The role of the CFO has changed significantly in recent years. Fifty years ago, hardly any company had a CFO, but today it’s a role with an ever increasing number of responsibilities. Are CFOs becoming the modern day Sun Kings? Or are their days numbered?
We all know how the joke goes: “How can you tell when a CFO is becoming more tolerant? He lets marketing present the entire budget before he says no.” From bookkeeper to consultant, CFOs are no longer the kill switch they once were. That automation will help to reduce operational tasks and facilitate him to adopt a more strategic role, is a recurring theme in all business literature. But what’s the next step? We’re all speculating, but apart from the trend watchers with their far-fetched ideas, nobody seems to have an answer. What’s the next stage in the CFO’s transformation? And, maybe more important, is there actually a next stage?
Will it happen like Erik van der Steen, Partner Advisory Digital Finance at EY, believes it will? He remarks that “the days of the business controller and the CFO are numbered [..] All that will remain is a small team using a superior skill set in design, monitoring and process optimisation, supporting management in value creation.”
Authority in the cockpit
I wouldn’t yet go so far as to claim that the CFO will disappear entirely, but the question of what the boardroom will look like in a few years is a relevant one. If we look at where we’re headed in terms of automation and robotization, then technology will result in the eradication of functions in their present form.
Compare it to the transformation of roles in an aeroplane cockpit. There used to be a flight engineer (read: CIO) on board, whose primary responsibility was to monitor systems: if something went wrong, he would search for a solution. With technology having made this role obsolete, only two staff remain: the pilot (CEO) and the co-pilot (CFO). We see co-pilots as number crunchers who may monitor the autopilot when the pilot leaves the cockpit for a break. Very recognisable.
But the difference between them is in the authority, ultimate responsibility and decision-making power of the pilot. And to perform this role properly, it’s sometimes best to hand control to the co-pilot in exceptional or crisis situations. This gives the pilot time and space to communicate with air traffic control (read: stakeholders) and cabin crew (read: the internal organisation).
But the comparison goes even further. The pilot’s and co-pilot’s manual tasks are increasingly being automated. Technological developments are taking over those processes in which human action poses a risk: a process that we also see with no hands accounting.
So what’s left? The strategic decisions that need to be taken before and during the flight- and all that on the basis of data analysis, which tells us how we can fly as efficiently and effectively as possible.
The imperialistic CFO
Back to the role of the CFO in the boardroom. In many ways, it’s the CIO who has been replaced by the tandem of CEO and CFO, with the latter seeing their role, responsibilities, and therefore their influence, grow. For example, the CFO is expected to have a fundamental understanding of the business. After all, they have to function as ‘CIO’ and take IT decisions that support business objectives. In addition, the CFO needs strong analytical skills and use the company data to make predictive analyses. They also have to be able to translate complex financial information and communicate this to staff and stakeholders. There’s even a bit of CHRO hidden within the role. Financial professionals are used to thinking in terms of processes and how to automate them. It’s up to the CFO to help the company grow into a smart organisation. Ultimately, technology is the enabler and people provide the added value. The CFO already has experience here with the transformation of the financial administration.
Though this depends on the type of organisation, and happens primarily in SMEs. All aspects of large corporations are relevant, but the hierarchy doesn’t typically lend itself to the individual design of C-functions like these. Are we heading for a board with the CFO as an imperialistic Sun King, a role with more power than that of the CEO? The growing number of tools that CFOs have at their disposal allows them to accurately measure corporate performance; but it also enables them to make the figures to work for them, so that they always support the CFO’s decisions.
Or is the CFO under so much pressure from conflicting interests that the job is becoming too overwhelming for a single individual?
And can we, with these new responsibilities and the reduction of actual bookkeeping, still speak of ‘a CFO’? Some technology companies appoint a staff member with a technical instead of a finance background to fill the role. They would be a better fit because they are seen as superior innovation drivers.
And that completes the circle. Are we headed for a CFO that’s more of an all-rounder, something unfeasible? Or is the end nigh for the CFO, with a new role on the horizon in the C-suite?