Throughout 2016 we surveyed more than 1,300 CFOs on topics ranging from their relationship with CEOs to multiple scenario planning to hiring plans to the tracking of nonfinancial KPIs. While the topics are varied, one commonality emerged: The expectations for CFOs and their teams continue to rise. As finance increasingly is integrated deeper into the business—no longer just a gatekeeper, but a true partner—CFOs reported on key changes they and their teams are experiencing or expect to experience in the coming years.
We share our top findings from CFOs for 2016 below.
1. CFOs and CEOs value different skills for the CFO role
The skill set for successful CFOs today is vastly different than when the role originated nearly 50 years ago. Today’s CFO must be a strategic advisor, a business partner, and a communicator, in addition to the finance, compliance, and reporting roles he or she traditionally held. In our Q2 2016 survey, we reported that 65% of CFOs cited technical and analytical skills as the most important attribute for their performance. This was in contrast to CEOs, in our partner KPMG’s survey “A view from the top,” where only 8% ranked technical and analytical skills as most important. Instead, CEOs ranked global experience the highest, signaling a disconnect between what each expects of the CFO.
Yet where CFOs and CEOs were aligned was on the need for CFOs to have experience with transformation and innovation—both groups ranked it the second most important skill. As the CFO role continues to evolve, CFOs will need to lead their organizations to provide greater strategic value, which will require transformation and innovation across not just the office of finance, but the entire organization.
2. Collaboration is not a ‘nice to have’ but a ‘must-have’ for today’s finance teams
Collaboration is top of mind for CFOs, according to our research in 2016. In our report, we noted that 70% of CFOs cited collaboration with other parts of the organization as a top initiative for their finance teams in 2016.
The emphasis on collaboration is being fueled by the need for finance to gain access to data from across the organization. Today’s finance team must incorporate operational and financial data, which requires it to partner with HR, sales, marketing, manufacturing, etc. for data. These new demands are changing the required skill sets for finance teams. According to our survey, the top skills that CFOs seek for their finance teams today are a mix of hard (Excel, analytics) and soft (interpersonal, collaboration) skills.
3. Nonfinancial KPIs provide clarity for the business
When we asked CFOs about nonfinancial KPIs, it was no surprise that 76% of reporting CFOs currently track them. Their teams are already collaborating more across the organization, as noted above, and measuring nonfinancial KPIs such as customer success, supply chain data, or employee retention provides a more accurate, long-term view of an organization’s future. And, over half of the CFOs expect nonfinancial KPIs to comprise up to 30% of their KPIs in the next two years. Today’s CFOs—and their teams—must know the business drivers behind the financials and their potential to impact the company’s future. But that knowledge requires both business understanding—a skill that many CFOs identify as the one missing from their teams—and more efficient business processes.
As key leaders of strategy and primary owners of data in their organizations, CFOs are in the best position to drive the process of defining and identifying the nonfinancial KPIs that will best lend themselves to accurately forecasting future corporate performance.
4. Planning for multiple scenarios is key
Last year, CFOs were faced with a changing regulatory environment and an uncertain economy. Yet many CFOs remained confident in their ability to accurately forecast sales for their organization, according to our survey. Where does the confidence come from? CFOs reported it was their ability to leverage multiple scenario planning and analytics. Nearly half (48%) of CFOs reported that during a market contraction they could provide the most value by planning for multiple scenarios, and 64% indicated they would deal with regulatory changes via multiple scenario planning.
Risk assessment has always been under the purview of the CFO, and that will continue. But today’s scenario planning incorporates a broader set of data and a macro view of the business. With that, CFOs can increase their competitive advantage and better position their organization to adapt to an ever-changing—and sometimes volatile—business environment.
5. Data ownership is shifting to the CFO
One of the biggest changes for CFOs, according to our surveys, appears to be the shift in data ownership. The CFO has always owned the financial data in the company. But, today, as noted above, CFOs and their teams are working more collaboratively across the organization and are tracking nonfinancial KPIs—and all the data that support those KPIs from across the organization.
As a result, nearly half (45%) of the CFOs in our survey reported that they have assumed the chief data officer role in their organization. This places a greater burden on the office of finance, as it is now increasingly tasked with managing and verifying data from disparate systems across the business, in addition to its existing CFO tasks.
Our 2016 surveys clearly reflect the changes taking place for CFOs and their teams. As CFOs continue to assume a greater strategic role in the C-suite, process, organizational, and team changes must be made. Our next survey, to be published in February, takes an in-depth look at the efficiency of reporting and the challenges associated with increased demands for organizational-wide data and insights. We look forward to sharing the results with you.