Synonymous with ‘number crunching’ and finance, the role of a CFO has evolved drastically in the last few years. It has grown more complex and enormous, encompassing responsibilities outside the core area of finance. Today’s CFOs need to lead strategic initiatives, focus on performance drivers, understand technology and its impact, enable innovation to thrive in every area of business and accelerate organisational growth. And, the rapid change in the economy has only been a key catalyst in spurring this evolution.
“A CFO is the financial gatekeeper for the organisation” really seems like an adage rooted in the past. As V.S. Parthasarthy, Group CFO of Mahindra Group, summarises, “The modern-day CFO is an integral partner in building and securing business value – shaping the direction of the company, directing resource allocation, deepening capabilities and driving performance.”
Here’s quick look at how the CFO’s role has grown beyond just being part of boardroom meetings on the company’s financial performance and the five clear facets of the role that have emerged, even as the title continues to remain unchanged.
Today, skills like flexibility and multi-tasking have become critical for finance professionals. In fact, multi-tasking is a bit of an understatement when it comes to today’s CFOs.
While holding the financial reins of the company, they also are required to effectively manage the additional diverse assortment of duties that comes along with the role. CFOs have to oversee everything in the core area of finance – from corporate reporting to taxation, and they must also know, understand and contribute in areas such as governance, human resources, strategic business planning, risk management, and related operations. As the Director-Finance of Blue Dart, Yogesh Dhingra, points out, “The day-to-day tasks of a CFO extend from providing commercial insights to leading multiple projects and building trusted relationships and even being the face of the brand.”
Another key role that a CFO plays is like that of a curator of a museum or its chief custodian. This means that CFOs need to be visionary leaders and have the ability to build a well-defined succession plan to meet not just the evolving business needs but also the most complex ones. Putting this plan in place consists of a number of factors which includes obtaining current business valuation and growth projections, and building a deep and talented team, among others.
CFOs of some of the most successful organisations play an integral role in building a strong succession management. The intent of this activity is to build a good leadership bench, and thereby mitigate risk associated with too much dependency on one key person. This activity also translates into two big advantages – at one end it is fitting opportunity for high-performers to display their skills, at the other it helps to drive organisational growth by capitalising on the rich talent.
According to Rashmi Joshi, the CFO of Castrol India, ‘”Ensuring a strong pipeline of candidates with the right credentials for the right role is an important strategy for every organisation.”
Technology has taken a deep dive into every aspect of business and the finance function is no exception. And, it is for the CFOs to see how best they can capitalise on the digital revolution, given the fact that they are at the helm of a role that intersects finance, technology and strategy. It is a common protocol in a number of businesses today, for the IT function to report to the CFO.
Sanjay Jain, CFO - Future Group, believes, “The CFOs of today are not isolated from information technology and will have to broaden their horizons towards analytics. They have 24*7 access to this business intelligence, and their collaboration with every department will determine the future performance.” That’s why CFOs should develop a deeper understanding of the digital technology landscape and the technology component of business processes. As the divide between finance and technology grows narrower, the two can no longer be seen in isolation. A fitting example here would be to see how technological advances such as data mining and predictive analytics have become the key source to gain new insights and drive the B2C and B2B markets.
Today, CFOs study economics of the market, the present and the future, understand the customer, the competitors, study changing trends in technology, politics, almost anything that can remotely affect the company. In short, the CFO focuses and understands the external and as well as internal factors, analyses them and gives a clear picture of what these factors mean for the organisation’s present and the future.
In other words, CFOs need to be nothing less than a designer. Because, they need to weave complicated disruptions like an expert and lay down the map for the organisation. Shankar Raman, CFO for Larsen & Toubro affirms the constant need for innovative solutions and the need to adapt to emerging situations and says, “CFOs today have to the master of all arts.”
The world is changing, fast. Maybe, even too fast. That means there is an element of uncertainty which throws up both, challenges and opportunity. And, if businesses have to deal with this uncertainty, they need a CFO who is a visionary, and someone who tracks business indicators and trends well in advance CFOs work in conjunction with CEOs and top leadership. often acting as sounding boards for the CEOs and the company’s board of directors.
One such person is K K Saberwal, the Director-Finance for the Delhi Metro Corporation, who has been closely involved in the management as well as operations of the Phase III implementation of the Delhi Metro.
And because predicting, analysing potential moves like mergers, analysing impact of industry trends, aligning risks and rewards, devising new investment structures, involve two distinct yet inseparable key areas – finance and strategy – CFOs inevitably have become the go-to people.
Whether it is deriving robust risk management strategies or supporting the business to develop effective strategies for growth, CFOs are delivering on a wide range of crucial parameters, apart from driving the finance function. If you see yourself as one such business leader in the future, – it’s important for you to be cognizant of these aspects and learn more about them.
Hear from the industry’s top financial leaders who have broken many a myths, created disruptions, at the finale of the Most Promising Future CFO Awards. A joint initiative by YES BANK and BusinessWorld, the Most Promising Future CFO Awards is an initiative to identify, recognise and nurture the promising next in line financial leaders of India Inc. who have demonstrated outstanding capabilities and achievements.
At the event, you will get to hear from industry stalwarts like Alok Bansal, Co-Founder & CFO, PolicyBazaar.com; Anup Vikal, CFO, Snapdeal; R Shankarnarayan, CFO, Times Group; Yogesh Dhingra, CFO & COO, Blue Dart, among others.
Get to hear from India Inc.’s top CFOs at the YES BANK Businessworld Most Promising Future CFO Awards finale and join them in recognising the future leaders. Click here and register to receive the invite for India’s biggest platform that encourages and nurtures the future CFOs.