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What Will Be Expected of CFOs in the Future: The Six Most Important Skills
April 29, 2024
Doing justice to the modern working world
Faced with digitalization, climate change, fake news, and geopolitical tensions, it is getting harder and harder for managers to predict economic developments. This also has an impact on the work of CFOs, who are increasingly becoming key players in their companies. Not only do they keep an eye on an organization’s finances, but they also must ensure that it’s always in a good position to conduct business. Which competences will CFOs need to live up to these expectations in the future? Finance experts Gabriele Schallegger and Jakob Müllner have pondered this question and identified the six most important skills for CFOs.
“CFOs must shed received wisdom and learn to ‘mistrust’ their own past, their previous experience, and also markets and experts,” says Jakob Müllner, the Academic Director of the WU Executive Academy’s Executive MBA Finance. Gabriele Schallegger, CFO at the energy storage start-up CMBlu Energy and an experienced business consultant, supports this view, stressing that the role, requirements, and skill sets of CFOs have fundamentally changed.
The 6 most important skills for the CFO of the future
Based on their experience, both experts have identified 6 key skills that will be crucial for modern CFOs in the BANI business world.
1. The CFO as a Strategic Generalist and Sparring Partner
One of the most important responsibilities of a company’s board these days is to make sure organizations stay resilient and competitive in times of crises. In today’s environment, a CFO’s role is becoming more varied and strategic, and as the CEO’s sparring partner, they’re getting into the thick of things.
“CFOs will always require financial expertise. What’s new is that they are increasingly expected to assume responsibility for the long-term success of the organization, which is sometimes quite hard to express in figures. So, it’s all the more important for a CFO to have the CEO’s trust, because at times they will have to say ‘no’ to them,” Jakob Müllner explains. This also means that “they have to extend their optimization mindset to encompass flexibility and strategic competitiveness instead of, as was the case in the past, being mainly focused on reducing cost and increasing profitability.”
Gabriele Schallegger
- Financial expert
This is why, for many years already, CFOs have had a generalist’s role in the Anglo-American region. In the German-speaking countries, this has only slowly started to change in the past years.
2. Know-how, competencies and (meta-)skills give security to the CFO
In uncertain times, top managers and business leaders can rely less on what they already know, says Jakob Müllner: “We can no longer base decisions concerning the future on the past. As our business world is becoming more complex and is changing faster and faster, the knowledge we have gained from our experience stays relevant for shorter periods of time. What used to work in the past possibly might not make sense in the future. This is why company leaders need a new constant to have a sense of certainty and orientation when they make their decisions. This constant can be a well-founded theory that helps them analyze complex realities and generate future-proof strategies (instead of backward-oriented solutions),” Müllner explains.
What the CFO of the future therefore needs:
- Know-how (concrete knowledge in various areas)
- skills (practical abilities that can be applied in practice)
- and competencies (a combination of knowledge and skills that can be applied creatively and flexibly in different situations).
“And that’s exactly what the WU Executive Academy’s Executive MBA programs aim at,” Gabriele Schallegger says, adding: “By sharing our experiences in the courses and talking to business experts in their fields as well as our own classmates with a lot of business experience, we not only learned to apply our knowledge and skills to a variety of situations, we also acquired so-called meta skills, which you really can’t do without today.”
It’s particularly important to also tackle the emotional aspects of leading, which requires a whole host of soft skills. Firstly, students learn to tolerate and accept ambiguity, uncertainty, and unpredictability. Secondly, it is essential to focus on solutions and possibilities instead of just the challenges and problems, particularly when times are tough. And thirdly, it is a must to invest in one’s own resilience and always be prepared to adapt the strategy when the environment changes.
Jakob Müllner
- Academic Director of the Executive MBA Finance
In the position of CFO, you shouldn't lose your nerve when the course is changed. Instead, you should think pragmatically and be brave enough to break new ground in order to achieve the desired goals.
3. A CFO needs skills in digitalization and sustainability
Gabriele Schallegger has identified two megatrends that could potentially have a grave impact on the role of CFOs in the future: sustainability and digitalization.
“There have always been technological advances and step changes CFOs have had to deal with. Automation and digitalization are two important levers to achieve a competitive edge today. For me, digital skills, for instance in the fields of digital transformation, cybersecurity, and generative AI, are a conditio sine qua non for CFOs to innovatively respond to the demands of markets and customers,” Gabriele Schallegger says. With the share of data and processes a CFO can have standardized in their company, the speed and effectiveness of decision-making will also increase. Apart from operative perks to be gleaned from the new technologies, a CFO should also have a sound understanding of their potential impact on the company’s industry and business model.
What’s more: an increasing number of companies are aligning their business with the United Nations’ SDG goals and implementing projects together with stakeholders from various spheres of society, such as initiatives realized in collaboration with a political or ecosocial NGO. “This is why it’s so important for CFOs to understand the potential consequences of these two trends for long-term financing and financial reporting. Finance experts have not traditionally been concerned with ESG and digitalization topics, but this is increasingly expected from CFOs today. So they must be able to cooperate and communicate effectively with all stakeholders,” says Jakob Müllner.
4. CFO job description: Courageous Decision-Making Despite Uncertainties
“To tackle complex problems, CFOs must calculate risks, develop strategies with long-term vision, and implement decision-making structures,” Gabriele Schallegger says. Top managers must be able to make decisions in a situation full of unknowns, and CFOs can no longer rely on figures, analyses, and plans.
What it takes, Jakob Müllner explains, is a “serendipity mindset,” a concept developed by researcher Christian Busch, who wrote a book with the same title on this topic. “It’s about the ability to spot opportunities in the midst of chaos and change and to use coincidences to grow.”
Completing an MBA can offer the environment to develop such a serendipity mindset. “In group projects, such situations are simulated in form of business cases modelled on real business practice. Students share their related experiences and analyze best practices,” says Gabriele Schallegger, who is about to complete her Global Executive MBA at the WU Executive Academy.
5. Know Your Target Group(s) and Communicate Accordingly
Today, CFOs must frequently represent “their” companies and find the right words when talking to investors and other stakeholders. “This requires a passion for the company and the ability to actively promote a team according to its qualifications and every individual’s personal development,” says Gabriele Schallegger.
As a result, CFOs must supplement their finance expertise with communication skills and make sure to actually use them: “CFOs must be able to speak the language of their stakeholders to be able to convey to them ‘the story behind the figures.’ To this end, they must cultivate a certain presence, communication style, and power of persuasion, based on which they can present their finance expertise in a way interlocutors will understand so that, as a result, they will be willing to support the CFO’s plans,” Gabriele Schallegger explains.
6. New tasks for the CFO: Work-life Balance and Mental Health
The elements of work-life balance and mental health are relatively new additions to a modern CFO’s skill set, says Gabriele Schallegger. “Attitudes regarding work and commitment to one’s job have changed: today, even young members of the C-suite are no longer willing to work 60 or 70 hours per week including weekends,” she says.
As a result of the shortage of labor, the competition is also less fierce when it comes to managers’ jobs. At the same time, the pressure keeps rising. “If you want to be a business leader, you will have to be able to tolerate a certain level of frustration. If your company is doing business in a difficult business environment or going through a crisis, it will still be your job as a CFO to meet profitability targets,” Schallegger holds. At the same time, the intense pressure on managers and thus also CFOs does not lower the expectation “that they should always be friendly and competent. They are expected to lead with compassion and expertise rather than through their hierarchical position,” the experienced top manager says. This is the reason, Gabriele Schallegger concludes, why today’s managers must have mental health strategies to find a healthy balance and stay productive.
These and numerous other topics are covered in the Executive MBA Finance at the WU Executive Academy. Get more information now!
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