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The emergence of the chief value officer

By Andrew Harding, FCMA, CGMA, Chief Executive — MA, Association of International Certified Professional Accountants

How has the finance leader’s role changed as a result of the pandemic?

Even before COVID-19 struck, the role of CFO had grown to encompass many responsibilities beyond finance. CFOs helped lead their businesses with strategic decision-making and often acted as the principal business partner to the CFO. They were also involved in discussions of how their organisations could generate and measure the long-term value they were creating for their stakeholders, as well as reporting on their achievements.

According to members of the Europe Regional Advisory Panel for the Association of International Certified Professional Accountants, the pandemic has further accelerated this evolution of the CFO’s role. In a recent discussion, they highlighted that CFOs are:

  1. Playing a critical role in business decision-making
    CFOs and their finance teams are now using their data and insights to support everyday decision-making right across the business. Their input is actively sought by colleagues in different functions. They are helping to develop new partnerships, manage risk, restructure the business and respond to evolving customer expectations so that their organisations can thrive in a post-COVID world. Finance teams are also being proactive about showcasing the work they do to other departments.

  2. Overseeing a digital transformation within finance
    COVID-19 has hastened the digital transformation that was already happening in finance. Many CFOs are investing in technology to automate their organisation’s finance processes. This enables their finance teams to play a more strategic role within the business and support the senior leadership team and board with complex decision-making.

    By investing in technology, CFOs not only improve the efficiency of their processes, they also give their people the opportunity to perform more rewarding work and add more value to the organisation in the future.

    For finance to truly capitalise on the potential of digital transformation, upskilling is essential. Finance professionals must be able to understand meta data and IT systems in order to convert their business and financial requirements into technical requirements that will be understood by IT developers.

  3. Helping their businesses to achieve sustainability targets
    Finance teams are already familiar with the concepts of budget milestones and cashflow milestones. Under the guidance of their CFOs, they need to start translating their organisation’s environmental, social and governance goals into sustainability milestones. This will involve prioritising the metrics on their board’s top-level scorecard.

    Finance’s involvement in helping the business to achieve its sustainability targets will increase further if governments introduce policies to force change. For example, Germany’s extensive climate package to reach 2030 climate targets consists of the Climate Action Law and the Climate Action Programme 2030. The latter contains action measures for all sectors — such as the coal exit, renewables expansion and support for e-mobility — and cross-sector policies, including a pricing system for carbon emissions in transport and buildings.

  4. Morphing into chief value officers
    Ethical business is good business. Businesses are more likely to perform well over the long term — and generate profits for their shareholders — when they look after their customers, employees, suppliers and communities. As a result, CFOs are not only responsible for overseeing the short-term financial performance of their organisation, they are increasingly monitoring the other ways it creates long-term value.

    CFOs are involved with setting and measuring non-financial key performance indicators (KPIs) relating to areas such as customer satisfaction, employee engagement and innovation – in addition to the financial KPIs they would have tracked in the past. Organisations are increasingly aware that the non-financial KPIs of today are effectively the financial KPIs of tomorrow. CFOs are also encouraging their finance teams to act as value partners to other functions and use their business and management accounting skills to manage the organisation’s relationships with all its key stakeholders.  

The end of the CFO?

This is a challenging yet exciting time to be both a finance professional and a CFO. It’s also a time of transition for business. As we move into the post-COVID era, we will find the world has changed and the role of the CFO must change with it. The term ‘chief financial officer’ may even become obsolete sooner than we think — replaced by the ‘chief value officer’, who joins the chief executive, the chief people officer and the chief sustainability officer in the c-suite. Now that is food for thought.