The Chief Financial Officer is very much in the eye of the storm of the current economic turmoil. They need to find answers to the impact of inflation, the rising cost of capital, shareholder unrest, and to somehow keep a view on how to invest in the future to drive growth.
It’s not an easy gig. The topics of volatility, growth and transformation were a key focus of debate at Criticaleye’s recent CFO Forum, where attendees and speakers discussed how to juggle competing pressures with a view on building forward momentum and high performance.
Bérangère Michel, CFO at John Lewis & Partners, described how communication is such an important aspect of her role. “Part of my objective is to explain the rationale for our plans and actions. Effectively explaining to people the situation we're in – in quite an adult way – and therefore what needs to happen and why and what it might mean for them,” she said.
By fostering strong relationships and open lines of communication, CFOs can gain buy-in from stakeholders, align their expectations and secure the necessary resources for transformative initiatives. “As a CFO, you’re almost like the arbitrator of the tension between various objectives. It's a very interesting position to be [in], but it is also quite isolating at times,” said Bérangère.
Charlie Wagstaff, Managing Director at Criticaleye, commented: “The defining characteristic of a really high performing CFO is one that has the ability to collaborate and partner across an organisation, someone that is able to support and challenge the CEO, understands the Board, and is close to the drivers of the business, especially customers. They will also retain that big picture, strategic view. To be at the very top of your game, a successful CFO needs strong EQ.”
New Models for Growth
During the Forum, attendees were asked if they had the right mix of talent and technology to outperform over the next 12 months – 61 percent answered ‘no’. It serves to illustrate how CFOs are right at the heart of the heavy-duty organisational change that is underway.
Bruce Cox, Non-executive Director of Aurelia Metals and a former CEO and CFO, shared his views on what it takes to lead significant transformation as a finance leader. He said: “The first thing you've got to change is yourself. Whether you're the CFO or the CEO, you need to actually change your own mindset. Secondly, you need to focus on culture; you can't go from A to Z without changing the culture of your organisation.
“The third element is programme management. With such a major change, including cultural change, and the values and the wealth that you're trying to create, you need to have a drumbeat in terms of programme management.”
Bruce, who led transformation initiatives during his tenure as CEO of Rio Tinto Diamonds and Rio Tinto Aluminium, outlined the importance of the CFO as the co-pilot to the CEO. “The CFO also needs to provide the tools to help the organisation monitor and manage the change that's required. This is particularly necessary in generating and monitoring value-driven ideas and driving those ideas from the bottom of the organisation all the way to the top,” he said.
Vincent Toolan explained the transformation journey he spearheaded as CFO of dunnhumby, the customer insights and analytics company. “The first thing was to make big changes structurally, which was to centralise… reporting lines. However, we're talking about human beings. People's behaviour does not necessarily map perfectly to what you draw in an org chart or on PowerPoint. So, it's making clear the accountabilities and goals. I'm very disciplined about setting OKRs [objectives and key results],” said Vincent.
By leveraging financial data and analytics, CFOs can identify growth opportunities, optimise resource allocation and drive efficiency. “I don't want to overstate it in the sense that, coming up with great analysis or management reporting and strategic planning, doesn't in itself change the fundamental nature of the business, or at least not overnight, but from the CFO point of view, it was a successful exercise,” he said.
Once again, the point was made about the need to manage a multitude of stakeholders and showing a willingness to take on other responsibilities. Ed Jones, Non-executive Director of NOW: Pensions, said that this was the case when he was CFO at Carnival UK, a cruise ship company. “I ended up leading a number of transformations in addition to my normal CFO responsibilities because we were really up for change, although inexperienced in it, which was an interesting combination. I learned that you needed inspiring leadership, a clear strategy and lots of communication with your organisation to be successful.”
He also outlined the benefits of fostering collaboration and building strong relationships across departments. He said: “The whole organisation went on a significant change journey as we quadrupled in size. I spent a lot of time working with the CEO and the HR Director on the various reorganisations we did, including in finance.
“Over time, in finance, we built up to strategic business partnering with a small team focused on data and MI [management information]. We also had a team focused on supporting finance and the business through process simplification and systems change. We put ourselves through the same rigours as we put everybody else. We needed a business case for change to ensure we were clear at the outset and to hold ourselves to account on the outcome.”
A good CFO will leverage their financial expertise, strategic vision and communication skills. “You want your employees to embrace where the organisation is going,” said Bruce. “That means you also have to emotionally commit to that change.”
By Bridgette Hall, Senior Editor, Criticaleye
Our CFO Retreat is being held on 9th / 10th November. We'll be discussing AI, organisational resilience, sustainability, strategic alignment in the Boardroom, the investor landscape and how to make the transition to becoming a non-executive director. For more information, click here
