CHIEF VALUE OFFICER – THE IMPORTANT EVOLUTION OF THE CFO | EXECUTIVE SUMMARY
Value in an organisation is produced by a series of enablers which can be represented by the six capitals in the Integrated Reporting Framework originally instituted by International Integrated Reporting Council (IIRC) as a proxy. These capitals are ‘converted’ by the operations and processes of the organisation into value and reported upon by using data and technology in real-time performance management. In turn, this reports the value to a series of stakeholders who are broader than, but include, the financial stakeholders. The role of the CVO is to support the development of components of the organisation’s value- creation strategy and to monitor progress against this. Value is a long-term concept and one that is aligned to the creation of sustainable organisations. The reality is that for most CFOs the achievement of the strategic goals of an organisation that embraces economic, environmental and social equity is a fundamental part of their evolving role. This is at the core of generating value.
CFOs are increasingly acting as strategic leaders and advisers in their organisations. The CFO role is one that has moved significantly from the traditional view, while retaining the core responsibilities. Figure ES2 provides a view of the currently required skill set for the role of the CFO. For many CFOs, this role, together with that of other C-suite executives, embraces the concept of value management. CFOs are the accountable face for the delivery of value in their organisations. The evolution of the role is driven, in part, by the expectation of the stakeholders with whom the CFO engages. While there is a debate as to whether there is a separate CVO role or if it is an extension of the CFO role, many of the CFOs who contributed to this research argued that they were already fulfilling that role.
On this basis, while there is always more to learn, there is no need to rebrand the role, but CFOs need to ensure that they step up to satisfy the required value agenda. A failure to do so will lead to a marginalised finance team and CFO role, as the CVO requirement will be fulfilled by others and finance teams will remain focused upon historic reporting with less value add. It is important to accept that there is a perception issue, as exemplified by the extracts in the ‘Responses to three questions’ section at the end of this report, which give a very traditional view of a CFO role. This does not align with the value-centric view that many senior finance leaders believe is the CFO role of today. The opportunity exists not only for those currently in post but also for those who aspire to be the next generation of CFOs, for their roles will be very different from that seen through the lens of ‘tradition’. Using a range of career development actions is essential as the pathways followed in the past provide only some of the attributes expected (see section 3.1). It is important that today’s CFOs appreciate the challenges in the development path that their successors now face.
FIGURE ES2: The reality of the CFO role
Stakeholder management
The CVO role is an important evolution of the CFO role.
Consulting skills
‘I think that if a CFO does not become a chief value officer, then they are going to continue to be that back-office function where all the decisions are going be made without the involvement of a financial lens or a perspective on the resources of the organisation needed. So, I think it is important that the CFO does evolve [in]to the chief value officer’. CFO based in the US
Financial acumen
Business acumen
Value acumen
Data acumen
Project management
Change management
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