New research: Defining the new role of the CFO

The past few years have made it clear: The world of business and finance is changing in unprecedented ways. In response, the new role of the CFO will evolve well beyond the traditional job description. So what attributes will define it?

To answer this question, Biltrust commissioned Paradoxes, Inc. to conduct an extensive research study, “The DNA of Future CFOs: Research Insights”.

One factor driving changeover to a new generation of financial leaders is the simple aging process: The current generation of CFOs is headed toward retirement age.  However, that wouldn’t necessarily result in significant changes to the CFO role.  Generations of CFOs have come and gone, yet what businesses expected of the position did not change appreciably. 

As we examined in our earlier post about this study, New research: What’s changing the DNA of the CFO?, multiple factors are driving this new evolution.  Broader disruptions, technology and operation transformation and other pressures are forcing change in both organizations and the demands they’ll make on future CFOs.

Aspiring CFOs will manage “horizontally” when they take on the job, working in more direct collaboration with other business units beyond the traditional boundaries of the CFO’s office. “The role is changing'' was a common phrase, with comments emphasizing the skills and desire necessary to collaborate personally and integrate technically with other functional groups. 

This is a notable change from the traditional perception of the CFO as a remote, removed, numbers-oriented corporate grandee who personifies a siloed corporate structure.

Most respondents – 91% in all – agree that teams must collaborate and share ideas cross-functionally to be successful. Future CFOs place significant emphasis on the ability to problem-solve across business units. Taking a leadership role in “better data analysis and insights” in support of business/financial goals is central to this “horizontal” outlook that’s key to the new role of the CFO.

“The CFO role (now) needs better skills and tools for real-time data and analysis… We have a BI team, of course, but anything non-standard or complex becomes an analyst query. Going forward, this [capability] will be a requirement of the CFO role...”

– Michael B., Healthcare

Respondents largely de-emphasized the need for an MBA degree. Instead, a blend of experience and education was preferred. An emphasis on computer science exposure and “data literacy” was described as superior preparation for the role. Several reported that this differed from their own career path. 

A mixture of finance or accounting with computer science was the hot combination for the new role of the CFO. Formal education was considered “less important than experience with different (accounting and finance) systems” and other qualities such as how to tackle the organization’s goals.

“A good CFO can pull themselves out of a situation if in the center, but look over things as a whole. Be prepared for challenging situations. It’s also important to value your people. To me, I’m only as good as the people who I am working with.”

– Stephen A., Electrical

Among current CFOs, finance/accounting is overwhelmingly the predominant degree field. Only around 20% of respondents describe alternative fields of study. 64% of current CFOs hold a finance degree of some kind.

Among future/aspiring CFOs, education background shows a more diverse mix of degree fields. At the Bachelor’s degree level, only 30% of aspiring CFO respondents hold Finance degrees. The new role of the CFO may demand broader academic interests. Here is how the extent of Finance studies breaks down by group:

Compared to current CFO officeholders, future CFOs emphasize collaborative skills more. Note how current CFOs focus on those skills more than their C-suite peers.

Skill areas where they’re seeking improvement

Current CFOs are focusing on improving data and analytics skills, while the new role of the CFO will demand investing in management and leadership skills. These skills may be essential for the next generation of financial leaders.

Perceptions of current finance infrastructure

There are notable differences in how these two “generations” of finance leaders view their organization’s finance infrastructure. Future CFOs have a less positive view of their firm’s current infrastructure.

• 46% of current CFOs report that their infrastructure is "very" modernized.
• Only 33% of future and aspiring CFOs labeled it “very” modern.

Current CFOs expressed above-average concerns with data access issues. Emerging CFOs cited challenges with team members and remote work. This may reflect their current roles at the working team level. Both groups reported that eliminating redundant tasks is a major challenge. Implementing automated processes will be key for the new role of the CFO.

Current CFOs emphasize managing risk and treasury management. The new role of the CFO instead aligns with external-facing goals. These include:

• Customer satisfaction projects 
• Driving data insights 
• Creating forward-looking plans and forecasts

Another insight? The projects the CFO invests in are now longer and more complex than in the past.  This reflects greater risk tolerance and reliance on cross-functional collaboration with groups like IT and Operations to bring projects to fruition.

• Current CFO title-holders favor a heavily finance-focused career path. The new CFO is embracing a blend of experiences across operations, IT, and strategy in their career arc. 
• Current CFOs believe that future CFOs will come from external companies. Future CFOs widely believe that CFOs should be promoted internally. 
• As we’ve seen, there’s a growing emphasis on people and collaboration skills: CFOs must have the ability to communicate and make business issues relevant across separate departments. Rather than be aloof from his/her team or the organization, the new role of the CFO requires being accessible and relatable.