CHIEF VALUE OFFICER – THE IMPORTANT EVOLUTION OF THE CFO | 2. THE CHANGING CFO ROLE
‘THE CFO IS A VALUE CREATOR’. CFO IN CHILE
In the other dimension, the finance function increasingly assumes some responsibility for the sustainability agenda of the organisation. The extent of this will depend upon the nature of the organisation. In a large entity where there are many complex issues associated with achieving a sustainable future, the finance team will do best to focus their skills on the quality of the reporting of sustainability activities, both internally and externally. Reporting, however, only reflects what has already been achieved. It is strategy that leads to action. CFOs need to be integrally involved in this. For a smaller, and perhaps less complex entity, as one audit partner commented, ‘when the music stops the agenda ends up with the CFO’. Finance teams therefore need to be prepared to structure themselves across four zones (Figure 2.5), led by the CFO. What can be said with a fair degree of certainty is that the CFO role will continue to be vital for the leadership of organisations and will continue to develop over the coming years. 2.7 The CFO role in the context of the CVO Are the CFO and the CVO roles synonymous or are they separate? The answer to that question, from the evidence presented, is that, to an extent, ‘it depends’. The classic view (as noted in the ‘Responses to three questions’ section) is that the CFO role is short-term focused and financially driven. The overwhelming majority of the CFOs consulted for this research would immediately refute that premise, arguing that their role is longer term in nature and embraces the totality of performance. For a significant global organisation, an argument may be made that an individual must be responsible for non-financial reporting and, hence, for addressing more value-driven requirements. This could be because a focus is needed on the special nature of the disclosures required and the complexity of gathering that information. As the CFO will remain the key figure in presenting such information there is a strong argument that this person – the ‘CVO’ – should report to the CFO.
FIGURE 2.5: Four zones of the future of finance
Insight generation
Sustainability
Value
Compliance and control
Transactional efficiency
For many organisations the CFO is the CVO. The progression has been a natural one. Several roundtable participants foresaw the growth of overlaps between the two distinct roles. One commented that ‘there is a thin line between these two, because [as CFOs we] are not just going to continue…just being the bookkeeper, now you are just the reporting person. The question now is, “[is] it possible to have a CFO and a CVO in one institution?”’ Another CFO commented that, ‘it is not so much in the title [as] in the mindset. What am I doing with that data to create that value?’. Another commented that, ‘I think you can start out as a CFO and then become a chief value officer. You need to know the fundamentals of financial finance and accounting. But I think as you gain experience and you put yourself out there more, you understand the business [and] you can build relationships with people around the company. You could then become that chief value officer. You start as a CFO but then you become a chief value officer’.
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