By Nadine Pichelot, Senior Vice President Finance, Anaplan
Over the past few years, rapid, complex change has drastically transformed the way we live – from how we work and exercise, to how we shop, bank, and communicate. We’ve felt the effects of chaos on both our personal and professional lives, from the impact of COVID-19 and supply chain volatility to Brexit disruption, political shifts, and market turmoil. Because of this constant change, many organisations have had no choice but to rip up their long-term planning strategies and pivot to meet the reality of more short-term circumstances. It’s been a lesson in agility and resilience for Chief Financial Officers (CFOs) in particular, one that they must now leverage to chart a path forward in the face of a looming recession.
But to be successful in this environment, CFOs might need to tackle challenges outside of their comfort zone.
CFOs have long had a reputation for being stuck behind spreadsheets and numbers – keepers of the budget with little flexibility. And while this might have held some truth at the start of the pandemic, over the past few years CFOs have evolved their role – from financial gatekeeper to transformational leader. The post-pandemic c-suite is shifting, and CFOs are stepping into a more strategic position, helping their companies navigate an increasingly dynamic business landscape with agile forecasts, continuous scenario planning, and an eye for mitigating risk.
Now with a recession on the horizon and economic uncertainty soaring to new heights, CFOs will need to get their priorities in order and open their doors to a more collaborative environment across departments. If they don’t address these specific cultural tensions, CFOs might miss out on opportunities to optimise their operations and solve critical challenges for the business, from alleviating margin pressures to meeting the needs of an evolving customer base.
By the book, but on a different page
To be successful on this journey, CFOs need to first examine the state of their existing cross-functional relationships. According to new research from The Harris Poll – commissioned by Anaplan and Deloitte, – rifts currently exist between the way CFOs view themselves and their evolving role, and the way they are viewed by their cross-functional colleagues. This divide in c-suite perception is a growing issue as CFOs continue to take on more responsibility across the organisation.
Businesses are relying on the CFO to address and manage challenges beyond the bounds of traditional finance, with CFOs also playing their part in effectively managing issues like the inventory bullwhip and supply chain constraints, to the management of ESG. However, owning these challenges outside of their traditional remit means that collaboration is essential. To align financial goals and plans with operational realities, CFOs need to prioritise strong relationships across departments, from sales and HR to supply chain and marketing.
And there is clearly a lot of work to be done. According to the report from The Harris Poll, Anaplan, and Deloitte, 78% of senior colleagues believe the CFO could improve relationships with individual business units, and more than half of marketing and sales colleagues said increased collaboration and connection with the CFO could reduce conflict between their teams.
This lack of communication has already played a part in how companies have shown up in the face of disruption, with 82% of CFOs and 96% of their senior colleagues agreeing that recent challenges – like the transition to hybrid work and supply chain volatility – could have been addressed more strategically if there was stronger communication and alignment between departments.
So how can CFOs reduce these departmental silos in order to successfully collaborate moving forward? It’s a matter of breaking down existing cultural tensions and building stronger cross-functional relationships. A task that will require an investment in change management and a willingness to listen and learn from all departmental leaders.
Priorities for the future
Better connection between departments isn’t the only thing that needs to be addressed as we embark on a new fiscal year. In a volatile environment, businesses also need to ensure that departments are on the same page when it comes to the priorities they are going to plan towards (long-term goals) and the priorities they are going to activate on now and over the next few years (short-term plans). With the COP27 Summit fresh on our minds, it’s no wonder alignment around a company’s Environmental, Social, and Governance (ESG) goals, priorities and initiatives has taken center stage.
Although ESG is among the critical concerns of modern organisations, there is a disparity between how organisations perceive their CFO’s efforts towards ESG and how CFOs see these efforts themselves. For example, although businesses believe that the responsibility for ESG lies with the CFO, this is not reflected in CFO priorities, with the management of ESG initiatives coming in fifth (70%) on the CFOs list in the Harris Poll survey. This misalignment is a real issue when trying to achieve lasting change. If the expectations of what should be delivered are constantly misunderstood and oversold, it will make it difficult for any business to truly achieve any long-standing ESG success in the future.
There is a huge opportunity for CFOs to expand their role in driving ESG initiatives into the future, and a clear appetite across the business to see CFOs step into that role. However, CFOs have to embrace ESG as one of their core priorities in order for progress to be made. This is another area where cross-functional collaboration will be key. CFOs who can align operational realities with both financial goals and ESG priorities will be able to transform their business to be truly accountable for delivering on tangible change.
The road ahead
The role of the CFO has become a lynchpin of achieving a litany of positive change in recent years. CFOs have helped organisations navigate unprecedented volatility, led digital transformation efforts forward – starting with their own departments – and have made great strides in establishing the use of data for sustainable business growth.
As we set our sights on another challenging year, both personally and professionally, it’s clear that the work is not yet done. CFOs need to continue to show passion and genuine enthusiasm for supporting other areas of the business. Achieving this will require CFOs to squash cultural tensions and take the lead in establishing a culture of cross-functional collaboration. With the lines of communication open, and a clear set of priorities in hand, CFOs can use their experience, emotional intelligence, and data-driven expertise to instil the trust and understanding needed to mitigate risk, uncover new opportunities, and drive sustainable growth for the business.