Career pathways for the CFO

But what skills will be needed now and in the future? To find answers to this question, IMA, the American Institute of Management Accountants and ACCA have recently published a report called “Future pathways to finance leadership.”

One of the largest ever global studies about leadership and career routes, this report details the routes CFOs have taken to become finance leaders. It also addresses the critical question for those seeking to become the next generation of CFOS: how do I get there and what experience should I seek?

Over 750 CFOs responded to this global survey, offering their views on how they see the role of the CFO changing, and the capabilities that will be needed.

The future environment that CFOs will operate in will be different: a rebalanced global economy from west to east, faster growing emerging markets, changing constructs of the finance organisation with shared services, outsourcing and increasingly global business, more business risk, wider regulatory challenges, more scrutiny on organisation performance and fast technology changes, the advent of social, mobile and cloud technologies.

It is clear from respondents’ feedback that finance career paths are very different to those of ten or five years ago. There is a need for these career paths to develop the leaders of tomorrow with the skills, experiences and capabilities needed in a rapidly changing business environment.

This new report is essential reading for those businesses looking to develop their future CFO talent, and for those professionals with ambition to become future CFOs in whatever sector they wish to work. The report is about achieving goals, and clearly demonstrates what CFOs need to do.

The Top Ten of Success

Global respondent’s feedback was distilled into a top ten hit list, including advice as follows:

1. Have a “Plan A” and Know your finance fundamentals

Developing a “Plan A” should build on a broad foundation of finance experience through careers. While future CFOs will still need a strong financial understanding, they should also target career experiences that provide them with an understanding across various points in the finance value chain.

Ninety five per cent of current CFOs agreed it was important that future CFOs have experience in the core finance areas of financial and management accounting. Almost half of today’s CFOs have had six or more finance roles during their career, 80 percent have had a finance role in more than one organisation and almost three quarters have finance experience in more than one industry. Critically, CFOs must be able to ask the right questions across the organisation. That is a skill that best comes from experience gained across multiple finance roles. Experience in specialised roles will continue to be beneficial, but experience in mainstream roles in finance remains essential.

2. See strategy and business experience as the new baseline

Strategy formulation and execution was identified by current CFOs as the most important area in which to have experience for future CFOs. Over the next decade the business landscape will be reshaped by a combination of market volatility, globalisation and transformational innovation. Whilst most of today’s CFOs (61 percent) do not have experience outside of the finance team, future CFOs should seek out greater mobility in and out of the finance organisation, building the commercial qualities needed, while building the internal relationships.

3. Career plan for the next big thing in finance: insight and analytics

How organisations gather and use data to drive better decision making is the next “big opportunity” for tomorrow’s finance team. The survey suggests current CFOs rate financial insight and analysis as the second most important area in which future CFOs need to have gained career experience. Future CFOs should plan experience in the area and actively seek out analytics roles, so they understand its value and application.

4. Gain experience in risk management

Risk experience is a must-have on the CV of future CFOs.

That’s because future CFOs will operate in a business environment that’s high risk. From traditional financial risks to emerging risks such as on line reputational risk or cyber risk, these will only grow, change, and in some cases become more difficult to manage. The future finance organisation will have a significant role to play in balancing carefully the investments that need to be taken against potential risk impacts, and plan out the different scenarios. Experience in risk management was identified by current CFOs as the third most important area in which future CFOs need to gain experience and risk management challenges were identified as the second most important factor influencing the future role of the CFO.

5. Become a deal maker

Merger and acquisition activity was identified as the fourth most important area of experience for future CFOs to gain. While business growth will be organic, much is likely to be through acquisition and merger and other forms of business tie -ups, tapping into already established businesses to ease market entry and leverage expertise and market knowledge. It gives specific technical finance experience in structuring deals, but also can help develop wider skills in change and project management. More broadly, we can expect funding, capital market experience and investor relations to remain core finance capabilities in the future for CFOs of larger businesses too.

6. Get closer to stakeholders, become customer focussed

The future CFO needs to be customer savvy and take on roles which provide greater customer understanding. The range of stakeholders with whom future CFOs will have to engage will be significant. The future finance leader will need to “talk the same language” across a wide range of traditional finance and non-traditional finance relationships. The future finance organisation will need to be attuned to the needs of different consumers and develop a culture which is customer centric. This will be an important milestone on the transition from back to front office for the finance organisation.

7. Focus on the management skills that matter

The top four skills identified in our survey were leadership skills, communication skills, strategy skills and change management skills. Strong leadership was seen as essential because the success of the future finance organisation is very dependent on a strong united leadership vision and an engaged and skilled finance team, particularly as the finance organisation become more diverse. Businesses will continue to evolve and reengineer their operations and activities, so experience in transformation and change management for future finance leaders will also be a priority. So too will be effective communication skills as they align messages and provide appropriate context on financial and business performance to different stakeholder groups.

8. Prepare for more regulation and broader reporting

Regulation was identified as the third highest factor influencing the future CFO role. It is therefore no surprise that future CFOs will face more regulation. Future finance chiefs need to be confident operating in a regulated environment and should be adept at putting in finance structures and processes that manage legislative requirements effectively. Alongside more regulation, we can expect on-going changes in reporting requirements - growing interest in the concept of integrated reporting, more involvement of the finance organisation in reporting on different corporate performance measures, increasing use of financial and non-financial data, recalibrating investment assessments to account for environmental or social impacts and so on. Future CFOs need to track carefully developments in these areas and think about how their career plans help develop understanding here.

9. Get connected

Technology and automation was identified as the fourth highest factor influencing the role of future CFOs. Tomorrow’s CFOs need to be technologically adept and understand the significant role technology can play in driving better finance delivery. They should also target roles which develop and utilise their technology understanding. There are developments on the horizon that could shape the future organisation and the role of the CFO. The merger of social, mobile and cloud technologies may revolutionise day to day business practices. Directly within the finance function there are other developments too; possible use of robotic software in parts of the finance team to increase automation and better workflow, plug and play technology, and access to real time information that provides finance chiefs with the ability to cut data many ways and which offer an immediate, integrated view of business performance. For many future finance chiefs, real time business information in the palm of their hand on mobile devices will be a reality.

10. Expand your footprint

The future CFO will need to be able to manage carefully the different demands between mature and emerging markets and align their finance strategies accordingly. They will need to be adept at working in the global business environment, leading finance teams which are diverse and virtual across mature and emerging markets. From managing new reporting requirements to driving financial insight into new markets and new consumer sectors, or raising capital, the finance organisation of the future must be entirely aligned to the business’s needs. Future CFOs that can bring cross cultural, cross market business and finance experience to the table will be highly valued.

Submission by Brenda Lee Tang, Head, ACCA Caribbean

Co-ordination by Sandrine Rattan, Communications Specialist