18
April
2018
|
11:27
Europe/Amsterdam

The CFO steps into the spotlight

"The role of the CFO today is incredibly complex." – Dr. Daniëlle Melis

Summary

In an article published in April 2018 on the Dutch news site Executive Finance, Dr. Daniëlle Melis, MBA, of the SHIFTTO Editorial Board described the shifting role – and new importance -  of the CFO in corporate governance anno 2018.

Read the full article (in Dutch) here.

If the CEO is the Number One in a company - then the CFO has traditionally taken the Number Two position in the boardroom.

But CFOs should be prepared to take on a much broader and more actively engaged role as a board member – and with that role, take on more responsibilities that require new competencies, for example in the area of ​​strategic decision-making, risk, innovation, technology and acting as a business partner.

In particular, the CFO must meet increasingly stringent requirements in the areas of regulation and corporate governance. “In recent decades, and partly due to the financial crisis, I see that not only are finance, internal and external reporting, risk management and compliance the primary tasks of the CFO; increasingly the CFO is taking on a strategic position in the organisation,” says Dr. Melis.

Additionally, “the same CFO will increasingly have to deal with current themes in the Supervisory Board,” she says, referring specifically to the audit committee.​​ The further broadening of expectations of the role of the CFO puts them in touch with shareholders. Whereas until recently CFOs were mainly involved in a financial dialogue with the stakeholders, their scope has now been extended to, for example, a dialogue about enterprise risk management, drivers for long-term value creation (not only shareholder value) and the strategic discussions about mergers and acquisitions.

Photo by Johannes Abeling

No, the CFO’s broader scope of responsibility is not an easy one, concludes Dr. Melis. "The revised governance code states that companies should focus much more on long-term value creation. I think you should want to provide your stakeholders with more and more information about the drivers of that value creation. This requires, in addition to being accountable for the past, a look into future potential. You are talking about information about value ‘enablers’: what is driving the value of a company? So, [looking at] much more qualitative information aimed at the longer term, rather than numbers focused on the short term. The big challenge is for CFOs, as business partners in the boardrooms, to provide the right guidance for all stakeholders. "