CFOs now work with CEOs to lead growth, drive value creation and play an integral role in the business decision-making process, said Nicholas Malone, CFO of executive consulting firm E78 Partners.
However, the evolution of the CFO role has been slow to change perceptions of the career path among those in lower-level finance roles. This is especially true in corporate accounting, where many companies face talent shortages due to low interest among young people in the profession.
Part of the solution is to change the perception of an accountant's job as a pre-automation manufacturing line worker churning out routine tasks in spreadsheets every day for years. Attracting top talent also means communicating that people with a variety of backgrounds and talents can succeed in accounting and finance, says Malone, who served as chief financial officer at Wayfair, Zagster and Xamity earlier in his career.
In a recent interview with Malone, we discussed accounting talent issues and how the implementation of innovative technology tools can be a solution.
What are the most common challenges your CFO clients and their companies are currently facing?
One of the biggest factors is talent: every year, private equity, the Big 4, Wall Street and hedge funds attract the majority of the best finance and accounting graduates. This is the result of a combination of high salaries and the general impression that investment analysis is more interesting and glamorous than corporate accounting.
To retain younger talent, many CFOs have had to adjust compensation, become more thoughtful about how they position the accounting career path for potential hires, and use non-traditional resources to support and strengthen the CFO's office (including outsourcing).
Another big challenge for finance leaders is that small and medium-sized businesses have traditionally underfunded the CFO office and neglected the position. Company leaders are focused on growing the business and often view finance and accounting as a cost center to be controlled, rather than a value-creation center that should be prioritized.
This short-sighted thinking hampers the very growth that companies are trying to support. Lack of strong financial processes and infrastructure can cause major problems when a company goes to the market for funding. This is especially true for companies preparing for an IPO, as public companies require a strong financial infrastructure.
How can CFOs attract more talent to their departments?
First, the CFO needs to communicate exactly what accounting and corporate finance entails. It is not a “dead end” job or one that deserves the moniker “treasurer in name only.” As is often the case these days, the CFO role can also be a stepping stone to other senior roles. Financial prudence and a deep understanding of financial levers for value creation make for a well-rounded CEO.
Second, finance leaders should: [human capital] The needs of finance and treasury departments are changing, and people with different backgrounds can succeed in these fields. Forecasting, for example, remains one of the key functions for a CFO and can be an exciting way to attract young talent to the field. People with technical acumen are also becoming increasingly valuable, but they may not know that there are opportunities to use their skills to have a successful career in finance.
How do you think new technology will change finance departments and the CFO’s office?
Businesses look to data as a key source of information and value creation, but it needs to be properly collected, analyzed, and understood. New platforms and data approaches can give finance departments better situational awareness and insight into what drives value creation for the business.
Finance teams have historically relied on basic tools like Excel, but today CFOs must consider adopting more innovative tools for tasks like account reconciliation, forecasting, and business intelligence. Modern software can eliminate many of the manual tasks that have traditionally plagued finance teams.
What AI does best is take on tedious, high-volume, mundane tasks like data entry, reconciliation, and reporting, freeing up finance teams for higher-value work like strategic planning and oversight.
As financial forecasting and modeling become a larger part of a CFO's job, they will benefit from AI-powered analytical tools that can quickly process and analyze vast amounts of structured and unstructured data. This will uncover hidden relationships, trends, and opportunities that traditional analytics would not uncover. These insights can improve financial decisions, company performance, and provide a competitive advantage.
