Creating Value in the CFO Role

by | Feb 22

11 min read

A chief financial officer, or CFO, is required to have secured a unique blend of academic qualifications and business experience to take a company’s financial standing from survival to thriving. Here’s what you need to know before pursing this career path.

Take on the CFO job, and you’ll be the individual at a company who oversees everything financial – both from an operations and a strategy perspective. Not to blow your own trumpet, but certainly worth being fully aware of, is that once you’ve been hired into this position, you’ll be second only to the CEO in terms of corporate seniority.

Qualifications, earnings – take a look!

If this is your favoured career pinnacle, you should ideally begin with a bachelor’s degree in an accounting- or finance-related field (such as a BBusSc Finance and Accounting, for example), to provide your base knowledge.

A highly recommended second step is to take on a Master’s Degree in Business Administration (MBA), which will offer you the leadership insight and alert you to the management responsibilities that lie ahead. This is a fairly demanding study path, especially if you’re working at the same time – but one that will enhance your expertise and help you make the best possible business decisions when the time comes and you are required to do so.

Then, it’s worth noting that more than 75 percent of CFOs at listed companies in South African hold a chartered accountant – CA(SA) – designation, according to a study undertaken by the South African Institute of Chartered Accountants (SAICA). If you thought medical students had a long path to follow to earn the “doctor” title, qualifying as a chartered accountant usually takes a minimum of seven years – a three-year degree, a one-year honours and three years of internship. This, of course, is provided you are able to complete the undergraduate qualification, post-graduate qualification and board exams in double-quick time. Read more, here.

According to Getsmarter, an online learning platform with over 10 years experience in developing high-quality short courses that are offered at the world’s leading universities, your earnings at the entry level, in the middle of your career, and after gaining 15 years of experience as a CFO will differ as follows according to country:

Table 1: CFO earnings across your career, in SA, the UK and the USA

Entry Level                 Mid Career            15 Years’ Experience
SA R828 000              R945 000              R1 212 000
UK £74 000                £85 000                 £112 000
      (R1 606 764)        (R1 845 607)          (R2 432 417)
USA $94 000             $112 000                $144 000
      (R1 693 348)       (R2 017 607)          (R2 594 066)  

Note: Exchange rates correct at time of going to publication

Evolution of the role

If you have a retired family member who was a CFO at the pinnacle of their career, you may like to discuss with them how the role appears to be shifting from that of the good old days. Back in the day, according to the report “Four Faces of the CFO” (Deloitte), the CFO was required to:

• preserve a company’s assets by minimising risk and managing the books with aplomb;
• operate an altogether slick financial department.

Your now-retired family member probably didn’t do more than quality control, compliance, and the production/analysis of financial statements.

Today, however, societal matters such as economic uncertainty and rapid technological advances have brought about a shift in CFO jobs – so that the individual in this role is more outwards facing towards potential opportunities; may be required to get their strategist hat on to enhance business performance, when required; and should, ideally, act as a trusted confident of, and advisor to, the CEO when its cones to shaping their organisation’s corporate direction.

More than just maintaining the in-house financial viability against the backdrop of an uncertain external marketplace, so too the CFO must be adept at communicating the extent of this financial viability to everyone from customers, vendors and stakeholders, to bankers and even junior staff members.

Ideal CFO traits

According to TechTarget, a network of tech-specific websites that offer readers access to industry experts, independent content and astute analysis, a CFO is required to think ahead and implement business plans, with a corporation’s long-term goals firmly in mind.

This role’s management studies (especially the insights gained from completing an MBA), will mean he or she is equipped to see how each of the company’s main departments are working in tandem or not – and, thus, where guidance is required to kickstart improvement.

If you like to be very hands-on with the spreadsheets and calculator, this is the time to take a step back and develop your leadership skills so that you can hire the best-possible finance team, and thereafter delegate to them while overseeing their work, as and when this is required.

Your no-guts-no-glory trait, similar to that of your CEO, will facilitate your impetus to try new things and take calculated risks, with a view to enhancing the overall financial picture that you’ve inherited from your CFO predecessor.

How tech can ease the way

Another way in which the CFO role has changed from your parents’ day, is the way in which this person – as owner of the corporate budget – is required to collaborate with other departments, from IT and sales, to marketing and public relations, to ensure that the right digital tools are put in place to boost the company’s overall efficiency.

While a white paper, “Equipping CFOs For A Successful Enterprise Transformation” (SAP), is a highly recommended read [access the paper here], it could help to know by means of four short, precise tips the way tech could transform your enterprise and also make your life easier:

1) Tech can assist CFOs to turn data into useful customer and compliance-related insights;
2) Leveraging artificial intelligence (AI) and machine-learning can pinpoint emerging security risks, before they take hold;
3) Well-chosen digital tools can help solve business problems, by automating rote tasks and implementing analytics systems that anticipate a recession, for example – thereby allowing a CFO to put the required financial cushioning in place; and
4) Putting an enterprise-wide system in place will give a CFO a line of sight across all departments and functions, so that it is possible to collaborate with, and challenge your CEO on, emerging business models and potential areas for growth.

What to expect in an interview

Are you nervous for an upcoming CFO interview? The experts at Forbes share three secrets, to alert you to what HR managers and executive search teams are likely to have top of mind:

• Will you be a good culture fit, and get on like a house on fire with the current CEO?
• Will your industry experience be able to guide, in a strategic fashion, where the company is moving?
• Is your background steeped in integrity and an ethical approach to your work?

PS: Don’t be taken aback by the thorough background/due diligence check that may be carried out on you. If this is done when hiring you, it was likely have been done for other senior staff members too – and this should mean that you’re poised to be working with a highly reputable and straight-laced bunch.

What to know about fraud

Once you’re happily embedded in the CFO role, an important thing to keep aware of throughout your dealings is fraud. This is because almost half of all organisations ¬– 46 percent, according to the PwC Global Economic Crime and Fraud Survey 2022 – have reported at least one instance of fraud, corruption or another type of economic crime, over the past year alone. It’s all about making the most astute investments (in your systems and knowledge) to remain ahead of what the fraudsters are up to.

While you may at first find this area of your job description keeping you up at night, there are a few important things that you can do to rest easier.

• Put fraud protection insurance in place;
• Because it is easier to hack – or scam – a person than a machine, make sure your staff members receive regular cyber-crime-related training;
• Fight digital threats with digital solutions, because permitting just one manual step into an otherwise automated process (such as receiving some documents via email, when onboarding clients or suppliers is otherwise accomplished online) can prove a recipe for a malicious attack; and
• Invest, where you can, in integrated systems – that streamline processes across enterprise resource planning, accounting systems, sales and even customer relationship management systems.

By using such a service, often referred to as software as a service (SaaS), you will be alerted to potentially dodgy payment details at the point of entering the details – but, fortunately, before the funds have left the company’s business account.

Remember, as you set about meeting with software companies to choose the best and most secure options on offer, that integrated systems tend to cut down on the steps in any given business process. They improve a finance department’s efficiency, provide enhanced security, and boost the company’s bottom line as staff members are freed up to focus on what really needs their attention. You and the CEO will also experience greater peace of mind, allowing for more innovation and less worry in your day-to-day duties.

Moving on up…

While CFO may represent a career pinnacle for some people, others will continue to push and strive until they find themselves another notch up the career ladder – i.e. in the role of CEO. [See article: “So you want to be a CEO?”] But an article from Korn Ferry suggests that those in the head financial position at a company – as well as other C-level leaders – will be required to close various gaps in their skillsets to be effective as a CEO.

While the choice to remain a CFO would simply see you perfecting your financial, business strategy and management competencies, the 36 percent of global CFOs with an ardent desire to move on into the CEO role will be required to showcase something called” learning agility”.

This skillset (i.e. learning agility), reveals the article “CFO to CEO: The right-brain leadership gap” (Korn Ferry), can be separated into:

• self-awareness;
• mental agility;
• people agility;
• change agility;
• results agility.

As CFO, the latter point is probably your strongest – i.e. you will happily achieve results via your financial acumen. When preparing for the CEO role, however, the third bullet will be most critical – i.e. developing the social leadership ability to “influence, engage and inspire others”. Making the transition requires rising above the technical left-brain skills that have been critical within your previous position, and growing those skills that revolve around people and relationships.

Yes, there is an all-encompassing intensity to the CEO role in which your “tone, attitude and energy” can require great levels of reflection in order to get the best out of others. While you won’t be able to succeed without the left-brain skills of strategic thinking and financial clout, the right-brain competencies and, in fact, overall approach to life that will be required – being courageous, optimistic, influential, and inspirational – cannot be taught during a business course.

A life coach or mentor could, however, assist you to shift your mindset into CEO gear – by sharing reading material, case studies, and their experiences and learnings gleaned from working with other CFOs who want to be a CEO.

Fact fact 1: Short-course clout

Because CFOs are tasked with managing a very wide variety of demands within their company of choice, it can help for them to know at least an entry-level amount about many different areas of business. If you’re currently working within a finance department, and have your eyes on the CFO job, or are an entry-level CFO and feel a bit out of your depth regarding all matters outside money management – here are a couple of short courses you can take after hours (either online or in person):

• Import and export management;
• Commercial and contract law;
• Tax law;
• Human resources management;
• Business risk management.

Fast fact 2: Length of time it takes to reach CFO
• typically, 10 to 15 years

Fast fact 3: Top CFO Priorities
What should CFOs focus their attention on as we transition beyond the years of the pandemic into a work space where accelerating investment must be made in digital transformation? Gartner shares these three tips:

• Allow in-year resource flexibility, so that you are able to predict and respond to change as rapidly as possible;
• Adopt digital technologies such that your employees’ daily tasks are increasingly streamlined and efficient;
• Prioritise the release of funding for technology that enhances customer growth and financial outcomes.

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