3 Steps to Optimizing the Ever-Evolving, Always Critical Role of the CFO

It is not an easy task to define the role of a chief financial officer with the economic crisis so close in the rearview mirror.

As companies scramble to keep up with wildly unpredictable markets and more stringent accounting needs, CFOs are finding that their function — while still as vital as ever — has evolved. They need to adapt to master new capabilities or risk being left behind.

What’s more, CFOs are often forced to contend with perceptions that have the potential to alienate them from the front-end decision-making process. They are frequently viewed as separate from the team that is running the business, i.e., as back-office necessities rather than key leaders. And they can be perceived as playing cop too often rather than contributing to the creative process.

Adding to these difficulties is the ever-expanding nature of their roles in recent years. According to a 2011 Accenture survey, 80 percent of the more than 1,000 finance executives polled said that their responsibilities had expanded since the economic downturn, with 79 percent indicating that they needed greater flexibility in their operations to “more readily respond to ongoing market changes.”

Today’s CFOs are also contending with a stringent regulatory environment, increasing demands from shareholders about transparency, timeliness, and accuracy, not to mention a volatile marketplace. Furthermore, in most industries their companies are still expected to cut costs even while seeking out growth opportunities for the future. And in an era of accountability, particularly in corporate governance, financial officers are increasingly being held accountable by the board and CEO when things go wrong.

Given the singular importance of the position and the tricky economic environment in which today’s CFOs are working, what can they do to separate themselves, and their companies, from their competitors? The following three characteristics of successful CFOs at high-performing companies offer some valuable insights into this question:

1) When it comes to market focus and position, they are proactive, not reactive.

The best CFOs influence results rather than being influenced by them. They provide leadership by helping their company understand the economic model used in their industry, use analysis to defend or extend its market position, and determine when to take advantage of new opportunities in new markets.

2) They operate outside of traditional roles and engage directly in initiatives across the organization.

By participating in all major decision-making cycles, highly effective CFOs adopt a front-line role in identifying and building capabilities, determining which capabilities truly make a strategic difference, and ensuring that core capabilities are optimized and aligned with their customer value proposition.

3) They excel at translating insight into action.

CFOs have incredible insights that they can put to use for their companies. For example, making sure their companies understand and embed performance management systems, enforcing resource allocation decisions and performance management requirements, and delivering action-oriented insight with meaningful performance metrics are all top priorities.

Whether at mature organizations, expansion-stage companies, or startups, adopting these three characteristics is critical for CFOs looking to to succeed in today’s complex environment.