In the future, CFOs can play an even bigger role in their company’s decision making, but only if they overcome certain challenges. In an article for Strategic Magazine, strategy consultant Paul A. Sharman claimed that CFOs have the potential to play a key role when important business decisions must be made.
Here are the 3 most important points from the article that describe the three things which you (as a CFO or Head of Finance) can do to get a more central role in the strategic work with the rest of the executive team.
1) Get used to the unpredictable market and create a plan for growth
To secure company growth is without a doubt the biggest challenge for CFOs. This task has only become harder as the world is changing faster and faster.
In order to make a good plan for growth, you must first of all look at the market differently. CFOs must regard the new business areas as a new normal and be careful not to bypass trends.
Second, CFOs should also consider data from several sources outside the finance function.
2) Always base decisions on data
Of course, the main job for a CFO is to handle finance, Sharman says. Another important task is to guide and give recommendations in decisions that affect the whole company.
If CFOs are going to be able to give recommendations, they must know the data showing the current situation and be able to anticipate the consequences of different scenarios.
The CFO must act like an orchestra conductor. As a conductor leads all musicians thought the melody, so must the CFO give advices across numerous business areas. This conductor’s role requires a large overview but is of great value to the company and its decision makers.
3) Achieve a pan-organizational view
Sharman believes the biggest challenge for CFOs is that the economy is moved from being based on production to being based on service, know-how and innovation.
In this new economy, the market changes fast and is more unpredictable.
If companies need to grow, they need constant access to precise data that is up to date. They should not just handle historical data, but also data in real time. When CFOs keep track of the development, they are able to catch warning signals and have time to act on them in time.
Sharman says CFOs already hold the important role in gathering, investigating and adjusting data. The ultimate goal is that companies can work from one version of the truth.
Moreover, Sharman thinks if CFOs really must become a resource that really contributes to the company as a whole (a pan-organizational view), they must integrate planning and reporting.
These 3 points are based on an article by Paul Sharman. The original article is based on a case study showing how to use and benefit from a Corporate Performance Management (CPM) solution. In the full article, he also gives tips on buying the right software.