As the world changes so must the business of running it. The role of the CFO is now more involved with not only financial but operational and IT related matters as they are made to oversee how technology integrates with economic as well as operational pressures. Today, we are seeing the number of COO positions decline which means that companies will be seeking to incorporate that role with the CFO’s role. According to Crist Kolder Associates, one of the 200 largest companies in the Fortune 500 and S&P 500, 15% of CFOs now directly deal with operational matters and only 33% of companies are hiring COOs, indicating a growing tendency for companies needing fewer COOs. Consequently, compared to the year 2000 the percentage of companies that have a COO in 2015 has declined and it is becoming evident that the role of the CFO will move beyond the management of monitoring risks to a role where they will be asked to oversee many divisions such as investor regulations and reputation management; risk management; corporate governance; Global marketing; Remuneration policies; and Treasury functions.
According to CFO, over the last 10 years more than half of the CFO positions have been filled internally as companies are grooming their talent for the position. CFOs that fit this description tend to engage heavily in business operations and strategy rotations and often bring strong industry and competitive insights. However, as the number of M&A transactions increases, it is becoming more important to hire special profiles. Many investors would like to see CFOs be proficient in investor relations within M&A. This emerging trend was seen in 2015 when 6.8% of all chief financial officers had investment banking backgrounds compared to 3.3% in 2006.
Strong communication skills, the ability to interpret complex financial data, and a broad knowledge of global economic markets are only touching the surface of what today’s CFOs must become really familiar with. According to a2016 ACCA (Association of Chartered Certified Accountants) report entitled “Professional Accountants-the future,” 55% of respondents from CFOs and their staff expect that the demand for new skills and competencies from the development of intelligent automated accounting systems will have the highest impact over the next three to ten years.
Other factors include the adoption of cloud computing, harmonizing business standards, economic volatility and the aspirations and expectations of coming generations.
This is part of our series articles in the International Corporate Finance Report.