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The CFO’s part: Prioritize, renovate, repeat

Amid a raft of new duties for CFOs, our study indicates that finance leaders are properly positioned to lead the C-suite agenda by championing transformations, digitization, and ability making.

If you desired to validate the previous adage that the only continuous in existence is improve, the effects from our most recent McKinsey World wide Study suggest you need to have not seem any more than the CFO role.

Responses point out that the possibility for CFOs to build the finance function as both equally a primary transform agent and a supply of competitive advantage has never ever been bigger. Yet they also clearly show a clear perception hole that must be bridged if CFOs are to split down silos and foster the collaboration required to thrive in a broader function. While CFOs feel they are commencing to develop economical value via nontraditional jobs, they also say that a plurality of their time is still devoted to traditional responsibilities versus newer initiatives. In the meantime, leaders outside the house the finance functionality feel their CFOs are still principally concentrated on and build the most benefit as a result of common finance duties.

How can CFOs parlay their raising responsibility and classic finance expertise to take care of these differing details of see and lead substantive transform for their firms? The survey effects issue to a few means that CFOs are uniquely positioned to do so: actively heading up transformations, main the demand toward digitization, and setting up the talent and capabilities expected to maintain complex transformations in and exterior the finance functionality.

Modifying obligations, unchanged perceptions

The most up-to-date study outcomes ensure that the CFO’s part is broader and a lot more advanced than it was even two many years in the past. The number of functional locations reporting to CFOs has improved from 4.5 in 2016 to an normal of
6.2 today. The most notable boosts considering the fact that the former study are variations in the CFO’s duties for board engagement and for digitization (that is, the enablement of small business-approach automation, cloud computing online courses, data visualization, and state-of-the-art analytics). The share of CFOs stating they are dependable for board-engagement pursuits has greater from 24 % in 2016 to 42 % right now for digital pursuits, the share has doubled (Exhibit 1).

The number of functional areas reporting to CFOs has grown since 2016, with notable increases in areas such as board engagement and digital.

The most commonly cited activity that reports to the CFO this 12 months is danger management, as it was in 2016. In addition, extra than 50 percent of respondents say their companies’ CFOs oversee interior-audit processes and company approach. Nonetheless CFOs report that they have expended most of their time—about 60 % of it, in the earlier year—on traditional and specialty finance roles, which was also true in the 2016 survey.

Also unchanged are the diverging views, concerning CFOs and their friends, about wherever finance leaders generate the most worth for their companies (Show 2). 4 in 10 CFOs say that in the past calendar year, they have
made the most worth as a result of strategic management and effectiveness management—for example, environment incentives connected to the company’s strategy. By distinction, all other respondents tend to imagine their
CFOs have developed the most benefit by spending time on conventional finance things to do (for example, accounting and managing) and on price tag and efficiency management throughout the firm.

CFOs and their peers have diverging views about where CFOs create the most value; non-CFOs most often note the value generated in traditional areas.

Finance leaders also disagree with nonfinance respondents about the CFO’s involvement in system choices. CFOs are additional very likely than their friends to say they have been concerned in a assortment of strategy-connected activities—for occasion, location all round corporate technique, pricing a company’s merchandise and products and services, or collaborating with other individuals to devise methods for digitization, analytics, and talent-management initiatives.

Guiding and sustaining alter

Our most current survey, alongside with prior McKinsey study,

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