In today's information-driven landscape, the role of financial directors (FDs) has evolved significantly. They are now tasked with extracting value from data and using it to make effective decisions that drive organisations towards monetisation.

According to Professor Rashied Small from the South African Institute of Professional Accountants (SAIPA), CFOs have become information custodians.

“Their role is to analyse, interpret and use information in a way that drives decision-making to achieve organisational objectives.

“Therefore, their skill set also has to change, as well as the distribution of information across the organisation. This ensures that all decisions made by various units are aligned with the business’s strategic goals.”

As a consequence, the role has evolved significantly, shifting from a focus solely on backwards-looking reporting to a proactive approach of looking ahead and embracing diverse skills.

What today’s FD looks like

“Today’s FD plays a crucial role in helping the business to identify trends, risks and opportunities,” says Grathel Motau, Group Financial Director at Thebe Investment Corporation.

“We need to produce reliable, useful, accurate information. That’s the basis. But the FD also needs to understand the business model. How do we deliver value to our customers? And therefore, what is the operating model that allows us to do that? What are the opportunities and risks? Who are the players? Answering these questions helps to build the business case,” says Grathel.

She adds: “They also play a critical role in evolving the strategy. In running a business, you must exploit key competencies and explore them. Don’t only focus on what’s here now – keep an eye on your competitors and customers. You should be continually exploring what’s next.”

The driving forces: issues shaping the role of FDs

Morongwa Sithole, Chief Financial Officer at Old Mutual Corporate, says there’s a rapid change in the internal and external environments impacting a company’s bottom line. “FDs need to anticipate possible changes and the financial implications thereof, thus enabling proactive strategic responses to be formulated.

“In addition, regulations are changing all the time. There are issues of sustainability and creating value for multiple stakeholders. Competition, new products, evolving technology and business models require innovative and agile thinking,” she says.

And then there’s the rise of data and data analytics, which are entirely changing the game. “There’s a wealth of data and processing tools available,” says Morongwa, “and it’s made the role of the FD more impactful. Instead of ‘only’ reporting, data helps them to generate insights, drive the agenda and engage in data-driven decision-making, all of which help to generate more stable returns.”

This requires a mindset change, according to Rashied. “They will need to move from having reports at certain deadlines to being able to have reports in real-time. They have been working with dashboards, but they must expand those beyond the normal key indicators so that they can make decisions by the second.”

Other challenges FDs face

What will become even more challenging, he says, is that they will need to be forward-looking, with two important factors causing disruption. The first is disruptive technologies and the second is uncertainty – something the Covid-19 pandemic should have taught us all about.

“This requires a further mindset change,” Rashied says, “from compliance-driven to a mindset which is foreward-thinking and managing options within an uncertain environment.”

Additionally, “FDs need to be broad-minded and have a wide business sense, but also have an eye on local and global macroeconomics,” says Grathel. She also points to several soft skills that are becoming essential. “Stakeholder management and engagement are crucial,” she says.

“For instance, you need to maintain a good relationship with your lenders, as you need them. You need to engage with customers and staff. Digitisation is a major disruption. And then, issues of wellness are significant. What can you do to help your team to be effective as humans?”

Morongwa adds: “Risk management and the ability to conduct stress and scenario testing and assess capital impacts are also valuable skills. Finally, leadership skills are vital to cope with the job's demands, particularly ensuring continuous development of the finance function, driving the right culture, working effectively in multidisciplinary teams and embracing diversity.”

“For me, successful FDs are those who can manage risk from all angles and have a good grasp of uncertainty and its impact on the organisation,” says Rashied. “They will do it by embracing technology because technology can provide a more detailed analysis in a much shorter period. But they must know how to interpret the results to make decisions in a real environment.

“This means their greatest challenge is that they must embrace the process of learning, unlearning and relearning,” he says. “That’s where the paradigm shift conflicts with the generation gap – because they must acknowledge that some of their past knowledge is no longer applicable.”

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