CHIEF VALUE OFFICER – THE IMPORTANT EVOLUTION OF THE CFO | 2. THE CHANGING CFO ROLE
2.5 Value across the C-suite The roundtable participants considered the question of ownership of value as a concept. As has been established in Chapter 1, value is a broad concept, and its creation reflects activities that are discharged by multiple teams across an organisation. No single C-suite executive could be responsible for all aspects of value. In relation to value, the application of the ‘responsibility – accountability – consulted – informed’ (RACI) model across the C-suite would probably demonstrate that most performing these roles had a responsibility for some aspects of value creation. All the C-suite roles need to be consulted on the whole value agenda for the organisation. As many aspects of the reporting of value are covered by the financial and non-financial reporting standards, in reality the CFO is accountable for these aspects of value. Creating a separate CVO role would not remove that responsibility from the CFO. While the leadership of the value-creation process is a collective responsibility of the C-suite on a day-to-day basis, it should be reflected in the responsibilities at the executive and board levels, and within the risk-management and governance structures of the organisation. Many of the risks to value should already be included in the assessments undertaken by chief risk officers: it is important to embed such responsibilities in their role. MANY OF THE RISKS TO VALUE SHOULD ALREADY BE INCLUDED IN THE ASSESSMENTS UNDERTAKEN BY CHIEF RISK OFFICERS: IT IS IMPORTANT TO EMBED SUCH RESPONSIBILITIES IN THEIR ROLE.
2.6 The CFO role for the future A finance professional commented, ‘The role of the modern day CFO is more like a like a T-shape where you have got that depth of knowledge from an accounting perspective, but then you have got the bar along the top with a broader understanding of different parts of the business that you link to integrated reporting, and it brings in different points of what we say value is about being …the worth or the usefulness of something to the business or whatever your objective may be’. The CFO role in the future is defined by two trends: one of increasing automation and one of a broadening range of external and internal reporting requirements.
Automation will continue to provide the finance team, and hence the CFO as its leader, with the opportunity to streamline data processing and improve the accuracy of data capture. Trends such as open accounting may simplify data flows for many, creating transparency across organisations. The use of blockchain to record transactions, both of a financial and non-financial nature, will also serve the same end. Consider the skills for a CFO as the vertical stem of a ‘T-shape’ with the recipients of value (the stakeholder groups) as the crossbar (Figure 2.4). The effort required in the processes and performance management across the finance function (the stem) will decrease over time with the progressive adoption of automation. This will enable the CFO’s focus to shift towards engaging with the stakeholders across the top bar the ‘T’.
FIGURE 2.4: The T-shape of the CFO’s responsibilities
Investors and other financial stakeholders
Customers
Employees
Community
Regulators
Financial and reporting responsibilities
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