Just a decade ago, chief financial officers (CFOs) primarily focused on corporate accounting functions and financial projections to make strategic decisions for a company’s overall well-being. With increasing responsibilities, greater scrutiny, and mounting regulations, CFOs today are taking on expanding C-suite roles to include human resources, information technology, and communications.
CFOs are seen as critical to the success of companies of any size or growth stage. CFOs work in large and small businesses as a vital member of the executive team, reporting to the president and, possibly, board members. On a day-to-day basis, CFOs plan, implement, manage, and control all fiscal-related corporate activities in accordance with generally accepted accounting principles adopted by state and federal regulatory agencies including the U.S. Securities and Exchange Commission.
“Today, every organization is being forced to work and think differently in order to achieve the growth and results that seemed almost easy to come by even 5 years ago,” executive search firm Parker + Lynch said in its white paper, “The Evolving Roles of the CFO in the New Economy.” “For this reason, it’s more crucial than ever to think broadly, and be able to effectively communicate your vision, whether you’re presently a CFO or you aspire to the office one day.”
Historically, the starting point for all successful CFOs has been advanced business education that focuses on financial management, strategic leadership, and administrative control. To meet the broad demands of today’s CFO roles, that education now also includes human resources, information technology, and communications. Graduate education, including online Executive MBA programs, prepares aspiring executives for the new challenges as a CFO.
CFO Duties
Generally, CFO responsibilities include accounting, finance, strategic planning, legal matters, property management, deal negotiations, and investor relations.
Those responsibilities may change depending on a company’s size. In smaller companies, CFOs may also manage budgets, review contracts, and prepare financial statements. At larger corporations, CFOs may delegate those tasks to focus on larger responsibilities such as monitoring investor accounts, forecasting fiscal outlooks, and setting corporate policy.
No matter the size of their company, all CFOs are responsible for 3 core areas, as follows:
• Controllership – CFOs are continually reviewing historical financial data and applying it to future earnings projections and growth potential. Company stakeholders, including shareholders, creditors, and employees, depend on CFOs for accurate information for corporate forecasting.
• Treasury – CFOs focus on investments for a company’s current financial situation, taking risks and liquidity into consideration. They also oversee the company’s capital structure, including the long-term debt, short-term debt, and equity.
• Economic planning – As a company’s primary financial strategist, CFOs must identify and forecast growth areas and implement policies and procedures that will incentivize future success.
Other essential duties include tackling changing technology trends, security threats, and regulatory hurdles. CFOs are also expected to take on human resources, high-thinking business analysis, and innovation.
In the central role of company leadership, CFOs are also expected to consider the mid- and long-term future of the organization, including being mindful of consumer behaviors and public perception. For example, it is no longer “acceptable or strategically viable [for companies] to pay as little tax as legally possible, given the reputational impact among commercially savvy consumers,” said CFO headhunter Simon Bailey of Savannah Group..
“Financial leaders must consider what is socially acceptable from a customer perspective as well as what is financially possible,” Bailey said in Savannah Group’s “The Changing Role of the Chief Financial Officer” white paper.
Essential Skills for Today’s CFOs
Bailey said today’s CFOs must be “one of the best communicators in the boardroom” who can translate details into clear and accessible messaging.
In addition to practicing excellent communication, executive search firm Robert Half recommends CFOs broaden their skills and experiences to make them indispensable, including the following:
• Expanded financial experience – Solid financial experience in budgeting, analysis, compliance, and risk management, among others, is crucial to sound financial decisions.
• Expanded understanding of technology – CFOs who keep pace with fast-changing technology, particularly cybersecurity and big-data analysis, are better positioned to understand risks and benefits.
• Broadened business and operational proficiency – By understanding a broad range of business processes and challenges, CFOs better recognize company business and operational needs.
• An advanced education – CFOs who earn business degrees—including an online Executive Master of Business Administration (EMBA)—are prepared to take on a variety of challenges as a result of the expansive education. An online EMBA degree program allows aspiring executives to continue building their careers while pursuing academic growth.
Future of CFO Employment
While the CFO role is evolving, the field is also growing. The U.S. Bureau of Labor Statistics (BLS) forecasts a 6 percent job growth for all chief executives through 2024. The median annual salary for all chief executives in 2016 was $181,210. The BLS said most top executives have business graduate degrees.
About Washington State University’s Executive MBA Online Degree Program
To attain that business graduate degree, consider that Washington State University’s Carson College of Business offers a rigorous academic EMBA program with an emphasis on global business, strategic leadership, finance, and innovation. The program allows students to put their skills to immediate use.
WSU has been lauded as a leader in business education from industry experts that include the AACSB and CEO Magazine. The program also ranks among U.S. News & World Report’s "Best Online MBA Programs" for 2024. To learn more about how WSU can help you reach your executive goal, visit our website.
Sources:
CFO responsibilities
https://www.shrm.org/resourcesandtools/tools-and-samples/job-descriptions/pages/cms_001161.aspx
http://www.parkerlynch.com/jobs/job-descriptions/Pages/cfo-chief-financial-officer.aspx
CFO evolving role
http://www.parkerlynch.com/Documents/downloads/PL-wp-cfo.pdf
CFO duties
http://www.investopedia.com/ask/answers/04/042204.asp
Changing roles
https://www.savannah-group.com/wp-content/uploads/2017/05/Savannah-The-Changing-Role-of-the-CFO.pdf
Skills
https://www.roberthalf.com/blog/salaries-and-skills/how-to-plot-your-steps-on-the-cfo-career-path