The CFO’s role offers both a unique viewpoint of their company and an unbiased, fact-based position that has raised the CFO’s profile to an unprecedented level over recent years. The modern CFO is both a co-pilot to the CEO and a trusted voice to the board and the media. They must balance ever-growing responsibilities, which span from focusing on finance fundamentals, to strategising for the company’s future, to acting as the face of the company as they communicate with and meet the needs of an increasingly diverse range of stakeholders.

Although the modern CFO’s role is wide-ranging and differs from company to company, the divisional and group CFO Gary McGaghey explains that the typical CFO role divides into six core segments. The weighting of a CFO’s work in each segment depends on their ambition, the sector and scale of the finance function, and economic stability. But most CFOs have some involvement in each of these segments, even if their involvement is indirect and occurs only through their team.

Here, Gary McGaghey breaks down the six core segments of the modern CFO’s role (which can be divided into a further three categories — execution, enablement, and development) and the skills and relationships CFOs must develop to truly thrive.

Execution

1. Grounding Business Decisions in Financial Criteria

To ground business decisions in financial criteria, the CFO should:

Take a commercial view of their partnership with the company.
Identify commercial, financial, and economic risks from business propositions.
Establish profitability of business propositions.
Constructively challenge stakeholders.
Clearly communicate the financial implications of proposals.

They should also have experience in business case appraisal, benefits tracking and realisation, pricing and profitability analysis, cost management, and planning and forecasting.

2. Providing Insight and Analysis to Support the CEO and Senior Managers

To effectively provide insight and analysis, the CFO should:

Clearly communicate financial information.
Assess profitability drivers.
Identify and communicate risks.
Forecast performance based on past performance.
Identify corrective action where necessary.

They should also have experience in financial planning and reporting, accounting and reporting for non-recurring initiatives, identifying non-financial drivers of financial performance, operating at executive level, and market trend analysis.

Enablement

3. Leading Finance Initiatives That Support Strategic Goals

To lead key initiatives in finance that support strategic goals, the CFO should:

Have the leadership skills to fuel change in finance.
Set and communicate their vision and strategy.
Engage stakeholders to identify the appropriate role for finance.
Bring stakeholders together within finance and the wider company.
Sponsor the delivery of large-scale change in the finance function.

They should also have experience in finance process improvement, conceptualising change in finance operating models, delivering finance systems, and engaging internal customers to achieve service delivery transformation.

4. Funding, Enabling, and Executing the CEO’s Strategy

To fund, enable, and execute the strategy that the CEO has set, the CFO should:

Fund the company’s operations.
Prioritise investments.
Craft strategic plans to reach corporate goals.
Understand key value drivers.
Transform strategic plans into operational plans and targets that include defining key performance indicators (KPIs).
Design the implementation program.
Monitor progress against strategy.

They should also have experience in managing working capital, implementing financial risk management strategies, managing large or complex improvement or change programmes, and managing mergers and acquisitions.

Development

5. Developing and Defining the Company’s Strategy

To develop and define the company’s overall strategy, the CFO should:

Translate corporate goals into a clear roadmap.
Identify financial and risk issues that relate to the corporate strategy.
Deliver a workable strategic plan within known constraints.
Draw up creative and conceptually strong solutions.
Analyse portfolios of opportunities.
Build trust and motivate others.
Communicate financial and risk issues to C suite colleagues.
Provide financial challenge at C suite level.

They should also have experience in the development and implementation of business plans, monitoring achievement of plans and targets, taking corrective action when necessary, and product and market development.

6. Representing the Company’s Progress on Strategic Goals to External Stakeholders

To represent the company’s progress on strategic goals to external stakeholders, the CFO should:

Communicate clearly on performance.
Offer insights into the company’s performance in line with its main competitors’ performances.
Improve the company’s main value drivers, KPIs, and initiatives.
Positively communicate about the management of key risks.
Adopt a forward-facing perspective.
Anticipate and respond to questions from the media, investor community, and analysts.
Respond positively to issues that industry regulators raise.

They should also have experience in preparing financial information for external publication, communicating to capital markets, dealing with external parties, engaging with the media, managing relationships with external auditors, and resolving accounting and control issues.

The CFO’s Relationships

CFOs need to nurture relationships with a vast range of individuals. Aside from the CEO, COO (chief operating officer), CIO (chief information officer), chairman, and executive and non-executive boards, they may also need to work closely with the marketing director, HR director, business unit heads, heads of key support functions, finance business partners, audit committee, external auditors, and strategy director.

They might also find themselves working with the corporate development officer, senior finance managers, business unit finance teams, risk director, operations director, external funding providers, investors, treasurer, individuals from the media, and regulators.

CFO-CEO Relationships

A healthy relationship between the CFO and CEO is always essential. Often, the CFO is the CEO’s most trusted ally, and their relationship relies on a high level of trust, respect, and transparency. This doesn’t mean that the CFO and CEO always need to be in agreement, but it does mean they need to be able to advise each other.

CFO-Stakeholder Relationships

Although CFO-stakeholder relationships vary, they all rely on trust. Therefore, CFOs must reassure stakeholders about the health of the company when facing obstacles. Today, stakeholders are likely looking for more robust analysis, more transparency in information, and reassurance that the company is making well-informed decisions. Plus, many external stakeholders are seeking deeper, more frequent interactions with the key management team, meaning that CFOs often play more public roles than they did historically.

CFO-Board Relationships

Many boards are more demanding of CFOs than ever before, requiring a high degree of transparency on risks, performance, and projections, not to mention frequent, granular reporting. CFOs must have integrity so they can uphold the board’s confidence that they will hear of all the achievements and setbacks that the company experiences. Although regular board meetings still offer the main platform for communication between the CFO and the board, many boards and CFOs now prefer a more informal relationship with the scope for ad hoc discussions.

CFO-Investor Relationships

To build trust with investors, CFOs should keep their financial reports as clean, clear, consistent, and comprehensive as possible. Today, investors seek more than statutory or compliant reporting. Instead, they require broad metrics and a realistic overview of company performance. This means CFOs should delve into company strategy, financial performance, risk management, and operational effectiveness in these financial reports. To achieve this, CFOs can practise the following.

Keep numbers simple and without error.
Demonstrate how the company manages capital.
Go beyond statutory reporting to instead provide a comprehensive description of the business.
Join up different elements of reporting to offer a wide view of the company.
Provide non-financial KPIs that support past and future delivery.
Highlight the company’s long-term plan instead of only its short-term returns.
Explain how the company manages risks.
Demonstrate an awareness of wider stakeholders.
Be proactive and timely.
Ensure leadership upholds integrity at all times.
Build trust in the finance team by allowing opportunities for individuals to demonstrate their understanding, experience, and capabilities.

CFO-Media Relationships

Transparency is particularly important in the relationships that CFOs build with media contacts. CFOs shouldn’t avoid giving information that is already in the public domain and should provide quick responses and build trust with media contacts, which often gives them the leeway to make changes to editorial material that could be phrased more appropriately.

In the event of a media crisis, Gary McGaghey recommends that CFOs respond with three R’s: regret, reason, and remedy. First, they should show empathy for those impacted (regret). Then, they should explain what happened (reason). And then they should explain how the company will resolve the problem (remedy).

Becoming the Ideal CFO

The ideal CFO is not only an excellent finance professional and business analyst who has outstanding communication, strategic thinking, problem-solving, and language skills, but they also have commercial sensibility, a deep understanding of business, international and operational experience, and the ability to manage conflict, run major projects, manage stress and complexity under pressure, and adapt to change.

Senior finance professionals who are hoping to land a CFO role can practise a combination of essential technical and interpersonal skills to help them achieve this position. But Gary McGaghey explains that as finance professionals reach the top of the finance function, they tend to realise that communication skills are the most important, especially for a group CFO role.

However, it’s not easy to teach communication. CFOs develop this skill through experience and surrounding themselves with role models and mentors. They may hone their communication skills by stepping out of the finance function to gain direct commercial experience; working closely with the wider company from the finance function; working in operations, sales, and planning; and working in international environments.

Learn more about the CFO’s role from Gary McGaghey.

About Gary McGaghey

Gary McGaghey is the group CFO of the €1.3 billion end-to-end marketing production and business services group Williams Lea Tag, which Advent International owns. Williams Lea Tag works closely with companies all over the world, helping these companies achieve personalised solutions. Gary McGaghey’s role sees him manage the private equity company’s financial plans, oversee investment-related decision-making processes, and expand the value of its holdings.

Gary McGaghey is also the non-executive director of Fitmedia UK, which develops children’s fitness analysis and testing solutions. In the past, he has held non-executive and statutory executive director roles for privately owned and listed companies such as Unilever, Nelsons, and Robertsons. He is a chartered accountant in South Africa and a chartered management accountant in the UK.