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The Four Hats: The Diverse New Job Description of the CFO

17 November 2020

“Cut costs, but also grow revenue, while keeping everything perfectly stable.”

Most will assume the role of a Chief Financial Officer is a challenging one – they are an integral part of the C-suite, after all – but few realise exactly how challenging.

Today the scrutiny on CFOs is arguably greater than it’s ever been, and turnover in the role has never been higher. Tasked with doing more and more with less and less, and this during a global pandemic and economic recession, the CFO must become a chameleon, wearing a range of different hats.

Two of these headpieces – Steward and Operator – have always been part of the role, while the remaining two – Strategist and Catalyst – are more recent additions. These are however increasingly expected to form part of a modern and dynamic CFO’s wardrobe.

But what exactly do these four hats represent? And why are they important? Let’s take a closer look.

Steward: the protector

The Steward hat is one of control and protection. A CFO must work to protect the company’s assets through compliance to financial regulations, thorough accounting and auditing practices, and communicating potential issues clearly to the board and investors.

This hat is about monitoring performance, mitigating risk and maintaining control. It’s about securing that which the company has already worked hard to earn and achieve. Unlike other hats, the ROI of this work can be difficult to quantify: rather than bigger numbers on the balance sheet, the pay-off of good stewardship will be things like minimising regulatory offences, enhancing process transparency and granting access to reliable data.

In some ways the Steward is like a football referee: the less they are noticed, the better they are doing.

Operator: the driver

The Operator hat is the financial driver of the organisation. The modus operandi is financial efficiency and effectiveness, which is achieved through a variety of strategies including tax reduction, financial analysis and planning, and any number of other finance-specific operations.

In order to position the organisation on the leading edge of financial strategy, the Operator must themselves stay on the leading edge of technology and innovation. Process automation, digital transformation, business intelligence and other technologies are becoming less of a plus and more of a must for the modern CFO if they are to help their organisation stay ahead of the competition.

While the Operator doesn’t drive the growth of the company – that is the responsibility of others in the C-suite – they do drive the financial team’s efforts to streamline and maximise that growth.

Strategist: the forward thinker

The Strategist is one of the newer caps on the hatstand, but one that is increasingly being chosen to accessorise a CFO’s outfit. This hat sees the CFO taking a seat at the strategic table to influence the direction of the company. It makes sense for a forward-thinking organisation to seek the sage advice of a financial expert when plotting its next move, so in some ways it’s a surprise that this hat wasn’t worn sooner.

Aligning finance and business strategy, directing merger and acquisition activity, developing capital market financing strategies, supporting long-term investments; the Strategist tackles a diverse range of problems, making it an exciting hat to wear.

This is also a CFO’s greatest opportunity to directly affect the ongoing growth of their organisation.

Catalyst: the stimulator

Like the Strategist, the Catalyst wasn’t always a hat that a CFO was expected to wear, but is increasingly being worn by top talent in the profession. This is about shrewdly driving change: knowing what to do and when to do it.

Using their control over the coffers, the Catalyst carefully selects business improvement initiatives (cost reduction measures, pricing execution, enhanced procurement, etc.) that will add value to the organisation, and works hard to efficiently and effectively enact them.

This hat combines innovation, evaluation and execution in equal measure, and is increasingly important as the business landscape becomes ever more dynamic.

Multi-faceted, challenging, rewarding

Looking at the depth and breadth of responsibility that now sits on a CFO’s shoulders – or perhaps more pertinently, their head – it’s little wonder that the role now sees such a high churn rate.

In a market that has become used to exponential growth since the GFC, bearing witness to dipping graphs creates discomfort for both CFO and employer. Add in the pace of innovation that we’ve also come to expect in the last decade, and both pressure to and difficulty of maintaining the rage has never been greater.

But whether you’re a company or a CFO, you can be confident that the right match is out there somewhere. And it’s these mutually beneficial relationships that Ignite are the experts at forming.

Ready to cover your financial head? Get in touch with our team today.

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