. Merger and acquisition (M&A) activity was identified as the fourth-most important area of experience for future CFOs to obtain. M&A activity provides specific technical finance experience in structuring deals, but also can help develop wider skills in change and project management. Funding, capital market experience, and investor relations are expected to remain core finance capabilities in the future for CFOs of larger businesses, too.
6. Get closer to stakeholders; become customer-focused. The future finance leader will need to "talk the same language" across a wide range of traditional finance and nontraditional finance relationships. Aspiring CFOs need to plan for roles that increase their breadth of stakeholder engagement and cultivate strong relationship management skills. But the emerging powerhouse stakeholder that future CFOs need to be mindful of in an age of brand disloyalty is customers. The future finance organization will need to be attuned to the needs of different consumers and develop a culture that is customer-centric. This will be an important milestone on the transition from back office to front office for the finance organization. The future CFO needs to be customer savvy, so taking on roles that provide greater customer understanding will be key.
7. Focus on the management skills that matter. The top four management skills identified in the survey included:
- Leadership skills (65 percent)
- Communication skills (60 percent)
- Strategic-thinking skills (53 percent)
- Change management skills (24 percent)
Strong leadership skills will be essential because the success of the future finance organization is very dependent on a strong, united leadership vision and an engaged and skilled finance team, particularly as the finance organization becomes more diverse. Businesses will continue to evolve and re-engineer their operations and activities, so experience in transformation and change management for future finance leaders will also be a priority. So too will be effective communication skills as they align messages and provide appropriate context on financial and business performance to different stakeholder groups.
8. Prepare for more regulation and broader reporting. Regulation was identified as the third-highest factor influencing the future CFO role. Future finance chiefs need to be confident operating in a regulated environment and should be adept at putting in finance structures and processes that manage legislative and increasing tax requirements effectively. Alongside more regulation, future CFOs should expect ongoing changes in reporting requirements: growing interest in the concept of integrated reporting, increasing involvement of the finance organization in reporting on different corporate performance measures, increasing use of financial and nonfinancial data, recalibrating investment assessments to account for environmental or social impacts, and so on. Future CFOs need to track carefully developments in these areas and think about how their career plans help develop understanding here.
9. Get connected. The growing interest in the coming together of social, mobile, and Cloud technologies may revolutionize day-to-day business practices. Other developments – such as possible use of robotic software in parts of the finance team to increase automation and better workflow, plug-and-play technology, and access to real-time information – provide finance chiefs with the ability to cut data many ways and offer an immediate, integrated view of business performance. Technology and automation was identified as the fourth-highest factor influencing the role of future CFOs. Tomorrow's CFOs need to be technologically adept and understand the significant role technology can play in driving better finance delivery. They should also target roles that develop and utilize their technological understanding.
10. Expand your "footprint." The future CFO will need to be able to manage carefully the different demands between mature and emerging markets and align their finance strategies accordingly. They will need to be adept at working in the global business environment, leading finance teams that are diverse and virtual across mature and emerging markets. Future CFOs that can bring cross-cultural, cross-market business and finance experience to the table will be highly valued. Time served in shared service operations may also be of benefit, both in terms of gaining core finance experience and understanding relationship dynamics.
"The current crop of finance leaders is adapting to the changing role of the CFO, which requires a broader, strategic approach to the business, and they can see that gaining those skills early on in the career journey will be a major benefit to future CFOs", IMA Vice President of Research Raef Lawson, PhD, CMA, CPA, CFA, AICWA, said in a written statement. "The whole point of seeking the views of today's global finance leaders about what the future CFO will need is to equip tomorrow's leaders for their roles. The findings of this study give us insight into what the route to the ideal future CFO position should look like."
About the report:
More than 750 CFOs, finance directors, and C-suite finance leaders responded to a global survey conducted by the ACCA and the IMA for its report, Future Pathways to Financial Leadership. The research provides insights from today's finance leaders on how they see the role of the CFO evolving and explores the developments shaping finance leaders in the future. The report outlines what all of this means for the career experiences that next-generation finance chiefs need to acquire.