CFO secrets: Revisiting ‘purpose’ helps ensure your finance function is fit for the job

The finance function must be “fit for purpose” in a crisis. Nathan Elvery explores the elements that will ensure it delivers when the going gets tough.

In a previous article I identified the leadership skills needed for the chief financial officer (CFO). In this piece my focus is on the finance function itself—the function directed by the CFO—and ensuring it is resourced to be “fit for purpose” in this challenging financial environment.

In order for something to be “fit for purpose”, i.e. good enough to do the job it was designed to do, one must fully understand the purpose or what an organisation is actually trying to achieve. It must be to support the organisation’s vision, aims and ambitions and, simultaneously, effectively deliver and discharge the statutory role and responsibilities of the CFO.

However, during crisis, where the environment and purpose are rapidly changing, the CFO should be revisiting this perspective and reassessing the resources and judgement of “fit for purpose” as a first priority.

Fundamental

There will be the routine deliverables for the finance team, such as closing the annual accounts but, more critically for the CFO, assessing the fundamental question of purpose will be invaluable in ensuring the skills, expertise and focus of the finance team is fully meeting the needs of their business as the new environment impacts on the organisation. This fundamental question of purpose should be the first question the CFO asks of the team.

In periods of high stress the finance function must have a firm grasp of the organisation’s financial position and performance—short, medium and long term. The CFO must ensure that there is sufficient depth of financial expertise, supported by effective systems, to achieve this objective.

Secondly, the CFO must make a judgement as to whether the resources available are proportionate to the changing complexity of the financial environment.

Underpinning these considerations are the individuals who constitute the finance team and the structure of the team itself. The CFO must ensure they have, through these individuals, the right skills for an organisation’s needs and they are structured in the most effective way to support the organisation’s objectives.

New skills may not be able to be learnt and developed in the time frame needed during difficult times, so bringing in skills on an interim basis for the team maybe more pragmatic and appropriate.

There may also be a need for specialist skills to supplement the core abilities of the existing team. If a CFO has already developed a good understanding of team members this could be, with the appropriate support, a good time to give key individuals the opportunity to shine and gain new skills and experience in a new role.

Structure

Finance functions come in many shapes and sizes including more traditional centralised teams, business partnership models, shared services or even outsourced models.

These models don’t change the statutory role and responsibilities of the CFO but they will be tested, and it will be important for the CFO to ensure they remain supportive and ensure a fit for purpose finance team.

Whatever the structure, a strong customer focus both externally and internally must be a key feature of the way the finance function does business.

This engagement and the building of effective relationships inside and outside the organisation will be a prerequisite to better collective decision-making. In addition, the CFO must ensure that, whatever the structure, the clarity of the reporting line to the CFO from all finance team members has no ambiguity.

Finally, through the leadership of the CFO, as the head of the function, the culture and values of the team are determined and act as a supporting foundation of future success for both the finance team and the organisation as a whole. The importance of the culture to the assessment of fit for purpose should at no time be underestimated.

The key personal skills for the CFO which shape the culture of the team will be tested. While these skills are relevant at all times some are more important than others in influencing the culture of the finance team and in turn the organisation as a whole*:

• Create, communicate and implement a vision for the finance function;
• Role model a customer focussed culture within the finance function;
• Establish an open culture, built on effective coaching and a ‘no blame’ approach;
• Promote effective communications within the finance department, across the broader organisation and with external stakeholders;
• Apply strong project planning and process management skills;
• Set and monitor meaningful performance objectives for the finance team;
• Role model effective staff performance management;
• Coach and support staff in both technical and personal development;
• Promote high standards of ethical behaviour, probity, integrity and honesty;
• Ensure, when necessary, that outside expertise is called upon for specialist advice not available within the finance function;
• Promote discussion on current financial and professional issues and their implications.

These are unprecedented times, but we have been through many difficult challenges in the past and have emerged more resilient with greater wisdom and experience. As a CFO you have a unique role in balancing your personal responsibilities with that of your organisation’s but in the same way a unique contribution to make.

Nathan Elvery, FCPFA, MAAT, is a past president of both the Society of London Treasurers and the Association of Local Authority Treasurers. He is currently managing director at Imagine Public Services.

*Reference: The Role of the Chief Financial Officer in Public Service Organisations, CIPFA.