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CFO role has grown, but reality lags behind
A CHIEF financial officer (CFO) is envisioned as more than a finance head in a company these days, and one who should be a strategic partner to the chief executive officer.
Expectations of the role CFOs play have grown, but a new study released on Wednesday suggests that reality has some way to go to catch up with these expectations.
The study, commissioned by Deloitte, CPA Australia and the Singapore Accountancy Commission, found that just about all CFOs surveyed (99 per cent) believe that they and their finance teams need to be part of their company's strategic decision-making process.
Six in 10 of them, from a range of private and publicly listed companies from both the government and private sectors in the region, said their CEOs and boards expect them to be more focused on performance management, business support and strategy-setting.
In performance setting, they are expected to improve both individual and team performance so the entire organisation benefits. In providing business support, they are to go beyond support in the financial sense, to understand the business environment and generate valuable ideas and opportunities.
And in strategy setting, they are to shape and set the company's strategy while executing it to deliver returns to shareholders.
Ng Jiak See, CFO Programme leader for Deloitte South-east Asia and Singapore, said: "CFOs play a critical role in the stewardship of their organisations' finances. Our latest CFO survey revealed findings that are consistent with our observations of the sentiments in the finance industry."
However, the survey found that, while almost all CFOs said it was important for them and their finance teams to be part of their company's strategic decision-making process, only 70 per cent of them believe they are either sufficiently or very prepared to successfully execute the strategy of their companies.
Those surveyed said they are still spending more than a quarter of their time in traditional operator and steward roles.
Four in 10 said they are typically caught up in the day-to-day operations, which prevents them from being more strategically involved in the business.
Half the CFOs also said the lack of proper processes in place forces them to spend more time on the non-strategic parts of the business; the same proportion said there is not enough talent resources in the finance function to drive strategic initiatives.
Forty-two per cent of them said that their finance team is involved in their organisation's strategic decision-making process in the initial stage of the project, but half said they are brought into the picture only at some point later.
CFOs pointed out that communication issues stand in the way of their effectiveness. Just under half (48 per cent) said communication to the finance function is neither clear nor frequent enough; a similar proportion (46 per cent) said the finance function is not always consulted or in the loop for the communications on business strategies.
Ms Ng said: "From our conversations with CFOs from small to medium-sized enterprises in South-east Asia, we have observed that CFOs do not participate as frequently in business strategies as they would like to, and are kept in the loop only when numbers are involved.
"Including CFOs in the planning process will ensure that business decisions made are aligned, financially sound and, hence, result in a greater success during execution."
Securing high-performing talent is also an important factor to the success of a CFO, she added, because having an efficient team with strong finance capabilities can free up the CFO to drive strategic initiatives.
Melvin Yong, Singapore country head of CPA Australia, added: "With increasing business complexity and disruption caused by emerging technologies, CFOs clearly need more than just technical qualifications to grow the finance function and execute their companies' strategy.
"They need to learn continuously to build new skills or enhance their existing ones to become active strategists and more effective business partners to their CEOs."