The strategic evolution of the financial directors’ role

Evoluția strategică a rolului directorilor financiari

The strategic evolution of the financial directors’ role

In recent years, financial directors (CFOs) have faced numerous challenges and opportunities. Should CFOs adopt an offensive or defensive strategy? According to the most recent CFO role analysis, financial directors do not see this situation as either/or.

Instead, it engages in a strategic balancing act, oscillating between offensive and defensive approaches, while also focusing on building the capacities necessary for future developments. This complex approach involves addressing both short-term and long-term priorities, requiring distinct mindsets and approaches.

Balancing offensive and defensive strategies

The results of the analyzes on this topic highlight that CFOs are carefully balancing different strategies to address the biggest threats to their organizations: increased industry competition and increased economic volatility.

The data illustrates how CFOs are allocating their time in efforts to improve organizational resilience and reveals their expectations for significant changes in organizations in the coming year. Notably, 55% of CFOs anticipate creating new revenue streams by establishing new businesses, reflecting an offensive strategic move.

CFOs also devote a significant portion of their time to mitigating financial risks while simultaneously seeking avenues for growth. Looking to the future, they anticipate significant changes in their organizations, and are attentive to building resilience and capitalizing on market opportunities.

Identifying strategies needed for resilience

To strengthen the company’s resilience, CFOs emphasize two key areas for building resilience: building the necessary capabilities to do so throughout the organization and integrating advanced technologies such as automation and real-time reporting.

These proactive measures are preferred over reactive and short-term approaches, such as cost-cutting responses to a crisis. Moreover, CFOs who have effectively built the resilience of organizations emphasize the importance of talent management and digital capabilities.

Reprofiling the financial function

A significant proportion of CFOs see organization-wide capability development as a powerful tool for building resilience. They actively participate in capacity building programs, recognizing the need for a diverse range of skills in the future.

Interestingly, basic financial skills on their own are not considered sufficient. Change management, adaptability and project management skills are highlighted as critical to the finance function and underline the imperative of multi-functional finance talent.

An increasing trend of digitization in financial functions can also be observed. CFOs have been increasingly integrating technology into daily financial operations for several years, and top-performing organizations are leading the way in technology adoption. Advanced analytics and data-driven technologies are used to improve financial and business operations, demonstrating a technology-forward approach by CFOs.

Looking to the future

In the face of economic volatility and ongoing strategic challenges, visionary CFOs take a proactive approach, focusing on:

  1. Transformative changes in the organization’s business or operating model
  2. Invest in technology across the organization, particularly within the finance function, to improve decision-making capabilities and
  3. Prioritize talent development, recognizing the crucial role in implementing change and building organizational resilience.

In conclusion, the role of CFOs is evolving in the balanced management of the changing environment, oscillating strategically between offensive and defensive while investing in capability development and technology adoption. This strategic approach prepares organizations to overcome challenges and capitalize on opportunities, ultimately building resilience for a prosperous future.