The victory of any business is dependent on the chief financial officer. As the role of the CFO grows in importance, it’s also becoming more youthful. The composition of today’s business leaders is changing significantly with the rise of millennials and others from Generation Z. We are already witnessing the impact of this younger generation on finance, with the ongoing digital transformation of the space being influenced by their familiarity with digital technology and the emergence these workers.
In recent years, the premiums industry has seen a significant shift. has given way to ACH, and other forms, of electronic payment methods. As these young finance executives take on more decision-making roles, such as those of CFOs, digitization and electronic payment methods will continue to be a trend.
This was the background I used when my company conducted a thorough study to create a picture of the future financial leaders and how they might affect the organizations they serve. Many organizations are making significant changes in the way the CFO is viewed.
These are the three most essential traits for the future CFO.
1. Customer Centricity
The primary function of the CFO has been to maximize cash flow and reduce financial risk. Although they played an essential role in determining the direction and strategy of their company, their primary focus was rarely on the bottom line. They were more focused on areas that could help the organization succeed.
But, this is changing. Over 500 financial professionals were surveyed, both current and future CFOs. We wanted to know their plans to improve their financial and operational systems. Nearly half of the future CFOs (47%) referred to customer satisfaction. This collate with just a third of those currently in this role. Interestingly, customer satisfaction was this group’s second most popular answer, ranking only behind forecasting/reporting.
This reflects the recent shift in customer experience over the past few years. It also shows the direct impact it has on financial leaders. A Harvard Business Review Analytic Services survey, surveyed nearly 1,100 business leaders and found that 58% said their CFO or finance function is a key player in their CX team.
It’s not surprising that the younger generation places the same importance on CX in their professional lives. They grew up in a time when Amazon AMZN was the leader in convenience and instant gratification. This is a significant shift in job titles from the traditional CFO position.
2. Data and Technology Drive the Future
The CFO has always valued data. The importance of being data-driven has grown with the development of big data analytics and other data sources. Deloitte says this has allowed CFOs to have “more-centralized control over operational business decision-making, answering queries such as What price point should this customer use today? Or Which inventory products should be pulled out of the supply chains?
89% of finance leaders and CFOs agree that understanding how data is used within their company will be a crucial measure of future success. It is normal to feel comfortable with data analysis. Both current and future CFOs stressed the importance of data analysis to understand the whole picture, not just the business’s financial aspects.
It is also interesting to see that 70% of the next-generation CFOs (70%) think that data and analytics are essential for their business’s future success. They believe technology projects that integrate with vendors, customers, and partners will define digital success. Future financial leaders will have a high level of technical proficiency that allows them to concentrate on the core elements that make a better financial department, such as interoperability and automation.
3. Horizontal Management Mindset
There are generally two ways to govern an organization. A vertical approach to managing an organization sees leaders as only responsible for one function. The other system is horizontal, where leaders see the whole organization as their responsibility, regardless of what role they are responsible for.
Many CFOs have traditionally chosen the first approach. However, even before the next generation of CFOs ascends into their roles, they already hint that they will bring a cross-organizational, horizontal mindset.
Future CFOs expressed their desire to work more closely with business units outside the traditional CFO’s office. They also stressed the importance of developing a skill set that allows them to collaborate and integrate technology with other functional groups.
As the role of the CFO carry on with to evolve with the changing behaviors of new finance leaders and other dynamics that impact the business world, it is evident that the part of the CFO has significant implications. Research shows that the traditional CFO model is being replaced by a more data-driven, technologically-oriented, cross-disciplinary collaborative definition. This evolution is accompanied by new technologies that will help future success.
There are many similarities between the current and next generations of CFOs. However, there are some critical differences in their backgrounds and areas of focus. One is that current and aspiring CFOs recognize the importance of digital transformation initiatives.