#374: MM: The Expanding Mandate of the CFO

#374: MM: The Expanding Mandate of the CFO

Given finance professionals operate in a volatile, uncertain, complex and ambiguous world a lot of organizations are currently doing fundamental reviews of their business models to understand how they can accelerate the pace of change even further in such an environment.

In this bite-sized episode we share with you some of the pointers from McKinsey’s recent CFO survey and what it means for our finance teams and careers.


[00:00:00] Andrew: Hi everyone. And welcome to this week’s Monday memo. Hope you had a fantastic weekend and looking forward to the week ahead. I know I definitely am looking forward to catching up with some of you

[00:00:09] at the various events we would plan this week.

[00:00:11] Perhaps something interesting to consider for the week ahead is no given that also as finance professionals, we operate in this volatile, uncertain, complex, and ambiguous world. A lot of the organizations we support are current. Doing fundamental reviews of their business models to understand how they can accelerate the pace of change.

[00:00:33] Even further in such an environment, and I came across this survey that McKinsey runs they’ve been doing it. Past decade or so they run it every couple of years

[00:00:44] and they interview our survey a load of CFOs to get a sense of what the main trends are. One of these trends was quite interesting. They seem to be, there’s an expanding mandate, unbalanced for CFOs out there in our organizations. And what does that mean then for us as finance professionals, wherever we sash within finance, counting FP, and a shared services or whatever,

[00:01:07] And there was a really nice chart that examined the share of rolled in direct reporting relationship with the CFO and how those are changed, increased or decreased in percentage terms since the last survey and the one that saw the biggest increase was procurement.

[00:01:22] now that could be for a number of reasons. And it’s just interesting. I’m actually talking at a purchase to pay conference during the week.

[00:01:29] given finance as long association with reducing costs. And actually we touched the procurement process and a number of different points. That’s probably no surprise and maybe also, perhaps because the digitalization and driving that agenda to we’ve had to digitalize a lot of our finance processes and given this probably a lot of them, again, touching to procurement to world from source to pair purchase, to pay, you could see some synergies there, perhaps the other areas that have suffered some large increases indirect reporting into the CFOs investor relations.

[00:02:02] M and a digital enterprise transformation cybersecurity

[00:02:08] until a smaller extent. It now it’s not all been going one direction. Some areas have tended to shift away from CFO responsibilities, even though they might remain on the hall within the finance organization areas such as risk management, corporate strategy, regulatory compliance, pricing and internal audit.

[00:02:27] we’re looking at the chart on the whole. It does look like the CFO’s mandate has expanded. And I suppose we really shouldn’t be surprises that as finance professionals, whether we’re working in accounting, finance, FP, and a controller role shared services. We’ve actually got a number of comparative advantages, when we look at the value we offer organizations, for a start, most activities in organizations drive some sort of financial or some valued outcome that contributes towards objectives. Within the value chain and are reflected in numbers where the financial and non-financial, and given our training around the numbers and our analytical mindsets, we can translate the historical impact from those decisions and transactions and analyze the success of those two.

[00:03:14] Project forward, perhaps, what am, I mean for future ones? So we’ve got that backward and forward looking capability to express the numbers in some meaningful insights. We also have this broader view across multiple functions and a lot of the processes that run across multiple parts of our businesses and organizations touch finance in some way, or the juror, the processes are at the end when we’re spending our collective.

[00:03:39] So we’re very well positioned to connect the dots and think to just mentioned or source the payer procure to pay vendor management, Vassar data contracts, controllership budgets, payment, accounting, FP, and a are involved if the strategic monitoring of outcomes. So it touches multiple parts of finance and the organization along the way.

[00:04:00] Another comparative advantage I believe is highly prized is our perceived independence and objectivity. Ultimately, we’re there to represent shareholders, ensure that your organizations are going concern, safeguard assets, which means we have to balance the long-term interest of the organizations versus maybe some shorter term business priorities or pressures as well as ensuring ethical decisions are being made. And. More often than not, that means that we provide unbiased advice. But we also stand on the tracks. If a decision again is particularly fatal or in our minds might impact the ability of the organization to be a going concern.

[00:04:40] For instance, cyber security is one, one example, making sure we’ve got the right focus on that. Doesn’t drive an immediate increase in revenue or margin. However, it does reduce the. I’ll be impact to an organization from a going concern perspective, the risk of business disruption, or a negative reputational damage from a data breach or a ransomware attack.

[00:05:01] So it does sort of make sense that CFOs might becoming more responsible for this. Also, we’ve got this great access to data. The bread and butter has been our financial data access and the advancements of the ESG. Probably means that more finance teams now are kicking the tires around non-financial data, all the functions that we’ve accessed to the key decision makers, because normally finance works and signs off and resource allocations with other functions.

[00:05:28] So that means we’ve got a great access to those decision makers, normally a seat at the decision-making table as well. When you combine that with the improvements we’ve been making in our business, partnering skills. It wouldn’t be a surprise to see some of those matrix lines of our dotted lines of reporting into the CFO become a bit more formalized and a closer relationship with finance, evolving their. And then finally I think is touched on it previously, is that the majority of finance roles or traditional finance roles are at risk digitalization.

[00:06:01] I talked about this over the past number of years. So we’ve had this massive first mover advantage of having gone through a lot of the pain around that to digitalize our own processes, which means that we’ve got a good insights on how to do that. Having gone through a lot of that digitalization pain, but also the upside as well.

[00:06:20] When we emerge out the other side, I think there’s further opportunity out there for also as accounting, finance, FP, and a professionals to benefit from the expanding scope of our function. And the CFOs, they need to build the right bench to people with the new capabilities and data science, software engineering, perhaps risk management business partnering analytics.

[00:06:46] So given that we’ve got this increasing breadth of skills required for finance professionals, it’s great. It gives us an opportunity to grow those skill sets of prior strengths in new areas, grow our knowledge base, the different types of roles we can aspire to play just increases. We’ve got this bigger canvas to make an impact to make a more meaningful difference.

[00:07:07] and that’s why we do the strengthen, the numbers show to share with you what’s happening. As we navigate these very sort of complex and changing times that we find ourselves in what people are doing well in finance and accounting and FP and a where perhaps we could do a little bit better, what we’re learning, which in turn helps us exaggerate the impact and success we can have in our own careers within our own teams and organizations. So look, hope you enjoyed this week’s episode. If you did have, please

[00:07:33] remember to subscribe and let your friends and colleagues know about us. We’re on all the major platforms, iTunes, Stitcher, SoundCloud, YouTube, Spotify, and Amazon music.

[00:07:40] So, thanks again for tuning in, have a great week ahead and until next time, take care of yourselves and that’s keep on building our strength in the numbers.

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