The Evolution of the CFO

Overview

Author

Claire Whiddett

Date

25th Aug 15

Category

The Evolution of the CFO

As the finance function model evolves, businesses are having to come up with new ways to develop talent. The trend for global organisations to restructure the function by setting up shared service centres, or outsourcing to third parties, is changing the traditional pathway to top finance roles.

Established wisdom has it that CFOs, to be effective, need a rounded understanding of every aspect of finance. That could include transactional functions, business support and analysis roles, as well as central reporting. But if those transactional functions have been separated out, they become less accessible to aspiring future finance leaders. It then becomes a more deliberate choice to move into a shared services role, assuming it is even possible to do so.

So what is the impact of the shared services route on the finance professional’s career path? Do the finance transformation roles attract the best and brightest professionals who want to be CFOs? Or is shared services a graveyard for those whom the organisation believes add value, but who are not expected to achieve the top finance role?

According to a recent ACCA report, Finance transformation roles: pathways to CFO , which examines the views of finance leaders and experts across a wide range of sectors, careers in shared services seem to be underrated.

‘Right now, a so-called urban legend positions finance transformation roles as a dead-end for those who want eventually to occupy the top finance seat at the executive table,’ says Jamie Lyon, head of corporate sector at ACCA and co-author of the report. ‘Perhaps that is because of the relative immaturity of the shared services finance model, or perhaps finance transformers just have not had time to reach the top; perhaps it is because organisations need to amend their view of the capabilities now required to balance agility and risk, growth and compliance in increasingly complex market contexts; or perhaps it stems from a lack of imagination.’

But individuals who take this route, according to Julie Spillane, managing director and global director of finance excellence for Accenture Global Services, can gain valuable skills and experiences in an era when the CFO role has two distinct sides to it: strategy and investor relations on the one hand, traditional finance operational leadership on the other.

‘Being able to navigate increasing business model complexity internally means responding to changing expectations – knowing how to deal with operations and the implications of culture,’ she says. ‘Shared services experience is extremely helpful for this new generation of leaders.’ She explains that it helps develop the skills needed for operational leadership.

Individuals who move into shared services can gain greater responsibility and greater access to global C-suite executives. Nigel Coffey, senior director of finance process transformation at PepsiCo, says: ‘I spent 10 years as a country CFO and I never met or spoke to the global CFO. On my very first day in shared services I was presenting to the senior leadership team. As a shared service leader you get access to a much more senior layer in the organisation than you will ever get as an individual country CFO.’

Strategic vs Functional

Nevertheless, roles in shared services are seen as less strategic, which could put them at a disadvantage as potential springboards to the top finance role. Coffey recalls: ‘When I was asked to go into a shared service and outsourcing [SSO] role my first reaction was, “you must be joking!” I called it the graveyard of ambition; there’s no progression, no career.’

Peter Moller, a partner in Deloitte Consulting, cautions aspiring CFOs against overvaluing shared services experience. ‘Let’s not kid ourselves,’ he says. ‘Finance shared services leaders have limited experience moving up the finance value chain. Shared services operations by their nature are never going to be strategic.’

Finance organisations most likely to see potential CFO talent among shared services pools are those with very mature – and successful – SSO models. Such organisations are consciously plotting career pathways through SSO operations, realising that skills honed there are key to building a strong finance management bench and top-tier talent.

Sandy Khanna, vice president at IBM global process services, has seen organisations deliberately fast-tracking individuals into finance leadership through transformation or shared services roles because they value the business experience gained. ‘You’ll always find that the good finance leaders find great roles because they’re in demand,’ he says.

Could it ultimately be that organisations wanting to appoint their CFOs from shared services backgrounds will have to do the persuading? ‘We don’t want to be the bean-counters of old,’ says Andrew Bacon, head of the EMEA shared services centre for Korean multinational Doosan Infracore. ‘Ask 100 shared services leaders and you’ll find that few aspire to be the traditional CFO.’

Indeed, some may be looking towards another top job altogether. ‘For somebody entrenched in finance, the move into a more operational role might be a good move toward a CEO role,’ Doosan says.

Whether it’s the shared services professional who needs to be persuaded of the CFO job, or the board who need to be persuaded of the shared services candidate, it’s looking like both could benefit from a strong fit of skills and experience.

Original Article: accaglobal.com

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