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AES International Partner Ronan Colleran outlines the impact of the changing role of the CFO in Ireland, with in-depth guidance on how to ensure your career progression remains on-track.

The Changing Role of the CFO

Over  the  past  20  years,  the  role  of  the  Chief    Financial    Officer    (CFO)    has    changed   considerably.   Traditionally,   the   CFO  was  the  right-hand  person  to  the  Chief  Executive  Officer  (CEO)  and  her  or  his  clear  number  two.  This  positioned  the   CFO   front   and   centre   for   most   commercial  decisions  and  for  input  into  the   overall   company   strategy.   Globally,   however,  the  role  and  positioning  of  the  CFO is changing.

This is due in large part to the following:

1) Digital  Revolution 

Innovation  in  the  areas  of  big  data  and  customer  insights  has  led  to  the  reinvention  of  the  Chief  Marketing  Officer  (CMO)  role.  At  the  same  time,  the  ongoing  digital  revolution  has  placed  technology  at  the  centre  of  the  organisation  and  it  central  to  the  customer proposition for many companies, thereby  increasing  in  prominence  of  the  Chief  Information  Officer  (CIO).  These  developments   are   altering   the   pecking   order within many organisations.

2) Increased  Regulation   

Following the  global  financial  crisis,  regulators  and  multiple   stakeholders   have   pushed   the   regulatory  environment  into  extensively  detailed  reporting.  This  has  moved  the  role  of  the  CFO  towards  the  fiduciary  end  of  the  spectrum,  rather  than  the visionary end.

3) Advances  in  Technology  

Due  to  advances   in   technology,   companies   of   all  sizes  have  more  tools  at  their  disposal  to   assess   the   financial   performance   of   their  business  without  requiring  as  much  human intervention. Prior to the advent of accounting software packages that produce real-time  management  information  and  reports,  senior  management  teams  relied  almost  exclusively  on  historical  financial  information  to  support  decision-making.  This  resulted  in  the  CFO  being  involved  in  every  key  decision  as  the  master  and  controller  of  the  figures.  Annual  reports  in their current formats are becoming less central to routine decision-making within many companies.

4) Career   Advancement 

“Lean”   has   become  the  mantra  for  a  lot  of  tech  start-ups.   This   has   translated   to   very   smart   candidates with less career experience being appointed to positions of responsibility at an earlier stage in their career at a lower cost.  The  changing  role  of  the  CFO  has  resulted  in  these  individuals  becoming  more  a  member  of  the  senior  management  team  than  a  clear  number  two  to  the  CEO  in  these tech companies.

A LOCAL VIEW

In  a  local  context,  while  Ireland’s  top  PLCs and private companies continue to hold the CFO  role  in  high  regard,  the  nature,  level  and weighting of the CFO’s responsibilities has also been impacted due to the following:

US  Influence 

The  significant  presence  of US multinational corporations in Ireland has  been  a  key  contributor  in  shaping  the  changing  role  of  the  CFO  in  Ireland.  In  the  US,  graduates  traditionally  join  Big  4  firms  to  become   public   accountants.   In   Ireland,   many graduates traditionally joined the Big 4  to  become  commercial  businesspeople.  The   CFO   roles   being   shaped   by   US   multinationals  in  Ireland  are  now  often  more  aligned  to  the  public  accounting  responsibilities with statutory reporting and compliance  being  central  to  the  role.  The  required CFO skillset is therefore narrower than a commercial CFO role. In effect, the CFO  is  being  paid  to  keep  the  company  from  breaking  any  laws  by  ensuring  all  statutory   filings   and   administration   are   completed promptly and correctly.

Less  Strategy,  More  Statutory

Many US companies who have their international headquarters  (i.e.  their  headquarters  for  all  business outside the US) in Ireland have an Ireland-based  CFO  who  reports  into  the  corporate  CFO  at  the  organisation’s  main  headquarters. The US-based CFO will tend to be responsible for more strategic, funding and  mergers/acquisitions  activity  with  the  Ireland-based  CFO  having  responsibility  for statutory and controllership activity.

The  Requirement  for  New  Skills

Globalisation  has  resulted  in  the  advent  of  global  business  services  centres  (otherwise  known  as  shared  services  centres)  where  large  organisations  centralise  business  and  support  functions.  The  finance  function  of  such operations cuts across different cultures, working  practices,  beliefs,  languages  and  time zones. This requires a different skillset for  finance  shared  service  leaders.  Ireland  has  benefited  from  several  organisations  choosing to locate such operations here. For these  leadership  positions,  experience  in  scaling organisations, process transformation and people management is more in demand than traditional “commercial experience”.

THE IMPACT

So   how   should   the  changing  role  of  the  CFO  influence  Chartered  Accountants  in  determining  what  career  path  to  follow?  Chartered Accountants need to be cognisant of the fact that the type of organisation they choose to join today will influence the type of  CFO  or  other  C-suite  executive  they  will have the opportunity to become in the future.

For   a   recently   qualified   ACA,   for   example,  joining  a  “wow  factor”  global  online company may be a great brand name to  be  associated  with,  but  the  following  questions should be asked:

• What  are  the  exact  responsibilities  of  the role?
• What  skills  and  experience  will  be  developed by working in the role?• Will these skills and experience play to my core strengths?
• Where  will  I  be  most  effective  and  happiest – as a small fish in a big pond or a bigger fish in a smaller pond?
• Do  I  want  to  ultimately  be  a  CFO,  a  commercial  director,  or  a  general  manager  and  will  this  company  assist  me in getting the role and level I desire?
• What   potential   internal   promotion   opportunities  could  exist  beyond  this  role to shape my experience?
• How   narrow   or   broad   will   my   experience be viewed by the market in general in three years’ time?
• Am I open to working abroad at some stage  in  the  future  with  the  company  (as  future  career  progression  may  be  dependent  on  you  moving  with  your  employer  to  company  headquarters  in  the US)?
• How  will  this  opportunity  set  me  up  for  the  future  in  terms  of  my  goal  of  where  I  want  to  be  and  the  type  of  work I want to be doing at the pinnacle of my career?
• If the long-term goal is to be a general manager,  it  is  imperative  that  broad  experience  in  a  CFO  role  overseeing  multiple  core  and  support  functions  is  gained.

For   employers,   careful   consideration   should  be  given  by  both  the  potential  employee  and  the  employer  on  what  type  of ACA should be appointed for a specific role.   Employers   should   ask   themselves   what  type  of  technical  and  interpersonal  fit  would  work  best  for  each  role  before  commencing  the  recruitment  process;  is  it  a strong technical accountant, a commercial accountant,  or  a  candidate  who  would  be  happy in a less dynamic finance role?

For  example,  in  recent  years,  a  well-known and sought after Irish PLC deployed a  recruitment  policy  of  hiring  the  best  and   brightest   commercially-minded   Big   4-qualified  ACAs.  However,  the  finance  roles  most  of  these  ACAs  worked  in  were  siloed product control-type roles that were and were not in the domain of what could be termed a “commercial finance” role. The result was high staff turnover with a lot of the ACAs moving on to another company within two to three years of working with that  PLC.  More  damaging,  potentially,  was  the  fact  that  the  quality  of  experience  these  ACAs  gained  did  not  contribute  to  their  career  development  in  the  areas  that  matched their skillsets and career aspirations.

EXPERIENCED CFOS

For experienced CFOs, the further you go up the corporate pyramid, the more specific sector  experience  becomes  a  prerequisite  for  CFO-level  appointments.  For  CFO  roles   where   strategic   input   is   required,   sectoral experience is a necessity. In addition, different   sectors   require   application   of   different  accounting  standards.  In  a  typical  career, how many sectors can someone truly become an expert in? Two sectors, or three at most. It is therefore rare that CFO-level candidates  can  move  seamlessly  between  sectors.  The  following  questions  should  be   addressed   when   considering   career   positioning:

• Is the sector I am currently in where I want to be in the future?
• Could I be pigeon-holed in my current sector  or  organisation  type  if  I  stay  longer in it?
• How marketable will I be if I choose to look at a new career challenge?
• What  is  the  five-year  business  plan  at  my current employer and will it satisfy my ambition?
• What  skills  and  experience  do  I  have  that  are  directly  transferrable  to  my  desired sector?
• What  are  the  gaps  in  my  experience,  and  what  can  I  do  today  to  address  those gaps?

For more information on how AES International can help shape your C-level career, get in touch with Ronan Colleran via +3531-554-92-59.

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