On Oct. 16, 2014, Chris Schmidt, Director in CFO Publishing’s Research and Custom Content Group, and Bill Daisy, Managing Director at CBIZ Tofias, recorded a podcast where they discussed the changing role of Chief Financial Officers in professional services organizations. The discussion centered on key areas of increased involvement, including strategic planning, growth, human resources, communications and technology. In particular, CFOs are changing their approach to these four critical responsibilities:
Communication of Financial Results
Professional services executive leaders and staff without a financial background may not understand technical accounting information. For this reason, CFOs are being asked to explain financial information internally in a clear, concise manner, while educating their colleagues on the nuances of financial reporting. They are being asked to not just report on results, but to provide financial information in a manner that influences behavior to improve project management and profitability, resulting in increased awareness and a sense of accountability among employees. This is an important expansion of the CFO’s role and one that can create better senior management-level decision-making.
CFOs are getting more involved in human resources and talent strategy. They are being asked to help fine-tune performance management systems, executive compensation packages and succession plans that will enhance organizational results. In addition, they are becoming a critical component in the lateral hiring decision process, assisting in the evaluation of the economics of making lateral hires and monitoring ongoing performance.
While CFOs have always had a role in developing their own personnel, their responsibilities are increasing and expanding beyond the accounting and finance function to include input on senior-level talent management decisions.
CFOs are being asked to identify new markets for expansion domestically and internationally, and to provide the key financial analytics and return on investment on potential expansion plans. In addition, CFOs are leading the effort in looking at office space and overseeing office relocation. It is clear that more and more CFOs are becoming a key member of the executive management team, and are being asked to provide their view and analysis on growth strategies to make better business decisions.
In addition to overseeing the creation of financial reporting, CFOs are also being asked to offer insight into how to increase profitability. This includes providing real-time reporting and financial results that give decision-makers a better picture of the company’s true financial position, and assisting management in making more accurate, timely and strategic investment decisions.
While CFOs have always had this type of input, they’re being asked to expand this input and take on responsibilities that Chief Information Officers or Chief Executive Officers would normally have. This is not only making CFOs more well-rounded leaders, but it is also allowing them to leverage their financial insight in ways they haven’t before.
CFOs have always played a pivotal role in organizational performance, but their responsibilities are increasing. More than ever before, CFOs are being asked to leverage their financial insight to add greater value and enhance operating results.
Bill Daisy is Managing Director in the Boston office. He can be reached at 617.761.0735 or WDaisy@cbiztofias.com.