Increasingly, the CFO needs to be seen as a leader within the entire organisation. With this in mind, KPMG sought to find out what challenges they faced, including the expectations CEOs placed on them.
“Historically, the CFO role was more in the background. Today, they are at the centre of things”
The report suggested that 72 per cent of CEOs believed the CFO role was destined to increase in importance over the next three years, with nearly three-quarters having said the CFO would rise in importance compared with other C-suite roles.
While CEOs acknowledged that the governance and regulatory burden on CFOs increased in recent years, 58 per cent believed the greatest opportunity a CFO had to affect the value of the organisation was in performance and growth. In terms of future expectations, the traditional contributions of a CFO – governance, control and efficiency – were barely mentioned by respondents.
A number of CEOs interviewed underlined the importance of having a big-picture-focused CFO. “They need to be more well-rounded, multidiscipline leaders with a strong line of thinking around business growth and shareholder returns,” said Tiak Koon Loh, CEO of Pactera. “The best CFOs, in my opinion, are not necessarily chartered accountants but MBAs.”
Philip Chronican, CEO of ANZ Bank, claimed he saw his own CFO’s agenda moving towards performance and growth, and is of the belief other companies will see a similar shift. “At a group level, we have strengthened the role of the CFO; it’s a more activist role,” he said. “Historically, the CFO role was more in the background. Today, they are at the centre of things.”
He suggested that had been the reason why ANZ Bank brought in a CFO who was “more of a business strategist,” and expanded the role to include strategy and M&A.
But contributing to strategy also means injecting a note of caution when the numbers may not add up. “Generally, if you are in growth mode, you need an aggressive CEO,” said Philip Wong, CEO of Xin Tian Di. “We need to grow our assets, we need to list the company and I am the one to drive the business. But my chairman always tells me ‘You need someone to hold you back.’
"So I have to rely on my CFO to give me advice from time to time or I could make the wrong investment choices. I have experienced what happens when you don’t listen to the CFO. I listen with an open mind. Given the global financial environment, the growing sophistication of technology, demands from investors, and increasing compliance requirements of the exchanges, the job of the CFO has become much more crucial."
He added that at Xin Tian Di, the CFO and CEO were more like partners.
For KPMG's Tham Choy, measuring and reporting risk is the most important mission of the CFO community in the future. “The entire investment community rationalises everything based on a risk-reward tradeoff,” he explained. “CFOs today can answer questions about profitability and ROE.”
In the next three years, CEOs expect their CFOs to be leveraging new technology to take advantage of evolving opportunities and transforming financial data into intelligence.
“The CFO has to start playing a major role in the whole technology agenda,” said Egidio Zarrella, clients and innovation partner and data and analytics head at KPMG. “They’re going to be asked more and more to find insight from the financials rather than just pumping historical data."