Changing operating models are transforming the role of the chief financial officer (CFO). The role was once seen as staid and steady, but it’s becoming multi-faceted. Beyond number-crunching, the modern CFO is a thought leader, involved in developing strategy, creating shareholder value and communicating the organization’s mission — in addition to being a voice of financial discipline.
This means that finance leaders need to develop new capabilities and skills, to prepare for new risks in the digital world of business and maximize the return on investments in the best innovations for their organization.
Executive education courses are helping finance leaders broaden their perspective and prepare for the changing role of the CFO by enhancing their leadership, strategy and communication abilities.
In Shanghai, China Europe International Business School runs the Chief Financial Officer Programme, which is designed to help CFOs become major strategic partners, not just chief accountants. “Technology advancement has enabled CFOs to avoid tedious documentation and analytical processes, and focus on more essential and macro issues,” says professor Su Xijia, program director.
People’s expectation of this role is also driving its evolution. “In the past, the main job of CFOs was mainly to provide information and report financial results,” says Xijia. “But we are now facing a more complex operational environment, faster iterations of products, and increasing management issues.”
Thus, CFOs are expected to shoulder more responsibilities, such as aligning strategies, resource allocation, and incentives-planning. The CEIBS program is multi-disciplinary, including courses often neglected in traditional financial education, such as macroeconomics and leadership.
“After studying in the program, students will improve their core competencies and learn new technologies, digital transformation, risk control, integration of business and finance, ESG reporting, and taxation,” Xijia says.
How can CFOs more effectively use data?
In Finland, the Aalto CFO Program aims to renew understanding of the CFO role and refresh knowledge of the latest financial concepts and practices. Participants will deepen their perspective on the digitalizing business environment and emerging opportunities as well as learn new ways to influence and communicate.
“The program gives the opportunity to strengthen your role as a financial leader and gain a strong toolkit for creating more value for the company,” says Jukka Nordlund, senior program manager at Aalto University Executive Education. The program credits can also be transferred into Aalto’s MBA or EMBA degree courses.
A core aspect of the Aalto CFO Program is digitalization, as the quantity of data and possibilities to utilize it in decision making and business development increase. “AI and machine learning applications create great opportunities for business development, such as through better prediction models, or through process optimization using prescriptive analytics,” says Nordlund.
CFOs don’t necessarily need to become data analysts themselves, but they need to understand the emerging possibilities automation, AI and data analytics offer — and they need to be able speak the same language as data experts.
Also on the CFO radar: environmental, social, and governance concerns
On top of digitalization, another major development impacting the CFO role is the growing importance of ESG (environmental, social and governance) factors in financial reporting, says Martin Glaum, the academic director of the “Digital CFO” seminar at WHU – Otto Beisheim School of Management in Germany.
This executive program focuses on the changes to the operating landscape and how CFOs can fill the business partner role through emerging technologies and lean processes. Glaum says ESG is today on the top of the agenda at most large companies, especially given the new EU non-financial reporting directive, which lays down the rules on disclosure of non-financial information by certain large companies.
“CFOs must be on top of this,” he says. “There is a massively increased demand for ESG information, within firms and in the financial market.” The finance function traditionally is seen as the ‘guardian’ of business data and reporting, so he says it’s natural to make the CFO ultimately responsible for ESG reporting.
This is challenging, however, because of the diverse and sometimes unclear nature of ESG information. “The CFO needs to have a good understanding of what ESG is all about, the relevant regulations, and what ESG means for [their] firm and [industry],” Glaum says.
He adds that a CFO today needs more social and communication skills than in the past, as they are now dealing with a more diverse range of stakeholders. Indeed, the Chief Financial Officer Programme at London Business School helps build the skills and confidence to communicate financial acumen and collaborate across different functions.
This helps participants — senior finance executives — to become more influential, leading internal and external stakeholder groups with greater success. “The role has evolved from the glorified book-keeper: now the CFO is someone who can talk about the strategy of the corporation. They will have a very prominent role in strategic decision-making,” says Henri Servaes, co-director of the program.
One unique aspect to the LBS course is that it’s taught by those at the cutting-edge of research in finance and corporate governance. This keeps the curriculum current, and attracts a high calibre of student. “It’s people who want to do their job better, and people who want to move up from being a CFO to becoming a CEO [that enrol],” says Sir Andrew Likierman, professor of management practice at LBS, who teaches on the CFO program.
He adds that executive education is not just reflecting the changing role of the CFO, it’s also driving that change. “The CFO can be regarded as a safe pair of hands, but we would like give them a much broader view beyond finance.”