CFOs play a crucial role influencing strategic direction during Covid
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The CFO is in a key position to help deliver an organisation’s strategic objectives. But this is a complex journey. Nathan Elvery provides some directions to help chart a course.
A CFO is a key member of leadership teams working to deliver strategic objectives. This is a complex matter so here are some clues which might help them better understand their organisations and where they should focus their efforts to support and enable the greatest chance of success.
The strategic direction of any organisation should be one driven by ambition, clear priorities, a fundamental basis of evidence and the collective buy-in of all who will enable its delivery. A CFO plays a crucial role influencing this direction and ensuring robust financial and resourcing plans support its achievement.
This sounds easy but to navigate this successfully the CFO has a unique role within the team, and it is vital that they are able to bring influence to bear. The connection between the strategic direction and the resources to get there determine the ease or difficulty of the journey, they must connect fundamentally and with complete clarity.
At the earliest opportunity the CFO must be able to influence the strategic planning, ensuring that there is a collective understanding of the existing demand and cost drivers of the business and that decisions which have already been made (i.e. previous commitments) can be sustained on an on-going basis.
It is easy to create new ideas but a continued and on-going assessment of the past, current and future financial decisions is a prerequisite for sound strategic planning. Public service organisations have a corporate responsibility to operate within available resources and to remain financially sound over the short, medium and longer term.
This is a time where a CFO needs to act as a leader, both for their team (who will be under tremendous strain) but also for the organisation who will need a deeper understanding of the organisation through a “financial lens” to safely navigate challenges ahead. CFOs have a unique window into the organisation and a deep understanding of the cross organisational issues it faces: Their voices need to be heard.
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Enablers and obstacles
Inclusion and recognition of the CFO’s unique role strategy development allows leadership teams to understand and, more importantly, to show their collective support to the CFO in exercising their wider fiduciary duties to the public and their professional obligation to act in the public interest.
Where this is well understood within organisational culture a CFO is seen as an enabler; where this is absent the CFO is often seen as an obstacle. This challenge to your organisation should inform an understanding of where it stands and what action it may rapidly need to implement.
It is therefore a shared responsibility for the leadership team and the CFO to recognise the importance of working together to nurture and support the right culture where healthy challenge is openly offered, welcomed and resolved as a single team.
The role of the CFO to bring rigorous analysis and challenge to the future decisions of the organisation should always be openly welcomed. Being comfortable in grappling with difficult trade-offs and ultimate service rationalisation is not the sole responsibility of the CFO but a leadership team.
The most successful leadership teams willing embrace and thrive on such conversations not avoid them. A CFO should be able to show a “yellow card” when it is appropriate to do so and should be encouraged to do so by the leadership. It is vital that a CFO is heard in recognition of their wider financial stewardship role and to ensure the organisation remains at all times a going concern.
A CFO will always have a Plan B and C. In this time of crisis these are the “rainy-day” options your leadership teams need to be made aware of. This will help build confidence that there are solutions available to your organisation and there is a way forward. It will also help to construct the action plan which you will need.
However, the rhythm and drum beat of the budget setting policy framework and production of the MTFS can help your organisation to make decisions at a more rapid pace.
From this action plan can emerge the appropriate governance arrangements including the reporting arrangements for monitoring progress. It is unlikely that those that existed before Covid-19 will be sufficiently robust now given the additional need for agility and pace to respond to a rapidly changing landscape.
However, the rhythm and drum beat of the budget setting policy framework and production of the MTFS can help your organisation to make decisions at a more rapid pace. The opportunity to align and influence change programmes within your organisation should be harnessed and built into this routine and familiar process.
The CFO should support the organisation by contributing to the effective corporate management of the organisation, including strategy implementation, cross organisational issues, integrated business and resource planning, risk management and performance management.
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Policy development
The CFO has a fundamental concern for probity and control and should be proactive in managing change and risk focused on the outcomes for the organisations plans and strategic objectives. To enable this the CFO and their team therefore need to be involved at the beginning of any new policy development. All too often they and their legal colleagues are engaged at the end of the preparation of decision reports. A strong and well understood governance framework should form a solid foundation for timely decisions. If decisions are not happening in a timely manner it is worth reviewing the adequacy of such arrangements.
Over recent years we have seen the role of the CFO (s151) combined with other organisational responsibilities creating wider and arguable more influential portfolios within leadership structures. It is important that the core CFO financial responsibilities, particularly in the current environment, are not comprised or diluted.
At a time of crisis where both the environment is rapidly changing and the purposes rapidly altering, a CFO’s skills are critical to the success of the organisation.
A CFO should consider this balance and ensure they are positioned to discharge their statutory duties in the most effective way. It may be appropriate to delegate additional roles and responsibilities to your team to create the space and focus needed in the short term.
To achieve successful outcomes for local communities and places involves many organisations working in partnership with each other through a shared vision and shared agreed priorities.
This can create additional complexity and the CFO should understand the financial risks and potential liabilities that may impact the organisation from these external organisational relationships. There needs to be an appropriate involvement in the business decisions of partnerships where the CFO has developed strong and constructive working relationships with key decision makers. The CFO must have access to these partnerships and be supported by their own leadership teams to be actively involved.
At a time of crisis where both the environment is rapidly changing and the purposes rapidly altering, a CFO’s skills are critical to the success of the organisation. Their ability to work within, across, internal and external to the organisation, inspire new ideas, manage risks and keep the organisation “safe” are well understood as are the consequences if it doesn’t happen.
Nathan Elvery is past aresident of the Society of London Treasurer’s; and past president of the Association of Local Authority Treasurer’s and managing director of Imagine Public Services Ltd.
Photo: JESHOOTS.COM on Unsplash
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