CFOs at big Pakistani companies like Engro believe that their duties have increased and intensified with the changes in times and technology. PHOTO: FILE
Times are changing, and so is the role of the chief financial officer (CFO) in companies across different sectors of the economy. According to Engro Corporation CFO Naz Khan, CFOs now enjoy more clout within their organisations, as the range of their activities now goes well beyond the traditional functions of finance and accounting.
“In addition to financial reporting and tax issues, CFOs now deal with strategy, business performance, capital allocation, investor relations, banks and rating agencies. They have practically become a counterweight to the CEO,” Khan said, while addressing the 7th CFO Conference organised by the Institute of Chartered Accountants of Pakistan (ICAP) on Tuesday.
Speaking on the occasion, Sui Southern Gas Company CFO Abdul Malik cited a survey carried out by McKinsey and Company that asked an unspecified number of CFOs what their CEOs expected them to do most of all. More than 88% of the respondents said their CEOs wanted them to participate in shaping strategy at the organisational level, Malik said. He added that shaping the organisational strategy was primarily a function of the board of directors, but the survey showed they had delegated their responsibility to CFOs.
Offering the perspective of a CFO working for a not-for-profit organisation, Aga Khan University Finance Director Shagufta S Hassan said her primary objective was to ensure financial sustainability while allocating capital for different departments. “You have to explain to these highly qualified doctors, researchers, PhDs and academics that projects that can possibly jeopardise the entire organisation can’t be started without ensuring long-term sustainability,” she said.
Replying to a question, Hassan said all members of the finance team at Aga Khan University were bound to spend four weeks in patient care and student scholarship departments. “Their approach to finance undergoes total transformation once they spend time in these departments. It serves as a reality check,” she said, while explaining the humanising effect this policy had had on finance professionals at the Aga Khan University.
Delivering his keynote address on “Financial leaders: meeting future challenges,” University of Texas’ Professor of Strategy Usman A Ghani said CFOs should embrace the age of adaptability, where change should be taken as the only constant.
“Research shows CFOs spend 40% of their time looking at Excel spreadsheets. They should turn their attention to simulating the future and moving away from the world of Excel spreadsheets,” he said, noting that the role of a CFO should be transformational, not transactional. He said interpreting financial data is no more the job of a CFO, as investment bankers and fund managers did it all the time.
He quoted a survey that said 30% of current CEOs in the United States were once CFOs. “Is this good news? Well, 50% of them have performed poorly. On the contrary, the success rate for the CEOs, who have a background in sales and marketing, is relatively higher,” Ghani said. Referring to Apple and IBM, he said their recent transformations were led by CEOs who did not have a finance background. “Business should always be the first priority. Accounting and finance come later,” he noted.
Published in The Express Tribune, March 13th, 2013.
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