CFOs must now tackle real-time emergencies and have the quick reflexes needed for crisis management.
The pandemic has transformed the chief financial officer’s job, forcing CFOs to focus more on crisis management and environmental and e-commerce issues at the expense of traditional finance considerations.
These are the findings of a recent McKinsey global survey of more than 120 CFOs, which shows that the share of financial leaders who encompass digital activities in their portfolio has tripled from 2016 to 2021.
Five years ago, emerging digital business was quoted by just 9% of CFOs as a major subject. Today, it is a concern for 31% of chief financial officers. The environment is also high on their list. Global warming is “our generation’s problem to solve,” said Scott Herren, Cisco’s CFO and executive vice president. Herren is ready to disclose “mandatory verifiable ESG criteria,” and said US regulators should follow Europe, which is “ahead of the game” with its Corporate Sustainability Reporting Directive.
Procurement, board management and investor relations are also high on CFOs’ agenda. According to McKinsey’s survey, 44% of CFOs considered investor relations to be part of their activities in 2016. Five years later, 64% see it as essential.
Paul Jacobson, General Motors’ CFO, recently presented the automaker’s ambitions for 2030 to investors. The usual five-year projection was replaced by an almost 10-year outlook, with the Detroit car manufacturer positioning itself as a technological company that builds e-cars and sells services such as car insurance.
With procurement being an increasing area of oversight for more than 40% of CFOs, compared to 34% five years ago, supply-chain bottlenecks are also now a problem for CFOs to solve. Crocs executives thought they would avoid China’s manufacturing slowdown by switching to Vietnam. Yet when factories shut down in Vietnam, Anne Mehlman, Crocs CFO, had to quickly adjust the strategy of the clogs company. Crocs shifted more production to Indonesia and Bosnia, and redirected its shoes to East Coast docks to avoid port delays in California. Mehlman allocated nine times more money to fly Crocs to the US.
Crunching numbers is not enough anymore. CFOs must now tackle real-time emergencies and have the quick reflexes needed for crisis management.