From CFO to CEO? Not Necessarily...

Why the CFO role is increasingly seen as a career destination in its own right, not just a staging post to the role of CEO.

A new report by Ernst & Young, The DNA of the CFO, challenges the assumption that all chief financial officers are aspiring chief executive officers and instead finds that the majority see their role as a vocation of its own. Of 669 CFOs interviewed by the Economist Intelligence Unit for Ernst & Young, 73 percent saw their role as a career destination of its own with just 10 percent aspiring to be the CEO.

The study also highlights a broadening of the CFO role beyond finance fundamentals, with the potential to influence corporate strategy and drive business change to such an extent that most enjoy a high level of career satisfaction. Almost two-thirds of respondents said they now act as the face of their company on all financial matters and performance, with a similar number agreeing that since the financial crisis, the CFO's key priority is to increase financial trust in their business.

Financial crisis elevates role

Over 60 percent of CFOs have seen their standing within the organization elevated in the past three years. In part this is due to CFOs aligning the finance function closer to the business but also because the financial crisis has resulted in an unprecedented demand for the unique perspective and discipline of senior finance professionals to guide the business. The report also highlights a shift in the perception of the finance function from outmoded "business prevention units" to an enabling partner to the business. For many CFOs, the acid test is the extent to which business managers consult them for advice on key aspects of strategy. Just over half of those CFOs surveyed agree that this now takes place routinely.

CFOs are also finding that they are taking on more operational responsibilities, mainly in the IT and property functions, which is natural given their financial discipline and management strengths. However, Les Clifford, Chairman of the Ernst & Young CFO Program, warns that for some CFOs, this dual responsibility creates a potential conflict of interest. "There is definitely a delicate balance to strike between being the objective, independent voice of the business and assuming a broader responsibility for operations," he explains. "CFOs have a duty to maintain this independence and objectivity, and sometimes the need for growth and performance in their operation role can test this to the limit."

Strategy co-pilot

The report updates the now clichéd story of the CFO's migration from ‘scorekeeper' to ‘strategic advisor', by seeking to clarify exactly what strategic contribution means for the CFO: 35 percent of the CFOs questioned believe they make an active contribution to developing and defining the overall strategy for their company. But the majority of respondents say their contribution focuses on providing insight and analysis to support the CEO and ensuring that business decisions across the business are grounded in sound financial criteria. "CFOs see their role as going beyond being an ‘information provider' or ‘aggregator-presenter'," says Clifford. "Their commercial understanding and analytical skills mean that this element of their role is a vital part of understanding how different decisions will lead to certain outcomes."

But while CFOs are reveling in their newly elevated role, they are also coming up against the challenge of carefully balancing the development of company strategy with the renewed focus on fundamentals brought about by the financial crisis. CFOs identified cost management, risk management and cash flow as their top three business priorities in the wake of the financial crisis. For almost four in 10 CFOs, this means they are not spending as much time on strategy as they would like.

In addition, CFOs are under greater pressure to be the public face of their company but recognize the need for investment in building stronger connections with a number of their key external stakeholders. Less than half of respondents say that their relationship with investors is good or excellent, while just 21 percent say the same for their relationships with governments and 25 percent for their relationships with the media. Asked where they needed to enhance their skills and knowledge, respondents pointed to communication and influencing as the most important area for improvement.

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