More than 400 CFO and senior finance executives traveled to Washington, D.C., for the Gartner CFO & Finance Executive Conference 2019. The resounding message they heard: Winners power through economic turns and uncertainty. They don’t push pause or cut their initiatives to drive growth.
Over the course of two days, Gartner experts explored what separates these winners from losers and how CFOs can approach critical challenges and make decisions with confidence. Gartner research finds that winners — defined as efficient growth companies — are disciplined, confident and prepared.
Read on for other key take-aways and steps you can take now to put these lessons into place.
Attend webinar: Stop Cutting, Start Growing: Lessons from Gartner CFO Conference
Take-Away No. 1: Strengthen leadership effectiveness
CFO personal effectiveness is measured by the extent to which they drive efficient growth and their performance against CEO expectations.
“Our research shows that only 22% of CFOs are personally effective,” said Dennis Gannon, VP, Advisory, Gartner, during the Differentiators of Today’s Personally Effective CFOs session. “From these CFOs, we learned that three attributes drive effectiveness.”
Each attribute is highly achievable:
- Act as a strategic partner to the CEO and the board
- Ruthlessly oriented around customers
- Connected to business performance
These attributes have a significant influence on effectiveness, while those attributes that fall outside of a CFO’s control, such as tenure, company size and past experience, do not drive effectiveness at all.
- Establish strong relationships with the head of sales, GMs, CEO and board.
- Constructively challenge CEO mindsets to arrive at better decisions.
- Embrace the unknown with a willingness to jump into roles across the organization.
- Personally own business-unit performance, pricing strategy and working capital.
- Restructure, if necessary, so business-unit CFOs report directly to corporate.
- Spend at least 5% — ideally 10% — of your time with customers.
Take-Away No. 2: Improve operational decision making
After explaining how poor financial decisions cause companies to lose profits equivalent to 3% of EBIDTA, Brook Selassie, Gartner VP, Advisory, challenged CFOs to refocus their business-partnering activities to improve operational decision-making.
“Twenty-two percent of operational decision-makers do not consider a single financial-soundness criterion in their decisions,” said Selassie during his session, titled Finance-Business Partnership: A Better Way. “Improving operational decision-making requires a shift from the current generalist model of finance-business partnership to one that relies on decision expertise.”
Develop expertise in a specific decision type (pricing, inventory, cost, etc.), rather than focusing on general knowledge
This requires CFOs to redefine the focus for finance business partners (FBPs), positioning them instead to specialize in a specific category of operational decisions. These “decision experts,” Selassie explained, support many different business managers across a defined set of operational decisions and develop expertise in a specific decision type (pricing, inventory, cost, etc.), rather than focusing on general knowledge of a particular business.
- Redefine the roles and expectations of FBPs toward individual decisions types, and improving decision outcomes in their areas of expertise.
- Change FBP job descriptions to match the decision expert role.
- Estimate the scope at which the model needs to be implemented: company level vs. regional level.
- Look for commonalities in the types of analysis or deliverables to standardize the decision support process.
- Create lateral rotations for decision experts to develop well-rounded expertise that prepares them for future leadership roles.
Take away No. 3: Ensure future talent needs are addressed
In the session Workforce Planning to Workforce Futuring session, Gartner VP, Advisory Scott Engler tackled a top concern for CEOs, boards and investors: The shortage of critical talent. Executives have ranked talent shortage as a top emerging risk for three consecutive quarters.
“Today’s CFO has a larger role to play in ensuring that their organizations are prepared for the workforce of the future,” said Engler. “They must go beyond back-end workforce planning, which is ineffective at mitigating critical talent risks.”
Instead, Engler told attendees, CFOs have to adopt workforce futuring to meet talent demands. Workforce futuring — or the process of reshaping the workforce via the use of technology and labor market analysis — enables CFOs to create competitive advantage and frees them from the constraints of legacy talent management processes.
- Identify business intelligence workforce data needed to predict talent risk.
- Forecast short- and long-term service talent needs and shortfalls.
- Work with heads of HR, CIOs and other business leaders to identify critical roles and activities needed to drive the augmented workforce of the future.