The evolution of the role of the chief financial officer has been underway for well over a decade, but in the past few years the pace of change has accelerated. Today’s CFOs are often responsible for many of the tasks that were traditionally and firmly in the lap of the chief executive.

A substantial 82% of almost 600 CFOs surveyed in a global study by Egon Zehnder said that their role had significantly grown in the past five years to encompass additional responsibilities, including environmental, social and governance (ESG); mergers and acquisitions (M&A); and corporate development duties.

Around half of CFOs interviewed had taken on ESG or M&A and corporate development roles in the last two years, the research found. CFOs in the industrial sector were the most likely to have added ESG responsibilities to their remit, while cybersecurity was more likely to be a recent addition for healthcare and pharmaceuticals CFOs than those in other industries. 

Over the next five years, it’s predicted that the CFO role will continue to expand. CFOs ranked driving change, shaping strategy and developing talent as the skills that will matter most. Female CFOs were adamant about driving change – 57% named this the key competency compared to 40% of male CFOs. 

“I expect my CFO to be the headlights on the bus, spotting the potholes and the problems that are coming up. Scenario planning is key, because none of us can predict exactly what’s going to happen, which means I need my CFO to be prepared for every eventuality,” says Sarah Walker-Smith, ACA, CEO of law firm Shakespeare Martineau.

Such is the rate of change that more than a quarter of FTSE 100 CFOs left their jobs in the first nine months of last year – the highest rate for five years. It’s almost double the 14 CFOs who left FTSE 100 companies in the first nine months of 2022, according to data from Russell Reynolds Associates.

A new generation

The expanding role of the CFO was one of the reasons attributed to many of the departures from listed companies. Critically though, another key reason was the need to refresh top teams with a new generation of strategically minded CFOs. 

Ben Jones, Head of the European CFO Practice at Russell Reynolds Associates, attributed this trend to chief executives increasingly looking for CFOs to advise on strategy, and having the operational grip to drive transformation and adopt or integrate the benefits of digital transformation.

Changes to business driven primarily by technology advances are reshaping how finance functions work and what the CEO needs from their finance chief, leading to changing demands on the CFO.

Mark Cracknell, ACA, a former CFO who founded Finance Utopia in 2019, says that a vision and ability to execute digital automation is a vital trait for CFOs and will remain so for the foreseeable future.

“It’s still about efficiency, about making finance function as efficiently as it can be. It’s a story that’s been out there for a long time, but it’s still very valid. The main area that I see is still around automation of basic processes,” Cracknell says.

Critically, he says CFOs need to understand the power of technology, how to harness it and how to ensure organisations benefit.

“CFOs really need to understand the art of the impossible. What can digital do for me and my organisation? – that’s got to be the starting point. Understanding what’s out there, how to harness it and what benefits will it bring to my organisation. That way your finance team then starts to add value in the right places in terms of insight,” Cracknell says.

CFOs have also got to want to put the finance function at the top table and for it not to be an administrative back-end function. This might explain why many CFOs of a particular age are leaving the CFO role at such a critical time of change. 

CEOs need agile, technological-minded CFOs who can oversee the digital transformation that organisations currently need, experts say.

“CFOs in their late 50s, early 60s haven’t necessarily been brought up with digital. They may not be as enthusiastic about embracing it as other people who have been brought up with it,” Cracknell says.

The ability to translate data into a good story and then communicate that narrative in a way that non-financial people understand is increasingly looked for in CFOs. Finance chiefs must also take on the role of influencer to persuade teams and bring them along on the digital journey to oversee the widespread change that’s needed in finance and business.

Given the global volatility and uncertainty Walker-Smith says the modern CFO also needs strong communication skills and good people management.

“The ability to convey assurance and confidence but without being overly confident is essential. You want to know that the CFO is in control – people will be watching the CFO, particularly in such volatile business times, to assess whether they look calm and in control,” she says.

Understanding a little psychology would be beneficial for CFOs in these times. Communication is also about knowing when and what to communicate. “You want your CFO to anticipate issues, particularly if you’ve got investors,” Walker-Smith says.

An external focus is critical for CFOs, but also an ability to adapt very quickly to internal scenarios, and the flexibility to look further ahead, Walker-Smith says. In the past, CFOs with good people skills might have been a nice-to-have: nowadays it’s a must-have.

For aspiring CFOs or finance chiefs who want to move on up, these non-technical skills will be increasingly essential. To develop them, Walker-Smith suggests getting a good mentor and/or a group of trusted individuals who you can talk to and get feedback from.

She also advises understanding different leadership styles – autocratic, participative – and seeing where you fit in, to understand more about yourself and enable you to fill in any gaps.

“Play to the strengths of everybody in the team,” she says. “It seems such an obvious thing but it’s often overlooked: understanding how to run your team as a team. Dial up the strengths of certain people when you need them. Manage the mix, not the individuals.”