As the scope and importance of the CFO role continues to evolve, many finance executives are changing their titles to represent a broader role. Kelly Cronenberg's Heath Escarillo is one example.
Mr. Escarho, formerly chief financial officer (CFO) of a law firm in Fort Lauderdale, Florida, currently serves as principal partner and chief performance officer. He spoke with The Modern CFO about the evolving role of the CFO, what it takes to transition to the CPO, and what the CFO can do for you and your organization.
Why are more CFOs moving into the chief performance officer role?
In response to the increasing complexity and sophistication of business and the availability of real-time predictive data in a digital world, CFOs are transitioning into the role of chief performance officer. The need for real-time decision-making to drive business performance has become critical, and the CPO role allows finance professionals to take a more strategic role in driving business performance and strategic outcomes.
What is the role of a CPO?
The CPO plays a critical role in developing and coordinating a business' development strategy to drive operational excellence and optimize business performance. This includes identifying and pursuing new business opportunities, such as partnerships and acquisitions, while aligning the company's financial and operational strategies to ensure that the budgeting process is closely aligned with the company's goals.
CPOs establish clear metrics and accountability measures, implement incentive structures that align individual and team goals with company-wide goals, and promote a culture of continuous learning and development to promote a performance-oriented culture.
To drive growth, the CPO develops and facilitates tracking and measurement systems, coordinates validation processes to ensure data integrity, completeness, and reliability, provides predictive reporting related to revenue, manages internal productivity, evaluates organizational performance against set goals, ensures capital availability and allocation, and facilitates processes designed to overcome any challenges that affect the long-term capabilities of the business.
Additionally, CPOs drive efficiency and productivity initiatives, including budgeting models and business intelligence, by driving harmonized key performance, metrics, and conducting ongoing assessments that identify where operational adjustments are needed, ultimately ensuring identification and prioritization of long-term value creation and sustainable growth.
How is it different from the role of CFO?
The role of a CPO goes beyond the traditional responsibilities of a CFO. While a CFO focuses primarily on financial management and reporting, a CPO takes a more comprehensive approach and leverages a wide range of skills to drive overall performance and achieve strategic goals.
CPOs integrate and analyze both financial and non-financial data from various sources across the organization, combining traditional financial metrics with operational, customer, and market insights to develop a comprehensive understanding of the company's performance drivers.
CPOs play a critical role in value creation by identifying opportunities for growth, efficiency, and innovation. By collaborating with other executives, the CPO helps align financial and overall business strategies to ensure effective resource allocation to support long-term success. This strategic focus includes initiatives such as process optimization, digital transformation, and talent development.
How do CFOs make the transition?
CFOs transitioning into the CPO role need to develop a comprehensive understanding of the business, strong interpersonal skills, and keen analytical abilities. Fostering cross-functional collaboration and aligning financial and operational strategies are important aspects of the CFO to CPO transition.
Building strong relationships with cross-functional leaders and facilitating regular meetings can help align goals and resources. CFOs also need to ensure that their financial planning and budgeting processes are closely linked to business objectives and prioritize long-term value creation and sustainable growth.
Effective communication with stakeholders and promoting a performance-oriented culture are essential to success in the CPO role. CFOs must develop a compelling story to articulate the company's evolution, provide regular updates to key stakeholders, and provide strategic guidance to management. By establishing clear performance metrics, implementing incentive structures, and promoting a culture of continuous learning and development, CFOs can motivate employees and lead their organizations to new heights of success.
How does a CFO decide if the CPO role is right for them?
By honestly assessing their skills and interests. In addition to the financial skills required of a CFO, the CPO role requires business understanding, analytical acumen, and the ability to communicate and engage with stakeholders at all levels.
CFOs who enjoy providing strategic insight and advice, integrating data from disparate sources, and driving business performance and strategic outcomes may find the CPO role to be a good fit.
Are there any additional thoughts that CFOs should consider?
Embrace technology and digital transformation. CFOs must actively embrace new technologies and drive digital transformation efforts within their organizations. By leveraging data analytics, artificial intelligence, and automation, CFOs can enhance decision-making, improve efficiency, and create value for their companies.
Foster a culture of continuous improvement. As the business environment evolves, CFOs must prioritize continuous learning and development for themselves and their teams. We encourage participation in professional development programs, workshops, and conferences to stay current on industry trends and best practices.
Collaboration is very important. To be an effective strategic advisor, CFOs must break down silos and collaborate with other departments such as marketing, sales, and operations. By fostering cross-functional partnerships, CFOs can gain a holistic understanding of the business and contribute to the development of integrated strategies.
By considering these additional factors, CFOs can enhance their ability to drive strategic outcomes and create greater value for their organizations.
