CFO priorities: How COVID-19 rewrote the list

Even before COVID-19 hit an unsuspecting world in 2020, the increasing complexity of business was being reflected in the broadening of the CFO’s role.

A 2018 McKinsey & Co. survey found that the average number of “functional areas” reporting to the CFO had increased from 4.5 in 2016 to 6.2 two years later.

Notable among its findings was that finance chiefs were increasingly taking responsibility for digitalisation — the proportion doing so had doubled to 28%.

Then COVID-19 emerged, and the world changed further.

According to James Keeling, FCMA, CGMA, CFO at Stevenage Bioscience Catalyst, an entrepreneurial hub for life sciences startup biotechnology companies, there has been a greater focus for CFOs over the past 18 months “in areas related to risk management, cash flow, and transformation activities”.

CFOs now, Keeling said, are prioritising:

• Maintaining a robust cash flow position and runway.
• Moving to cloud financial accounting solutions, driving greater flexibility to support the introduction of fast and factual reporting — for the executive and the board.
• A greater focus on governance and control.

Some of his points match those in consultancy Protiviti’s 2021 Global Finance Trends Survey Report. It found that CFOs’ top priority in 2021 remains the same as in the previous year: security and privacy of data — with enhanced data analytics, FP&A, and cloud-based applications also in their 2021 top five.

Keeling said the CFO has been a key strategic business partner, going beyond not just the core financial activities of the business but also those relating to operations, IT, and HR. The pandemic caused a refocus, however, he suggested: “Greater involvement and sense of urgency in ensuring all these functions are coordinated with appropriate budgets — and actions to address any shortfalls — to support the business strategy have been revisited.”

He added: “There has been a greater focus on the interdependency of the finance function.”

For Lawrence Amadi, ACMA, CGMA, a partner and head of IT Assurance at KPMG Nigeria, the rise of integrated reporting meant that CFOs with their “additional perspective across the business” are increasingly taking responsibility for reporting beyond the numbers.

Amadi, who also leads on CFO advisory for KPMG Nigeria, added: “The average CFO’s attention to managing fraud and managing control weaknesses or lapses has heightened quite a bit.”

Transformation collaboration

“Enterprise financial transformation is a team sport,” a recent report from Workday and Deloitte said. The report — A More Effective CIO-CFO Partnership — said: “A strong partnership between the chief information officer and CFO is especially important for addressing challenges as they arise.”

Keeling said that where a company does not have a CIO due to the stage of the business lifecycle and staff size, the CFO can be expected to assume the role of CIO, “particularly as there is usually close alignment of the IT function with finance and operations teams relating to implementation and budgets”. He added: “The CFO usually also has a unique skillset and knowledge that transcends the IT function so is well placed to support the CIO.”

Adoption in finance and operations of artificial intelligence and machine learning technology will demand even greater CFO-CIO collaboration, he suggested.

Amadi said some companies are creating a new role of chief digital officer or chief transformation officer that go beyond the role of the CIO. All these roles are working with the CFO to broaden the digital transformation discussion and agenda, he said.

Creating flexibility

As finance continues in this new pandemic era, CFOs need to take steps to maintain engagement within remote teams.

“You have to just think about how to create the flexibility for people; otherwise they’re going to burn out,” Amadi said. He suggested one solution is to offer employees who have been with a company for seven to ten years a paid sabbatical period of two months.

In addition, after difficult deadlines have been met, he said that CFOs “should allow the team some time to just rest and reset”. He added that the CFO, with their strategic decision-making role, “can help the CEO and the other executives’ thinking [in] this direction”.

Keeling said COVID-19 had shone a light on the opportunities of flexible working patterns and how they can enable more efficient ways of working.

His tips for transitioning to a hybrid work pattern across the business are:

• Open a dialogue with the team as early as possible so that there is a clear understanding of the opportunity both for the company and the individual.
• Update remote working and related display screen equipment (DSE) policies and create an appropriate budget to support employee homeworking; for example, supplying a chair, a desk, and computer equipment.
• Review and amend employee contracts where necessary.
• Do not micromanage remote teams. “It is demotivating and does not work,” Keeling said. “You employ great people for a reason based on their abilities and engagement. Performance should be measured on outcomes,” he said.

Source: By Oliver Rowe, a senior editor at FM magazine, on 15 November 2021.