Beyond the Numbers: The Issues Facing CFOs/Controllers

Clayton & McKervey

CFOs, controllers and business owners recently gathered to discuss the changing role of CFOs and controllers. Traditionally, individuals in these roles have been responsible for financial and accounting functions, but a recent poll of 1,054 senior financial executives conducted by Accenture found the following percentages of respondents have had increased involvement in:

43% – Information Technology
41% – Strategy/Business Development
39% – Human Resources
38% – Operations/Production
37% – Risk Management
37% – Customer Service
35% – Procurement
33% – Marketing/Sales
30% – Research and Development
24% – Legal
23% – Sustainability

Many of the participants agreed they have had increased involvement with most, if not all, of the above non-traditional financial and accounting functions. One participant exclaimed that the list was her “job description.”

Why do we see increased involvement of financial executives in these areas?

• Many of these additional functions affect the “bottom line,” so it is natural for financial executives to become more involved in these areas
• The company may be too small to hire all the applicable specialists
• Financial executives may be better equipped to evaluate such things as services from vendors without emotional involvement because they are inherently analytical
• They may be more involved with bids to be sure the company will make money

What challenges should we be aware of when financial executives have increased involvement in these areas?

• Human resource functions performed by the CFO/Controller could be a conflict of interest because:
  • The CFO/Controller may be the policy enforcer
  • As the acting HR person, the CFO/Controller is the person employees need to go to if there is a policy problem
• Having greater involvement in non-financial areas of the business could mean financial executives are neglecting tasks that are more closely aligned with their primary job functions, such as:
  • Strategic planning
  • Changing ERP software (due to lack of time to evaluate and implement change)
• The financial executive may not have the depth of expertise needed to perform these new responsibilities; therefore, they may not be doing all that they should be doing from a risk management perspective. They could be exposing the company to risks without knowing it.

What techniques can financial executives use to adapt to the increased involvement in these areas?

• Ask yourself “What do I know?” and “What do I need to know?” and seek out the knowledge needed
  • When taking on more responsibility, gather information:
  • Meet with several vendors and ask “Who are your major competitors?” and “What sets you apart from your competitors?”
  • Use Google as a research tool
  • Subscribe to trade publications
  • Ask new hires what went well and what didn’t go so well with their prior jobs and learn from the other companies’ successes and shortcomings
  • Get involved with key associations in your industry
• Update your skills (not just the required CPE)
  • Learn about change management (to be an effective agent of change, you need to be able to communicate effectively)
  • Update soft skills
    • Leadership
    • Coaching
    • Open vs. closed communication style (open is better)
    • Toastmasters
    • “Vital Skills International, LC” company training
• Analyze your strengths and delegate things that are not your strength
• Surround yourself with a “cabinet” of advisors just like the President does (could be inside or outside organization) to advise you on:
  • Human Resources (could be an attorney)
  • Tax (could be an accountant)
• Explore outsourcing rather than having in-house resources
  • Information technology could be outsourced, especially in a smaller company
  • Pick a vendor you can trust
  • Review alternatives regularly (i.e. every two years)
  • PEO or ASO to take over some administrative and compliance aspects of HR
    • Handbook
    • Loss control
• Leverage people you know, both internal and external
• Use technology to free up time or resources
  • A multiple location company could use the same IT person for all of its locations
  • A multiple location company could use the same administrative assistant to answer calls from all locations

The long and short of our roundtable conversation is that CFOs and controllers have to wear many hats. In order to increase your success rate for the non-financial assignment, you have to roll up your sleeves and seek to understand.