These days, a CFO’s reach extends far beyond back-office accounting and finance. Chief financial officers can be expected to weigh in on human resources, marketing, and environmental, social, and governance issues. Even digital transformation can fall under the realm of a CFO’s responsibility; in recent years, it has become “the front and center of what CFOs are dealing with,” said Ankur Agrawal, a partner at McKinsey.
In fact, a recent McKinsey survey asked CFOs what they are focusing on, and “not surprisingly, technology and technology-enabled disruption is a big part of where they're spending their time,” said Agrawal, who moderated the panel “CFO Guide to Digital Business,” at the recent MIT Sloan CFO Summit.
A panel of three CFOs agreed that digital transformation can be great for business, but it won’t work unless you start with your strategy, then figure out how technology can implement that strategy. Although the speed of innovation increased dramatically during the pandemic, that doesn’t mean CFOs should jump into digital without thinking about its relevance.
“Digital should be backed by strategy, versus digital for digital’s sake,” Agrawal said.
Digital, however, isn’t the only way that finance professionals are seeing their mandates change. During the panel, the three finance professionals spoke about how they’re branching out into new parts of the business and managing the delicate balance between automation and human capital. Here are three of their insights.
1. ESG will have a major impact on finance
Interest in ESG is the highest it has ever been. Companies are tracking their carbon emissions and keeping track of data to measure sustainability. As such, CFOs have moved to the forefront of how ESG is measured and reported, a new frontier for accounting.
Alan Hippe, CFO of drug company Roche, said that finance executives should expect to see their responsibilities increase as ESG reporting becomes more mainstream. When it comes to how data is assessed and audited, ESG “will have a major impact on finance, and I see it already,” Hippe said.
“The first time we do an audit tender now, we do the tender the first time for the financials, but at the same time, we audit our nonfinancials,” and that includes ESG, Hippe said. “We bring that together under one audit, under one process.”
In the future, as the U.S. moves closer to adopting a universal set of global sustainability standards, the pressure will increase on CFOs to minimize their company’s environmental impact and have the data and metrics in their reporting to back it up.
2. CFOs are stepping into new roles beyond accounting and finance
CFOs today are expected to collaborate with other areas of the business — HR, information techology, even marketing — to create synergies and add value where needed.
Chris Guiffre, CFO of Pear Therapeutics, a software-based digital therapeutics platform, said he doesn’t believe there is a “core” CFO role.
“A CFO who thinks his or her job is to close the books every month and report every quarter is a small fraction of the value a CFO can deliver,” Guiffre said.
Guiffre has dabbled in investor relations, HR, and tech.
“I love managing [information security] and IT because I see them as ways to enable the operations,” he said. “I even like having HR under me because businesses are built on the people.” If you have an HR group “that prides itself on recruiting and learning and development, you make your organization better.”
3. As finance embraces automation, workforce management matters
CFOs are turning to artificial intelligence and automation to increase efficiency, by synthesizing information and making tasks easier to complete. The pandemic only accelerated this trend. A McKinsey survey showed that 67% of businesses accelerated the use of AI and automation during COVID-19.
But will machines and digital technology replace workers? How can CFOs manage this balance?
Wajeeha Ahmed, CFO of digital media company Barstool Sports, said that no matter the technology, humans are still essential. She recalled keeping a “lean team” of eight people leading up to a NetSuite implementation. Then she lost three people from her team and was working overtime to make up for it.
“That really set me back because I already had a lean team, and I had this grand plan, and I had this NetSuite rollout all planned,” Ahmed said. “In some ways, being scrappy and not having enough bodies hurt me.”
In retrospect, Ahmed said she wished she had a bigger team during the automation process because having fewer people on her team “took a toll.”
Technology is great, but without having the right people to implement it, AI and automation won’t be as effective, she said.