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CFOs need new skills for future challenges

A survey of more than 500 chief financial officers, conducted by McKinsey at the beginning of 2016, shows that the role is becoming increasingly diversified and that the CFO mandate is expanding to cover areas including IT, cybersecurity, risk and M&A.

What does a CFO actually do?

The survey begged the questions 'what does a CFO actually do?' and the answer is 'not what you think'. It found that CFOs are increasingly taking on responsibility for areas outside their traditional domain and many non-financial functions now report in to the CFO. These include: corporate strategy, regulatory compliance, IT, investor relations, cybersecurity, digital and physical security. This logically leads to CFOs having to spend more of their time on non-financial matters. More than four out of 10 reported that they are now spending most of their time on non-financial issues, such as strategic leadership, organisation transformation and performance management. The graph below shows how CFOs are mainly spending their time:

There is also concern that companies don't have the necessary skills and resources to successfully digitise their activities. The graph below shows that fewer than half of companies said they feel well prepared to be competitive in the areas of digitising business activities, managing shareholder activists, cybersecurity and big data.

Key findings from the survey include:

  • more than half of CFOs said that the areas of risk management, regulatory compliance, as well as M&A transactions all report into them;
  • on average, five functions other than finance now report to the CFO;
  • forty-one per cent of CFOs said that in 2015, they spent most of their time on roles other than specialty finance or traditional finance. These other rules include strategic leadership, organisation transformation and performance management;
  • there are differing views on where CFOs add most value to the company: 18 per cent say it's through their traditional finance work, while 22 per cent say it's through strategic leadership;
  • two-thirds of respondents said that CFOs should spend more time in future on strategic leadership, as well as organizational transformation, performance management, and big data and technology trends;
  • two-thirds of CFOs say their companies do not yet have the capabilities for agile decision-making, scenario planning, and decentralised decision-making they’ll need to be competitive in the coming years;
  • 87 per cent of CFOs rate their finance functions as effective, only 56 per cent of other C-level executives say the same;
  • CFOs are more likely to cite a lack of resources and skills as barriers to effective finance-function performance, while other executives are more likely to say that barriers to effective finance-function are caused by a lack of innovation mind-sets;
  • many say their companies use basic financial controls in their decision-making—but few report the use of more advanced practices;
  • only a quarter of CFOs use innovative ways to identify projects to fund or defund and only 30 per cent have a formal process to review investments made 3-5 years ago.  

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