A CFO’s role has changed to include more responsibility over HR.
As finance has become crucial to your company’s strategic advantage in business, a CFO’s role and responsibilities have changed to include human resources.
In fact, back in 2015, Deloitte CFO Mark Friedman predicted that the responsibilities of a CFO would be shaped by technological innovation:
“And, they should refocus the finance talent agenda to bring into the organization people who have the skill sets to retrieve the data, interpret it, and use tools such as data visualization to transform the insights into a story that’s strategic and easily understood.”
According to McKinsey’s 2018 report on the CFO's role, a CFO has tremendous impact on capability building and the acquisition and evaluation of talent.
CFOs have increasingly taken on board engagement and investor relations. In 2018, 42 CFOs reported being actively involved in board engagement, a jump up from 24 in 2016. Also, in 2018, 46 CFOs reported having responsibility for investor relations over 33 reporting just two years before.
A CFO's role has evolved from simply being a numbers-person into being a people-person. Do CFOs have the people skills and mindset to leverage human talent as they do capital assets?
Why does adding HR responsibilities to the CFO role make sense?
The trend of CHROs reporting to the CFO rather than CEO had some worried but during times of recovery, this change in a CFO’s role has its merits.
“When we were in that rapid, dramatic period of downturn, compensation became a cost-cutting area, where the CFO had significant influence and decision-making on compensation formulas and structures. Now that we’re in the recovery period, there’s renewed effort and focus on compensation to retain key people as the economy recovers.”
In this current period of preparation-for-recovery, capacity building, performance metrics, compensation, and talent acquisition are critical to a company’s future.
The performance of high-cost HR activities on a company’s bottom line is naturally of importance to a CFO.
Human resources and finance can learn from each other to improve business performance by harnessing HR’s data, applying financial principles to the hiring and evaluation process, keeping people in mind during times of transformation.
The CFO can optimize a company’s recovery by empowering the CHRO to succeed.
Does your business need a CFO that knows people?
Today, thanks to the profession’s recognition of the importance of CFOs having soft skills and business savvy, it’s possible to hire a CFO that is both focused on human capital and finances.
Consider these five skills, traits, and abilities to look for in a CFO who knows people:
- Professional experience outside of accounting and finance. An entrepreneurial mindset is even better.
- Communication skills that enable them to effectively and persuasively communicate financial priorities internally and externally.
- Ease with innovation across the organization that empowers technology instead of merely managing the risks.
- Asserts a vision of the CFO’s strategic leadership role moving the company forward.
- A cross-functional perspective to meet the existing business needs and not so narrowly target efficiency.
In the preparation for recovery from the global COVID-19 pandemic environment, CFOs are leading the transformation at their company, and that is becoming a pivotal part of their role.
Do CFOs know people? Yes. In fact, CFOs know a heck of a lot about a company’s people and, moreover, what they know makes a huge difference.
One last tip, you won’t find a CFO who knows people if your job description isn’t up to snuff.
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