The year 2020 has been socially, politically, and economically transformational. Businesses have never before faced complete shutdowns that forced them to change where and how they operate. Yet, every challenge brings with it opportunity. It could be argued that there has never been a more opportune time for the office of finance to have an impact, with CEOs increasingly looking to the finance function to help shape business direction and strategy.
Once considered a numbers-only role, finance is now balancing traditional responsibilities with growing demand for data-driven analysis and insights that support growth and strategy. All of this is happening against a backdrop of rapidly changing business and regulatory environments.
Such forces are redefining the role of the chief financial officer (CFO) and other key positions, such as the controller, financial planning and analysis (FP&A) leader, treasurer, and auditor. Beyond the traditional accounting career path followed by most finance leaders, what skill sets, knowledge, areas of focus, and business relationship-building skills will the office of finance need to master to become tomorrow’s finance leaders? In this article, we take a look at the emerging, and some more traditional, skills finance needs if it is to become the strategic guide the C-suite requires.
The New Normal Means New Expectations and New Skills
As the remit of finance has shifted and widened, so too has the complexity of key areas, such as treasury management, tax, and auditing. This has increased the need for broader ranges of expertise and new skills. Finance leaders today often bear responsibility for areas such as risk management, and they watch over IT and other key business functions. Balancing the books is no longer the primary function for finance.
The term “new normal” may have become a buzz phrase, but the post-pandemic world, when it arrives, will transform many aspects of business as usual. As a result, CEOs will turn to finance leaders who not only have accounting experience, but also wider operational backgrounds and a broader mix of business experience.
The changing skills trend was clear from data in a study from organizational consulting firm Korn Ferry that found at the 1,000 largest U.S. public companies, the portion of CFOs who are certified public accountants fell to about 36% last year, down from nearly 50% in 2014.
The same study also found that almost half (45%) of the CFOs surveyed said the two capabilities most critical to the future of the finance function were operational information (such as reporting and analytics) and strategy enablement—both beating out more specialized finance skills.
Diversification seems to be the key word when it comes to the skill sets needed by finance professionals. CEOs have not turned their backs on candidates from accounting backgrounds when choosing finance leaders for their organizations—they just require a broader range of capabilities.
“The person in that position just needs to have an evolving skill set, regardless of their initial training,” said Bob Ryan, an executive adviser at Shields Meneley Partners, a career-transition firm that advises executives, to the Wall Street Journal.
Data Science a Core Skill for Finance Leaders
Access to data and actionable insights are now fundamental to business success and helping companies identify new market opportunities, improve customer experiences, drive business planning, and support change and innovation. CEOs are looking to CFOs and finance teams to deliver analytics and insights that support strategy and decision making.
CFOs and finance teams will need to understand how to harness data—beyond just the financial numbers—to tell a business story that explains context and the reason behind a decision, and answers “what if” questions.
Dr. Ilya Strebulaev, professor of finance at Stanford University, believes that data expertise will be critical. “We now live in a sea of data and have the technology to evaluate that data and make decisions about consumers, competitors, markets, and much more,” he says. “CFOs must understand how to use all of this data—not just financial data—to understand the business and drive decisions. The companies that don’t won’t survive.”
Technology will play an important role in the ability to make data timely, accessible, and relevant. New cloud-based financial management systems, in-memory databases, visualization, and mobility are enabling finance leaders to move beyond just analyzing historical financial data to accessing real-time insights about business performance. Even better, it’s making it easier to deliver these insights to other business leaders, further strengthening those partnerships.
Looking ahead, finance teams will increasingly use advanced analytics to run predictive models and develop better forecasts. Understanding technology and systems—and whether they are capable of enabling greater efficiencies, agility, and insights—will be critical.
Robynne Sisco, Workday co-president and CFO, agrees. She explained, “If I think about tomorrow’s finance leaders and their functions, they will need to think about how they are going to leverage technology to change the way they operate. We want to see finance spending less time on recording and verifying the numbers, and more time making the data connections and explaining the implications to the business—applying the finance lens on decision-making.”
Finance’s journey to become a more strategic function will depend a great deal on its ability to find the skills to allow it to embrace digital technologies, such as artificial intelligence and machine learning. That requires a shift to more technical skills and better links with IT leaders to bring together the two functions more effectively.