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Beyond financial expertise: Why well-rounded CFOs drive greater value
Posted by Grace Townsley
August 8, 2023
When you consider the traits of a value-driving, high-performing CFO, what comes to mind? Financial acumen, leadership capabilities, strategic thinking and integrity may be a few of the most commonly sought-after CFO traits. But according to a recent report by EY, hunger for change may be one of the biggest indicators of a CFO capable of unlocking real value for your company.
Today’s CFOs need more than financial expertise to navigate complex market demands
Financial expertise is foundational for a CFO’s success. But on its own, financial knowledge may not be enough to equip CFOs to take their company to the next level.
The demands CFOs are now under are as nuanced as they are contradictory. Expand rapidly, but find ways to reduce companywide expenses. Innovate, but don’t bring on unnecessary risk. Create best-in-class long-term value, but continually look for ways to drive short-term wins. These requirements put pressure on CFOs — and go far beyond financial reports and forecasting.
In preparing its 2023 CFO report, EY gathered insights from 1,000 CFOs and senior finance leaders. That research revealed three specific challenges finance leaders are facing in 2023:
Balancing short-term and long-term gains.
Many CFOs are being asked to drop key company investments and future-revenue projects to cut short-term costs — at the expense of long-term value.
Innovating in a risk-averse market.
CFOs are naturally risk-aware, cautiously approaching new opportunities with an eye for stability. But generating the kind of cost-effective improvements leadership is really after often requires innovative thinking and some level of trial-and-error.
Building leadership skills in a traditionally finance-focused role.
CFOs’ backgrounds typically include advanced finance and accounting. But in this role, leadership, communication and emotional intelligence are just as essential — but rarely taught in school.
CFOs who want to drive deeper value in an uncertain market need more than accounting and finance knowledge. To help their company get ahead — and stay there — they must learn new levels of adaptability, innovation, change management and people skills.
Let’s take a closer look at how CFOs can address each of these unique emerging challenges:
Balancing short-term and long-term gains
In EY’s report, 50% of surveyed CFO and finance leaders say they’ve had to cut funding in areas meant for long-term gains, just to meet short-term earnings targets. And 67% of respondents admitted to facing tension among leaders about balancing short- and long-term priorities.
Short-term project cuts may improve earnings for a quarter or a year, pleasing stakeholders and other senior leaders for a time. But quick fixes can create other lasting issues. Instead of sacrificing the big picture, CFOs have the opportunity to use their financial insights and projections to prove the real-world value of holding onto priority projects — and cutting costs elsewhere. When leadership disagrees about how to balance the bottom line, it’s up to the CFO to protect the company’s long-term best interests.
Innovating in a risk-averse market
Just 14% of EY’s surveyed CFOs and finance leaders plan to drive transformational initiatives over the next three years. The main reason more CFOs aren’t in a position to create change? Seventy-two percent believe “traditional back-office behaviors and mindsets” are getting in the way of innovation, while 55% believe finance culture change is needed before transformation can happen.
Innovation may be necessary for survival, but in 2023, CFOs are facing significant headwinds in their pursuit of it. Few finance leaders believe their company can manage transformational change, despite evidence that change can actually drive value today and in the future.
CFOs who are willing and able to bring change in this shaky market are likely to do so through greater digitization, shifting the finance culture within their company, and focusing on finance leadership development.
Building leadership skills in a finance-focused role
In the past, a CFO needed little more than a clear understanding of financial reports, metrics and forecasts to fulfill their role. Now, companies are increasingly looking to their CFOs for strategy, in addition to analysis and forecasting. But traditional finance education doesn’t teach the kind of leadership, communication and strategic thinking required to fill this need.
The biggest development challenges EY’s surveyed CFOs are currently facing in their role is finding time to develop their strategic knowledge, expand their role expertise and review thought leadership content. These CFOs recognize the need for personal development, but struggle to find ways to implement it themselves, especially when other job requirements are competing for their attention.
The rare CFO who is exceptionally knowledgeable, strategically minded and willing to embrace innovative change is the one best positioned to drive deeper company value in this market. And while CFOs may not be fully equipped through traditional education to offer this higher level of support, creating intentional time and opportunities for professional development can give them the additional expertise needed to excel in their role. With a greater emphasis placed on priority-project value, innovation and leadership development, CFOs can meaningfully contribute to their company’s long-term growth and success.
Want more? In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact ushere.
As a professional copywriter in the finance and B2B space, Grace Townsley offers small business leaders big insights—one precisely chosen word at a time. Let's connect!