Businesses are increasingly relying on their finance directors to play a strategic role in addition to their traditional operational roles and responsibilities such as control, compliance and reporting. On a practical level, this extends to providing business insights and analytical data to help inform business-critical strategic decisions.
This adds far more complexity to the financial-director role – a challenge that Morongwa Sithole, Chief Financial Officer of Old Mutual Corporate enjoys.
Before stepping into her position at Old Mutual Corporate in March 2022, she had seen this change in the role and responsibilities of a chief financial officer. ‘In the past, the role largely focused on bookkeeping, financial reporting and cost management. Today’s financial director is a strategic partner and adviser to the full leadership team – they help to drive growth and build the organisation.
As a leading provider of employee benefits, Old Mutual Corporate helps large corporate clients as well SMEs to manage their financial risks. ‘Our holistic proposition for SMEs – SMEgo – was created to enable small businesses to gain efficiencies and grow. This is just one way we are trying to shape the economy of South Africa. We are committed to being part of the solution – to driving economic growth and addressing unemployment.’
‘This illustrates how important it is that finance teams truly understand the business environment – the industry and market trends, competitive landscape, regulatory changes that may impact the cost base for clients, impacts on sustainability targets – the full array of external factors,’ Sithole says.
‘We also need to drive business performance and give early warnings if we see that targeted financial outcomes may not be achieved. Finance teams really must be forward-looking, proactive and align with the business’s financial and operational goals.’
Sithole relishes grappling with complex financial problems: ‘It’s rewarding to make decisions that support the longevity of the organisation and affect its financial success and sustainability.’
She lists the following three additional skills as essential to modern-day chief financial officers.
1. Strategic thinking
‘Make no mistake, financial managers and directors still need those traditional financial management skills, but now you also need good business acumen, the ability to analyse data and an understanding of business and operational strategy.
‘We need to think beyond the numbers and identify opportunities for growth and innovation. We also need to consider the short-, medium- and long-term impact of decisions on the business, employees, operations and broader stakeholders.’
In addition, all organisations are aware that there’s a need to constantly innovate – those that don’t will be left behind. ‘This means the finance department has to provide financial support for new strategic initiatives while simultaneously managing uncertainties that may arise.’
2. Agility and risk management
Risk management is a key part of the job, and now takes place within a constantly and rapidly evolving environment. As Sithole points out, emerging external factors and internal changes require businesses to identify, manage and mitigate new and complex risks, such as cybercrime: ‘There are numerous reports outlining cyber-crime incidents and massive data breaches that have taken place globally and locally, and in our industry such events could lead to severe financial losses and reputational risks.’
To cope with the new demands of the job, organisations require their financial directors to develop a variety of very strong skills. The first concerns the tension between short-term deliverables and the long-term impact decisions may have: ‘There’s always real pressure to make decisions based on short-term delivery, but the impacts must be sustainable over the long term.’
3. Excellent communication skills
‘It has become increasingly important to companies to be able to juggle different stakeholder expectations. A business must deliver meaningful returns to shareholders; competitive products to clients; good employee value proposition to employees; and make a positive impact in the broader economy, environment and community it operates in. A CFO needs to understand and recommend how to achieve a balance so that all stakeholder expectations are met.
In addition to communicating with all internal and external stakeholders, Sithole believes that FDs need to have leadership skills to be able to build solid teams and retain the scarce finance skills which are very much in demand.
Last but by no means least, it’s critical to be comfortable with uncertainty and change, given the need to navigate the economic environment, forecast potential future outcomes under different scenarios and make mission-critical decisions that will create long lasting business prosperity.
By Mandy Collins
Mandy is a content specialist and business-writing trainer who consults with companies across various industries. She is the author of a number of books, for children and adults.