“The role of the CFO has evolved in recent years into a function fully involved in the definition and implementation of company strategy.” That’s the verdict of Page Executive’s recently released “Seven executive trends for 2016” report, and certainly one I agree with from what I’ve seen developing across South East Asia.
In the past, the role of the CFO was focused primarily on accounting, financial controlling and reporting. But it has become more strategic in recent years. CFOs are now seen as a business partner, working with other senior stakeholders in driving the company strategy. They are becoming more and more prominent across most organisations right now, and not just in multinationals (MNCs) where the trend began.
The report also says the traditional remit of the CFO has become more complex as financial management, accounting and control have become more global and interconnected. This is certainly true in Singapore and other South East Asian countries, where big conglomerates are expanding locally, regionally and globally and the role of the CFO is proving key in helping them define strategy and cost management.
In these circumstances, CFOs need to be accountable for different sets of rules in different countries. International accounting regulations change constantly and because CFOs have major accountability with financial reports, they can’t take their eye off this area. A CFO in Singapore, for example, will commonly have a regional remit, so they will be assisting the company’s growth strategy. That growth, if it’s within emerging ASEAN countries, will mean the need for careful understanding of compliance issues and a CFO will be extremely important in overseeing this.
A key finding of the report is that “CFOs must contribute to all areas of the organisation, with many acting as the catalysts and steering strategy development and implementation.” To do so, a CFO needs a new set of skills and competencies and clients across South East Asia know what these look like. The modern CFO can’t just be technically sound, they need global or regional exposure, excellent communications skills, agility, adaptability and experience in change management. A CFO can’t add value or act as a catalyst for change without these skills and experience.
Clients across the region are also looking for CFOs who are strategic, business partners, with strong leadership skills. This is playing out across every market. However, there are definitely differences in the availability of such quality talent among these markets. In Singapore, where the market is more advanced, there are many more capable candidates than elsewhere.
In Malaysia and Indonesia, where the demands of clients are still progressing, the local talent pools have not had too much exposure or the opportunity to step up to be CFOs, largely because MNCs have always placed expats in top leadership positions. However, this environment has certainly been changing in the recent years. These MNCs had the availability of a global talent pool and the means by which they can bring talent in from across the world, but many are grooming local Asian talent to take over. There is still a clear need to train more people to keep up with demand for the right type of finance people.
From CFO to CEO
One of the most eye-opening future predictions in the report is the suggestion that “it is conceivable that the CFO could ultimately supersede the CEO as the most important C-level position, making aspiring to the role of CFO a career ambition for young professionals.” This stems from the fact that financial leaders are clearly strengthening their position in their own right, but I think this statement will take a while before it eventuates in South East Asia.
I have definitely seen a lot of CFOs who have progressed to be CEOs. A lot of these CFOs were deliberately groomed to become the CEO. In this part of the world, I see this as the trend that will be ongoing. The CFO is so exposed to the driving of strategy and big company decisions, that they play an important role next to the CEO, working closely together.
The CEO’s main strategy is to grow their business, expand it into new territories. The CFO's role is to make sure they understand the financial and economical constraints and risks associated with this. Hence, it’s important they work with the CEO to define this growth strategy. In South East Asia, for some time to come, I see this partnership strengthening and the CFO role continuing to be a stepping stone to the CEO position.
Read more insights on the future of the CFO role and a whole host of other executive trends for 2016 in the Page Executive report and get in touch to see how Page Executive can help you source senior leaders for your business.
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