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Strategy and innovation
The image of the CFO: the image of the bad cop is coming to an end.
From controller to ally. CFOs cannot shrug off the stereotype of them being blockers and bearers of bad news. But the role of the CFO has been enriched within the organisation, with their offices becoming spaces for advice and planning, and for driving transformation and digitisation.
The second Bankinter CFO Forum's CFO Frontline report X-rays the role of CFOs in Spain. CFOs have increasingly developed into strategists, being more transparent and offering a 360-degree vision that has enabled them to rise up through the organisation's structure.
An influential CFO on social media known on Twitter as “The Secret CFO” recently revealed, with their usual sense of humour, their method for addressing certain unpopular measures in their company, such as how to cut costs or redesign the incentive structure. “I like to do these things in a four-handed strategy with the CEO. A good cop-bad cop routine can be very beneficial, because it allows you to swap roles with the CEO depending on the audience”. This is a somewhat cynical vision of the role of the CFO, and it does not mesh with the trend picked up by the Bankinter Barometer.
“I still remember the first time my boss called me ash. But they never told me I was wrong”, said Ana San Vicente, CFO of Teknia, at the recent launch of the annual report. The attendees laughed complicitly with their colleague from this Spanish multinational: being seen as the lord of the spreadsheet is still part of what you get paid for, being the Mr Pessimistic in the comic strips by Escobar. But let's look at how this distorted image compares to reality.
CFOs believe that their role is superior, even if this is not recognised
As this is the second annual CFO Forum report, we are can already start to compare metrics and observe the role of the Finance Department evolving. The CFO has a high opinion of their work. 64% of those surveyed now believe that the CFO is the number two in the company, behind only the CEO, compared to 59% who thought this last year.
However, 31% of CFOs believe their role is closer to third place in terms of power in the company, compared to 36% last year. Only 1.5% regard the CFO as being in fourth place on the management ladder, with 3.5% thinking they are fifth.
So much for what CFOs believe about their professional level. But the ranking they give themselves in their own company is something else.
Our survey shows a difference between desire and reality. According to our Barometer, only 46% of CFOs believe they are actually in that logical second position, compared to 56% last year. 30% regard themselves as being in the third level, 16% in the fourth and 8% in the fifth.
In other words, after a time of crisis during which CFOs sat at the right hand of the CEO at the head of their organisation, a decline in their actual position within the management area can be observed in 2023.
The stress between being a facilitator and being seen as a controller
The role traditionally assigned to the CFO by other areas of the organisation was that of a controller. This is an image that persists in industry and construction, according to data in the Frontline Report. However, CFOs are seen as facilitators in the service sector. They drive transformation and plan the investment needed for development of the business, particularly in the technology field.
42% of respondents from other areas consider that the finance department provides them with tools and facilitates their work. Compared to this opinion, 40% still cling to the stereotype of the CFO as the controller of spending, while 18% consider the finance department to be just another department.
This mixture of external assessments closely corresponds to the duties CFOs themselves identify as typical of their role today. 51% of their work is related to providing valuable information for the organisation, 25% to their leadership role, and 24% to promoting digitisation and driving transformation.
Empathy and transparency are taking over at the C-level
Our second annual report on CFOs in Spain focuses specifically on the relationship between the CFO and their senior management colleagues. This relationship is becoming richer and richer, with values such as empathy and transparency predominating.
One of the quotes in the Frontline Report graphically summarises the opinion of CFOs among their C-level colleagues :
“All the areas got together because we have to get the ship moving, and they have a very clear picture of the company's situation”.
As Javier Hernández Bermejo, Bankinter's Head of Medium-sized Businesses, says, the CFO has become established as “an increasingly important figure in the management committee. The CFO's position rises during crisis situations”.
Closely mirroring the conclusions of Bankinter's Frontline Report, a study by KPMG found growing demand in companies for the finance function to be involved in transversal transformation processes. In particular, it argued for greater collaboration between finance and technology and operations. Managers from other areas highlight “the role of CFOs in supporting business areas when difficult decisions have to be made”.
The closest collaboration is between the CEO and the CFO. There is a natural evolution between these two roles, as we described in a recent article. But there are ups and downs with other departments. In a “league table of closeness”, the CFO collaborates most with the managing director or CEO, followed by the CIO (technology), the COO (operations) and the CHRO (human resources). The KPMG study highlights how the relationship cools as the CFO approaches the business area, particularly - and very markedly - the Marketing Department.
The Frontline Report examines the CFO's relationship with all of these roles, concluding that:
- CFO-CIO: work closely together and have substantial synergies in relation to the digital transformation and digitisation of processes. If there are two departments that attract each other like magnets, they are finance and technology.
- CFO-CMO: marketing feels most comfortable with a CFO who combines strategy and planning. Planning is identified with more investment, and the CMO likes that.
- CFO-COO: this relationship is more complex, according to the report, with some COOs seeing their CFO as a controller who thwarts their initiatives. “We have much more information that the operations people don't see in their day-to-day work. If you share that information, then they understand the reason why”, said Iratxe Pardo, Financial and Treasury Director at CIE Automotive, during the presentation of the report.
- CFO-CEO: The top executive in the company is looking for initiative and help with strategic decisions and general planning for the company from their CFO. Borja Agüero, CFO of IFC (Cantabria Labs), says, “this starts because the CEO shares the same vision, empowering the CFO and trusting that they can help them with the strategic path”.
“The CFO and uncertainty”. This is the title of this year's CFO Frontline Report, a field study where the role of the bad cop is giving way to that of a commander correcting the course of the ship and ensuring it reaches port. This has happened during the perfect storm of the last three years, which has put their technical capacity and, above all, transversal leadership of the organisation to the test.
