Invisible Finance

The changing role of the CFO is a never changing topic for the past many years. So, I thought I could also follow the well-trodden   path of articulating how the role has changed over the past couple of decades.

In the 90’s the role of the CFO was fairly a restricted one. He was mostly seen as a bean counter who makes sure that the financials of the company are well managed and the necessary controls are in place. Handling the statutory auditor was his/her most important role and getting the accounts passed by the Board without any major observations was a significant milestone. Here, I may be generalizing a bit but this has been my experience as a finance professional during this period.

In the first decade of the new millennium, business partnering as a key skill set was recognized as a need  to be part of the repertoire of the CFO. The expectation on business support from the stakeholders increased. CFO focused more energies on providing key insights on the business KPI’s as well and started contributing to the improvement of the operating KPI’s. This naturally meant that the CFO needed to understand the customers at a much deeper level. In additional, efficiency improvements through outsourcing and offshoring gained momentum and the CFO played an important role in driving these projects. Parallelly, the CEO started to rely on the CFO as one of the key input providers to shape the overall strategy (as opposed to only the finance strategy). During this period, we also saw many of the CFO’s taking the mantle of the CEO and shining in the new role as well.

In the second decade of the new millennium (which is the current decade) things started to accelerate. Automation gained a new pace and robotics became a part of the efficiency improvement tool. Also post Enron and post 2008 financial crisis, risk management as a field came into special focus. Indian Companies Act was overhauled in a major way mandating the need for better governance and also putting a greater onus on the KMP’s. (Key Management Professionals).

All this meant that role of the CFO has further broadened and the CFO took it gleefully with both hands. Learning new skills on robotics, cyber security, block chain, AI, MLP, NLP to name a few, have now become a pre requisite for the CFO to perform well in this new avatar.

This is the journey so far and what next?

This got me thinking. If the CFO needs to be one step ahead and perform all these ‘octopus’ like multi tasks, it goes without saying that he needs to manage his time far better than what used to be the case in the past. Also with a renewed focus of corporate culture on ‘being fit’ and ‘work life balance’ that have become the mantras, what has to be done by the CFO?

One solution : Become invisible within the organization.

Let me clarify, when I say, become invisible, I mean that when it comes to routine jobs, the time spent by the CFO needs to be as minimum as possible and his personal intervention should not be needed for the routine tasks. We know by Pareto’s law, unless you are a completely innovation oriented company, most of the tasks are routine (or what we call BAU- Business as Usual).

How does the CFO become invisible within the organization?

As all are aware, Finance today is seen as the bedrock of all the processes and makes sure that the organizational priorities get adequate resources in time. Every company has its own set of SLA’s and TAT’s being adhered to within the organization. Finance team should first make sure all these SLA’s and TAT’s are clearly agreed upon. Decisions should be decentralized as much as possible. Controls are to be built in the system itself so that there is no need for the user department to call and obtain clarity. If the processes are simple, fully automated and exceptions are minimal, there is no reason why a CFO needs to be chased for getting the normal activities completed. Escalations should be minimized. This means that the CFO needs to continually work on being ahead of the curve.

How can this be practically achieved by the CFO? Does he/she have the time?

The average time spent by the CFO can be broken down into compliance related tasks, business partnering, stakeholder management, strategy support to the CEO and time spent managing his team members. I believe the ideal time share should be in percentages – 5:10:15:20:25 in that order for each of the above areas.

This adds up to 75% only. What happens to the remaining 25%?

Think about it.

To survive in today’s world, the CFO needs to upgrade and transform himself constantly. Be it changes in the industry, changes in technology, changes in the customer behavior, changes in the behavior and expectation of the millennials, he needs to keep a close watch. This can be done only if the CFO concentrates a good amount of his time on developing these. Today, there are multiple ways of keeping one abreast of these developments and also tools available to enhance one’s knowledge levels.

Personally, I found participating in conferences and seminars to be quite useful. One of the best ways of learning is trying to teach another person. Therefore I try to speak on these topics to as much audience as possible. This could be in the form of being a guest speaker, or a panelist or speaking to management graduates in their institutes as a visiting faculty. Also I found reading eclectically on these topics also supplements the learning.

While all these may be seen as true for any professional in any career, in today’s scenario, the CFO in particular needs to adopt all or most of these measures to become a more knowledgeable person.

This will free up an enormous amount of time which the CFO can divert for self-improvement as I mentioned earlier.

This then becomes a virtuous cycle -the more you learn the more you optimize and therefore you have time to learn more.

And this is not only true for the CFO but for every finance team member.

I am aware that this is easier said than done, but from my experience, I know that this is possible and makes the working environment of the organization much more positive and agile.

Sambasivan G

CFO at Tata Sky Ltd

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