Originally Published in Forbes | August 2, 2013 | By Kathryn Dill
When Duke Energy DUK +0.72%Corp. made Lynn Good its chief executive in June, the news was significant beyond the progress it signaled for women in the energy sector. Good had been the company’s chief financial officer, and her appointment highlighted an emerging trend of CFOs becoming company leaders.
A recent survey of Fortune 1000 CFOs found that the vast majority—81%—felt they worked at companies that viewed their finance operation as a “strategic business partner,” involving the CFO in top-level decision-making as never before.
“There’s been an evolution in America in terms of the CFO,” said Paul Mandell, CEO and co-founder of the executive conference organization the Consero Group, which administered the survey at a gathering of CFOs in San Diego earlier this year. “The CFO is increasingly being called upon to weigh in on much more strategic decisions involving the company, including everything from transactions to providing assessments of emerging markets and analyses that go far beyond looking at the books and determining whether there will be enough cash to support investment.”
During the economic downturn, CFOs were given strategy and crisis management responsibilities that were new to many of them. The role of the CFO grew as a result in ways that have yet to recede, even as businesses recovered.
“In an economy in which access to credit and the financial health of the business is a major area of focus,” said Mandell, “it does make sense for the CFO to be involved in important decisions the company is making.”
Gale Sommers spent nearly two decades with Ernst & Young before leaving to become CFO of a D.C.-based commercial mortgage banker. He took his current position, CFO of Virginia-based Professional Warranty Service Corporation, in 2007, just before the real estate market imploded and the company lost three quarters of its business. He says that since the recession, he’s been far more involved in company-wide decision-making.
“Anything we’re doing in the company, I’m always involved with that, and I probably would not have been involved so much in the past,” said Sommers. “There’s an appreciation for the skill sets of CFOs now in terms of strategic planning.”
On top of his regular financial responsibilities, Sommers also oversees IT, HR, and underwriting, and at one point he spent over a year in charge of the company’s sales staff. He still negotiates pricing with customers over the phone.
“I really don’t spend a lot of time on the financial numbers anymore,” said Sommers. “I’m mostly focused on operations and strategic planning.”
He is not alone as an executive-of-all-trades. Donna Carter has been a chief financial officer since 1988. Having first held the role at Chemical Venture Partners, the private equity division of Chemical Bank, she is now the CFO of Whittier Trust, an investment and wealth management firm with 125 employees and more than eight billion dollars under management.
In her first years as a CFO, she estimates that 75 to 80% of the role fit the traditional model for a chief financial officer. Now, she would put that percentage around 30 or 40, at most.
“I touch pretty much every area in the company,” she said. She oversees Whittier’s IT, client reporting, corporate accounting and reporting, regulatory reporting, compliance, and tax functions, as well as the compensation-related areas of human resources and the compliance aspects of marketing.
“Way back when, pretty frequently the CFO could do their job pretty well sitting in their office, crunching numbers,” said Carter. “Now you have to be out talking to the business to find out what the needs are. The demands for information and for collaboration are so great.”
Nick Araco has been tracking the changing concerns of chief financial officers for the better part of a decade. In his role overseeing business consulting at McGladrey, an accounting and consulting firm, he received regular calls from CFOs wanting advice. Instead of answering their questions personally, he would put them in touch with other CFOs. In 2008 he founded CFO Alliance, an organization that connects financial executives online and through events. The group now has more than four thousand members across the U.S.
Since 2008, Araco has watched the conversation among CFOs evolve from crisis management and righting the ship to maximizing the amplified company role most chief financial officers now hold.
“When we launched this we were talking about prosperity, wealthy, and continued growth,” he said. “From 2009 to 2012 we were talking about survival and the increasing opportunities CFOs were having to have a role and an impact across the company in ways they had never seen before.”
That new significance introduces new concerns: Consero’s report indicates that less than half of the CFOs surveyed had identified successors, an issue that would not, in previous years, have been a problem.
“The CFO is taking on more and more responsibility, and the role is becoming more critical than it ever has been,” said Mandell. “That being the case, stability and smooth transitions are becoming increasingly important.”
“If people aren’t thinking about this,” he added, “it’s an area of crisis for lots of companies.”
Mandell facilitates conferences for many different kinds of professionals and says that Consero’s survey and his conversations with CFOs indicates that they feel generally satisfied with the access they have to their CEOs and board members. Most also acknowledge that their departments receive a considerable portion of company resources, a feeling, he says, that is not shared by other executives.
And despite mentions of extra hours and a learning curve that shows no signs of leveling off, both Carter and Sommers celebrate the increased influence their positions now allow them. Both stressed the importance of learning from executives in other parts of their companies, particularly in areas like IT and human resources, which lie beyond the academic and professional training of most finance executives.
“For me it’s been very positive change,” said Carter. “I love it. The broader the role gets, the happier I am, because I like learning new things and doing new things, so the challenge is great.”