What do you get when you cross an accountant with a strategic business partner, a communicator par excellence, and a financier? The answer, according to industry experts such as Albert Christensen, is a modern-day CFO. Christensen is a Vancouver-based partner with national firm B2BCFO, which provides financial planning and business decision input to mid-sized companies who may not yet have a full-time CFO.
The KPMG 404 Institute, part of a global network of professional firms that provide audit, advisory and tax services, recently published a study that said “companies are moving toward CFOs whose skills align with their corporate strategy.” The Institute’s research showed that 96 percent of CFOs have experience that extends well beyond the traditional finance function.
“Savvy business owners,” said Christensen, recognize that in this age of fast-paced business and tight economy, CFOs who are good accountants but aren’t “focused on strategically moving the business forward” need to be replaced.
In fact, KPMG research indicates that in 2009, CFO turnover increased 19 percent compared to 2008, and 36 percent compared with 2007 – a trend that Ron Wysaske, CEO and president of Riverview Community Bank, sees continuing.
Wysaske, who spent 28 years as CFO for Riverview before becoming the bank’s CEO and president, said he has seen a lot of turnover in the CFO role at local businesses, as well as across the nation. For example, just in the last six months, Vancouver firms such as Silicon Forest Electronics Inc., Nautilus Inc., Sunlight Supply, Inc. and RS Medical have all replaced their CFOs with new blood.
According to Michael Page International, a global specialized recruitment services firm, “The traditional accountant is dead. Out go the figure-obsessed CFOs and in come leaders with strong personalities with a wide understanding of markets and cultural issues.”
A strategic business partner
John Bateson, Sunlight Supply’s new CFO, said that one of the major changes in the modern CFO’s role is to be a “strategic partner to the business leaders and the executive team.” He referred to the CFO as the “financial gatekeeper” who asks the tough questions like “why do you want to spend that amount of money?” and “how are we going to measure results?” and “how long will it take to get the desired results?”
Wysaske agreed, saying that “boards and CEOs look to the CFO for more than just numbers – they need the CFO to be a partner in strategy formulation, tactics and business planning.”
A communicator and financier
Wysaske also said that in his experience, companies value a CFO’s ability to think on his or her feet, draw conclusions, and then clearly express those conclusions. Bateson concurred, adding that not only should the CFO be able to communicate up to the executive board and down to the production floor in a transparent manner, but also be able to extract information from department heads when necessary.
While you could argue that good communication skills are required of any major position, Bateson said that the major change for CFOs in this area is the requirement to communicate with the business community at large.
“Typically,” Bateson explained, “it has been the CEO that has been the face of the company. Now, venture capitalists, investors and shareholders want to look the CFO in the eye.”
Sometimes, according to Bateson, this new role of gaining the trust of both external and internal people is a “very tough tightrope.”
In the new economy, “money is cheap, but not necessarily easy to get,” said Bateson, adding that the modern CFO needs to be comfortable interacting with investors, because people “want to invest in a winner.” Bateson said the CFO is uniquely qualified (better than the CEO or sales representatives) to demonstrate to investors a number of key points including:
- A track record of success
- Controls in place to protect success
- Effective communication of the business’ strategy going forward, making investors believe success will continue
Christensen also said that because so many baby boomers will be retiring in the next decade, modern CFOs must be “cognizant of the business’ exit strategy,” whether that is by acquisition, an employee stock ownership plan (ESOP) or a transition to a second generation. The CFO, said Christensen, must now groom the company to make it attractive to buyers and/or investors.
The traditional CFO roles of financial analysis, trending and risk management are still valid, according to Christensen. However, he said “what we have more and more is the need for the CFO to help the CEO take the business where he or she wants it to go.”