Today’s CFOs are increasingly expanding their expertise and areas of responsibility into the operations of their companies.
What keeps CFOs up at night? Finding new sources of revenue growth naturally keeps more than half of CFOs awake. But running a close second are concerns that their organizations will not have the talent necessary to achieve their goals, cited by 47.1% of the 86 CFOs surveyed recently by the Korn/Ferry Institute. By contrast, only one-quarter of CFOs state that making quarterly earnings targets keeps them up at night.
Welcome to the new world of the CFO. This greater focus on talent should come as no surprise to either CFOs or their colleagues in the HR department. In general, this shift represents a trend that has been going on for some time.
Today’s CFOs are increasingly expanding their expertise and areas of responsibility into the operations of their companies. More than three-quarters of the CFOs surveyed said they were taking on more operational responsibility.
If CFOs are to succeed in this expanded role, they will need to broaden their skills and be open to input and feedback from other functional areas. When CFOs get involved in important issues that can impact the bottom line, the results can be quite positive.
Consider the area of compliance with the Patient Protection and Affordable Care Act (PPACA), otherwise known as healthcare reform. We have been writing quite a lot about the law and the CFO’s role in complying with it and for good reason. The law is one of the most important influences on employee benefits strategy and decision-making to come along in some time. And CFOs have taken a central role in those efforts.
Now, those efforts appear to have paid off. Despite all of the ink that has been spilled on the impact of the PPACA on companies’ bottom lines, more than 75% of the CFOs surveyed state that the law will have no impact or only a little impact on their companies’ bottom lines. Another 16.5% say the law will have some impact on the bottom line, but only 4.7% say that the law will impact the bottom line “a lot.”
If CFOs are looking for opportunities to have more influence when it comes to talent and HR matters, a change in leadership can be a key moment. Another study of 20 global companies that hired a new CEO from inside or outside the company found that found that the chief human resource officer (CHRO) is the position most likely to be changed when a new CEO is hired, indicating the importance of having a talent strategy that is aligned with the company’s new strategic direction. One way to ensure that is the case is to replace the chief talent officer. If this happens, CFOs have an opportunity to make the case for greater input on HR, benefits and talent matters. The study was conducted by RHR International using publicly available information from 2010 to 2012.
Of course, CFOs are also at risk when a new CEO comes on board, particularly one hired from outside the company, but less so than their HR colleagues. CHROs were let go 20% of the time in all circumstances but 45% of the time when the new CEO is an outside hire.