Who has the most influence in a company? Increasingly, it’s the chief financial officer.
More CFOs are being promoted to CEO than ever before, according to new research. Approximately 8.1% of sitting CEOs came directly from a CFO chair.
The modern CFO manages more than just money. CFOs are taking broader leadership responsibilities, such as managing customer experiences, hiring and retaining talent, and leading strategic shifts into automation and other areas.
The CFO is a lifeline for company health — and becoming more critical as we head into a time of economic uncertainty. What does this mean for today’s CFO? How is this role evolving as businesses face ongoing disruptions and instability?
Changing characteristics of the modern CFO
CFOs are far more diverse in gender and race than CEOs (and the rest of the C-suite). This year, 16% of CFOs are women, up from 9.7% a decade ago. And 10.9% are racially or ethnically diverse, up from 3.6% a decade ago.
CFOs also have staying power, according to Salesforce research. CFOs remain in their positions for 4.8 years, on average — second only in tenure to the average 7.2 years notched by CEOs.
And they have more responsibilities in their evolving roles. For example, they must be:
- Complex problem solvers
- (Well informed) fortune tellers
- Self-aware leaders
- Expert delegators
“Traditionally, people have thought of CFOs as a steward” and that includes “running a tight finance ship,” Susan Li, Meta’s new CFO, said at a recent summit sponsored by Fortune. But today, CFOs wear many more hats, like “the efficient operator hat. The CFO is really a partner in steering the business direction and product vision for the company.”
At some companies, the expanding role of the CFO is removing the need for a chief operating officer, added Tracey Travis, executive vice president and CFO at The Estée Lauder Companies, who also attended the summit.
CFO challenges in 2023 — and beyond
The C-suite has relied heavily on CFOs in recent years to help lead in times of economic turbulence, and that will continue in the future. In fact, 75% of CFOs say economic disruption is 2023’s biggest challenge.
Another challenge is how to invest wisely in a downturn, especially in technologies that can help companies become more efficient as budgets tighten. The modern CFO who understands the potential of strategies like automation and platform consolidation can positively affect the bottom line.
The average company uses 976 applications to run its business and store customer data. This isn’t efficient, effective, or affordable.
If CFOs don’t have access to data across the whole business, how can they make informed decisions? The modern CFO must be a digital native — and that comes from deep understanding and partnerships with the CIO and tech team.
The key is focusing on technology investments that deliver value, long-term cost savings, and ultimately, solid ROI. How can companies make the right technology investments during a downturn to deliver long-term value? Salesforce COO Brian Millham suggested the key is to lean into efficiency — simplifying complex processes and creating better productivity pathways.
“It is possible to cut costs and reduce complexity while creating resilience within your company,” he added. “You can do this without compromise by consolidating systems and investing in the right technology for your business.”
Skills for the modern CFO
Spreadsheets are still important, but today’s CFO needs to communicate beyond the numbers.
“CFOs are viewed as kind of a deputy CEO,” Alyse Bodine, global head of the financial officers practice at recruiting firm Heidrick & Struggles, told Fortune last month. “The ability to lead a diverse set of individuals, both finance and non-finance, across the organization takes people skills. So, there’s definitely a heightened demand on that skill set when it comes to the finance population.”
Salesforce completed hour-long interviews last year with 10 CEOs across enterprise and commercial business. Many said they expected to replace current C-suite team members with leaders who had higher emotional intelligence (EQ) and were better equipped to handle not only stressed employees but a more socially engaged workforce.
This isn’t new news. In 2020, Summit Leadership Partners found that 80% to 90% of high performers in the C-suite were differentiated by high EQ. According to their research, EQ is twice as important for predicting performance in executives than technical skills or IQ.
And EQ could bridge the Great Disconnect between employees and the C-suite.
How CFOs can evolve
It’s no longer enough to steer a finance ship well. As CFOs develop new leadership styles, they should ask themselves the following questions:
Is the way I lead:
- making the company stronger?
- true to who I am?
- necessary to get the job done?
It takes a different lens to solve today’s — and tomorrow’s — problems. The modern CFO who can think creatively and differently, and develop thoughtful strategies for investing, is well poised for the road ahead.
Ultimately, it’s the CFO who signs off on major investment decisions and takes the risk of investing in innovation versus tightening belts. Leaders should bet on the CFO that invests in the future versus pausing progress.
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