Preparing Future-Ready Professionals

The CFO’s Many Strategic Roles

Rick Payne | October 1, 2021

Chief Financial Officers (CFOs) have been key players in strategy for decades. In 2002, Tony Isaac, then CEO of The BOC Group (now part of Linde plc), said “Many CFOs are already active members of the strategy team.”  This view was echoed by CFOs also interviewed in the 2002 report entitled The Role of the Chief Financial Officer in 2010 published by the forerunner to IFAC’s Professional Accountants in Business Advisory Group (PAIBAG).  

The PAIBAG’s recent report, Future-Fit Accountants: Roles for the Next Decade, confirmed that the CFO’s remit “extends into strategy”. But what form does this strategic role take? At ICAEW we have identified eight strategic roles  the CFO can take on, depending on the needs of the organisation.

The roles we discuss are:

  • Leader – with the CEO, take a lead role in strategic alignment
  • Analyst – pull together the facts on financials, the competitive environment and strategic options
  • Creator – contribute strategic ideas and create an environment where innovation flourishes
  • Critical thinker – challenge strategic ideas and ensure rigorous evaluation
  • Adjudicator – prioritise strategic initiatives and allocate resources
  • Orchestrator – run the strategy process
  • Implementor – turn the strategy into reality through financing, culture, budgets, KPIs and incentives
  • Communicator – convince stakeholders to support the strategy; translate the strategy into financial terms

It is important to note that the CFOs we interviewed for our research were clear that “strategy is a team sport” and the role varies depending on the skills of the rest of the executive team. Also different roles are emphasised depending on where organisations are in their strategic cycle and whether the organisation takes a more planned or opportunistic approach to strategy. Businesses with long product development cycles, such as airliner manufacturers, must make long-term bets on the types of products that will be required in the future, so creative strategic ideas are more important at the beginning of the strategic cycle. Start-ups and tech companies can often pivot quickly so strategic creativity is an ongoing requirement as strategy emerges rather than being set in advance of implementation.

Although CFOs have long played a leading role in strategy, this is not to say this is the case in all organizations. Some CFOs face several barriers to taking on a greater strategic role. We have attempted to summarise these barriers and make a number of suggestions for overcoming them. These suggestions are easy to state but not so easy to put into practice. For example, most strategic CFOs point out that it is essential to have a great number two to free up time to focus on strategy. But finding the right person and developing them takes time, even assuming you can get budget for the role.  There is also risk involved in delegating significant responsibility.  In the end though we believe the effort and risk is worth the reward, both for the CFO and their organizations.

ICAEW’s Business and Management Faculty will continue to develop its work on the CFO and strategy by next looking at strategic thinking and strategy formulation.

 

Rick Payne

Technical Manager BMF, Executive, ICAEW

Rick Payne is ICAEW’s expert on building effective finance functions, the role of the CFO and business performance management. Rick works in ICAEW's Business and Management Faculty and carries out research focused on helping members in business. He also sits as a technical adviser on IFAC’s Professional Accountants in Business Committee. Having qualified as a chartered accountant with KPMG he moved into wholesale financial services, undertaking senior roles through to divisional CFO. In addition, Rick is a qualified trainer and executive coach and has an MSc in Organisational Behaviour. He presents regularly to audiences of finance professionals and academics in the UK and internationally. See more by Rick Payne

 

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