For the past decade, EY has run its ‘DNA of the CFO’ programme – an annual celebration of the chief financial officer (CFO). The programme is complete with global surveys of attitudes toward the role, research into the looming challenges and insights into what the most successful CFOs bring to the job.

It’s fair to say that little changes year on year. In 2016, the survey laid out what EY identified as the four key trends disrupting finance leadership: digital, data, risk and uncertainty, and finally stakeholder scrutiny and regulation.

It all adds up to the same thing. Today’s CFO has to cope with it all – external disruption in the marketplace, increasingly engaged (and occasionally activist) shareholders, internal challenges of cost reduction, IT developments, the need to attract the best and the brightest from a small and competitive talent pool. And that’s not to mention keeping the CEO’s latest moonshot idea a grounded, affordable reality.

So it’s not surprising that the role of CFO has begun to gain the reputation of the impossible job: ignored as a functionary when the business succeeds, but the first in the firing line when things go wrong. Recent events at Patisserie Valerie, among others, show the value of – and risks attached to – the role.

And the future is uncertain. The consensus view is that over the next 10 years automation will strip out layers of finance staff. Corporates will carry fewer pure accountants, most of whom will be working for the outsourcers, not for the companies.

Audit itself will shift to real time and be largely automated, upending the model of audit-trained accountants ascending the corporate ladder to the CFO’s office. That in turn presents a real challenge for CFOs to think about the types of people they need in the future: people who are still analytical, creative and curious. And, as soft skills become ever more important, CFOs need to be great negotiators, facilitators, communicators and presenters. And, above all, agents of change.

“You’ve got to have that commercial and strategic awareness,” says Richard Pennycook, former chief executive at Co-Op and former FD for Morrisons. “The functional specialist piece is a given. You absolutely have to have a feel for how your business operates, what its strategy should be and support the CEO in that strategic journey. You also need strength of character to say no if you don’t agree with your CEO.”

And it’s not just hitting the right numbers. Swag Mukerji, group CFO at Centaur Media, identifies the biggest challenge as an FD is “to be able to go into a traditional organisation and demonstrate to them that finance actually has a value-added role to play in the business”.

So what does the modern CFO look like – and what makes them different to their predecessors?

“The ability to be a sounding board for the CEO combined with the ability to influence and challenge is massively important,” says Pinesh Mehta who, having spent eight years in corporate finance at KPMG, is now an investor at the Business Growth Fund (BGF). “Ultimately CEOs are by nature entrepreneurial and you’d hopefully have the check and balance with a CFO who at times can rein it in where required.”

Mehta works closely with CFOs at investee companies and points to examples from the BGF portfolio where the finance chief is central to navigating headwinds by influencing senior colleagues. “In some sectors where disruption is threatening the business model and existing conventions, we need an FD who can recognise what’s coming and has the ability to try to change internally,” says Mehta.

She adds: “If there is disruption going on in the market and the CEO is worried they’re going to lose all their customers over the next two years because of that, my assumption is that the CFO should be there at the top table with the CEO trying to understand what they need to do.”

It all comes down to anticipation. “The CFOs that we rate and look for have the ability to be aware of disruption ahead of time,” Mehta explains. “They’re on the ball and, while they might not necessarily have a thought-through plan on day one to present to the board, they at least raise the issues and work it out collectively.”

Neha Mittal is the CFO of fintech firm MarketInvoice. Despite her educational achievements (she has completed an MBA at Wharton), she maintains that no CFO can hope to flourish without continuing to add to their knowledge. “The MBA was a great training ground for strategic thinking and then I had my own company, which taught me about resource constraints,” she says. “That said, for scaling companies you have to be constantly learning because things change and you have to change along with them."

Mittal focuses on connecting and networking with her peers to share challenges and thoughts – it’s a constant learning cycle, she explains: “And that’s perhaps a bit different to the traditional CFO approach. Now, you have to be open to new ways of thinking and not sticking rigidly to a policy that can’t be changed.”

Indeed, despite the pressure some CFOs feel to make the move to CEO, Mittal believes a commitment to learning means the job title is irrelevant. “What I care about is whether I’m building and growing something and learning. And at the moment in the CFO role I’m very satisfied. Going forward those will be the things that matter – not the title.”

“People skills are crucial to what I do,” says Phil Wong, CFO of NSS Group. “That means I have to focus on bringing HR, operations, finance, sales – all these departments – together under the banner of value creation. Because the more share the value creates, the more we can offer people in terms of pay rises, the more we can offer people in terms of progression, promotions and skills development.”

And Wong believes the modern CFO cannot simply rule by decree, no matter what status the job title confers. “The CFO has to become more of an influencer to bring the business together,” he says. ”I think the people skills of a modern CFO are critical. And that means taking on a leadership role. We’re in an organisation with a very flat structure and our culture isn’t about beating people with a stick and barking orders, it’s very much leading by example. So careful leadership for the modern CFO is critical.”

Good people are hard to find. And no sustainable solution can rely solely on bringing in new blood every time the business’s needs change or grow. For a start it’s costly and time consuming, not to mention disruptive. Despite this, few finance leaders see succession planning as a key part of the job. A recent Korn Ferry survey of 740 finance chiefs found that only 34% of them had a succession plan in place for their role. And 81% of respondents said there is no internal, “ready-now” successor.

Far better, then, to focus on developing what you’ve already got. Wong says one of his most important tasks is to develop his financial controller’s (FC) career. “The FC here is the classic mix: very bright, very technical, with an industry background. In fact, his technical knowledge is probably as good as mine if not better.”

Wong points to two acquisitions that NSS completed last year as a perfect case study for teaching and learning on the job. “He followed me through that journey, looking at the financial planning and analysis, constructing deals and apportioning equity; we were negotiating with vendors and deferring their consideration, which are the sort of skills he’s always wanted to build up."

“Modern CFOs are more front-line facing and act as a key adviser to the CEO,” says Andrew Hicks, CFO at software and services company Advanced. “There is an increasing need for CFOs to be an integral part of deal negotiations and structure to meet both short- and longer-term goals. This is particularly true in transforming industries like IT, where the shift from perpetual licencing to software-as-a-service licencing can have a huge impact on company performance with deal revenue changing from one time to being spread over multiple years.”

Wong agrees: “For the CFO now, the mergers and acquisitions (M&A) side of the role is critical.

“I was very fortunate to start my career in corporate finance, helping entrepreneurs structure acquisitions, but now as CFO it’s great to be actually on the inside doing an acquisition. When we did these first two acquisitions, we did it without any lead advisers; just myself and the lawyers. I was managing that legal process as well in terms of getting the sale and purchase agreements done and all the rest. It’s a great grounding for understanding the rest of the business.”

Barbara Richmond, group FD at Redrow, shares Wong’s view that over-reliance on advisers can lead to trouble. “Some clients are changing advisers more frequently so some advisers have become more transaction focused and they aren’t putting the effort into the relationship and understanding the business. Advisers also don’t always like to tell you the truth, because it might not be financially rewarding for them.”

As the section 'How the data revolution will change the CFO's role' indicates, data is becoming an indispensable part of the CFO’s toolkit. For Mittal, it has a crucial part to play in empowering the CFO both within and outside the business. “You’ve got to be data driven and tech savvy. It doesn’t matter what industry you’re in, when you’re making strategic decisions you need data to back it up and to understand where you’re going and what the risks are. Using data makes you better informed and helps your judgement.”

But, while she maintains that data plays an increasingly important role in the CFO’s decision-making process, it has its limits. “We’re not at the stage where we can rely on it fully; we still need to speak to customers and test our theories,” she explains. “For example, when we make an investment, we’re never 100% sure it’ll deliver what we want. So we try to do many things,and the one that starts to work is the one that we go for – that’s the mentality. And you need data to drive the key performance indicators that tell you if the experiment is working or not.”

Simon Bittlestone, CEO of Metapraxis, explains how three key technologies will revolutionise the CFO role in the next 10 years.

Recently, I asked a gathering of CFOs a question: “What is the role going to involve in 10 years?” The conclusions were: strategy, leadership of people and the management of business performance. And when you look at those conclusions, two of them often don’t even sit in the CFO’s role.

So, change presents a risk and an opportunity. If finance can reposition itself into being guardian of business performance, leading on the strategy and providing leadership in the business to help achieve those two things, I think it offers an incredible career path for the next generation of CFOs.

When it comes to data and analytics, we used to see resistance. But in the UK and the US the door is now much easier to open. CFOs care about this and they need to get engaged. As a consequence, there are three technologies that CFOs will have to adopt if they want to be relevant in 10 years time.

The first is robotic process automation, which will transform an enormous amount of work in the finance function, whether it’s purchase to pay, core reporting, inventory management and so on. So much work can actually now be automated through essentially intelligent monthly application macros. That has to be adopted and will help fundamentally change the shape of the finance function.

Second, with analytics we will actually have many, many more roles where people move further up the value chain, saving a huge amount of time which can be spent on key insights and applying analytics, hopefully to help better understand the future performance of the business and make improved decisions.

The third technology is blockchain, which is taking longer to have an impact than some expected. That’s because it’s challenging for people to get their heads around, but we’re seeing quite a lot of CFOs embracing the opportunity to look into things like inter-company ledgers. It will essentially provide entirely automated, real-time financial ledgers.

• Habits of the successful CFO
  Business & Management Magazine, November 2018, p.12-15

The ICAEW Library & Information Service provides full text access to leading business, finance and management journals and key business and reference eBooks.

Further reading on the habits and attributes of successful CFOs is available through the articles below.