Study unveils complex role and challenges of chief financial officers
Study unveils complex role and challenges of chief financial officers | Insurance Business Australia
Insurance News
Study unveils complex role and challenges of chief financial officers
Research outlines factors contributing to conflicting expectations
Insurance News
By
Roxanne Libatique
Monash University has released new research highlighting the complex and often ambiguous role of chief financial officers within organisations, with a focus on digital transformation, leadership, and mentoring responsibilities.
The research noted that fulfilling the wide-ranging expectations placed on CFOs can be challenging.
Associate Professor Paul Thambar of Monash Business School conducted semi-structured interviews with 12 CFOs from Australia and Sri Lanka. These interviews spanned industries such as mining, education, healthcare, pharmaceuticals, financial services, and professional services, covering both profit and non-profit sectors over 18 months.
Chief financial officers’ responsibilities
According to the research, CFOs view their role as being both a leader and a trusted adviser to chief executive officers and their organisations. They see their responsibilities as balancing controller tasks, such as financial reporting and cost management, with business partner roles.
However, the study found that CFOs face conflicting expectations from senior managers. These conflicts often involve balancing the roles of controller and business partner, managing budget expectations, and establishing trust within the organisation.
Thambar highlighted that CFOs employ various strategies to manage conflicting expectations.
“For example, faced with the conflicting expectations related to balancing controllership and business partnering, CFOs focused on improving the quality and timeliness of the controllership tasks to build trust and confidence with senior and operational managers,” he said. “When faced with conflicting expectations on managing budgets and costs, CFOs focused on the implications of any budget or cost issues and positioned these implications as a way of managing any conflicting expectations.”
Factors contributing to conflicting expectations facing CFOs
The research identified several factors contributing to these conflicts, including:
an imbalance between controllership and business partnering
poor reporting quality
a lack of organisational trust
“CFOs identified building trust with senior managers and the wider organisation as an important aspect of managing role expectations. CFOs suggested building trust can lead to an improved understanding of the role and reduced role expectation-related conflicts,” Thambar said.
Digital transformation, leadership, and mentoring expectations facing CFOs
The study also highlighted ambiguous expectations related to digital transformation, leadership, and mentoring. CFOs often faced these ambiguities because senior and operational managers expected them to support digital initiatives while balancing their traditional roles.
“CFOs experienced these ambiguous expectations because their interlocutors, senior, and operational managers held an expectation that they would be able to balance their controllership and business partner roles and provide support in emerging areas such as digital transformation,” Thambar said.
Despite these ambiguous expectations, CFOs generally view them as opportunities to build relationships and trust, according to Thambar.
“[The] ambiguous expectations appeared to be broadly welcomed by CFOs who have used these expectations to build relationships and trust and to embed their role as a trusted adviser to senior and operational managers,” Thambar said. “For example, as early adopters of digital technologies in their organisations and using digital technologies to improve their accounting processes and data, they are able to improve their core accounting practices and provide information in a reliable and timely manner to support decisions. Through this process, they are able to enhance their role as business partners and construct their CFO role as influential and valuable.”
Funded by the American Institute of CPAs and The Chartered Institute of Management Accountants, the study concludes that the evolving business partner role has led to CFOs being seen as adaptable leaders who help organisations tackle strategic challenges, such as digital transformation.
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