A large part of any Chief Financial Officer (CFO) role is strategic decision support, whether those decisions are related to staffing, pricing, selling, manufacturing, or any other area of the business. A CFO’s forward-looking point of view combined with their financial acumen makes them ideally suited to provide actionable information to their CEOs and other corporate decision makers and integral to the success of the organization.
Leaning on a CFO for strategic decision making support offers the following benefits:
- Adding value to the company in the short-term as well as the long-term
- Providing data-driven guidance during business shifts
- Aiding in weathering a crisis or downturn
Let’s look at how CFOs assist in these areas by taking an active role in strategy setting.
A CFO’s Role in Strategic Planning
The responsibilities of a CFO will always include decision support, and the most effective CFOs would not have it any other way. In a post-pandemic world CFOs have taken an even more prevalent role in decision-making advising than ever before. A whitepaper on Spearheading Smarter Decision-Making explains,
“The CFO has been on a steady evolution over the past 15 years. The 2008 global financial crisis was a major inflexion point, as savvy CFOs largely eradicated the historic ‘beancounter’ stereotype by playing a crucial part in steering companies back to growth. Since then, they have increasingly been expected to be a key business partner, solidified by the Covid-19 pandemic, which has seen the more strategic CFOs ride to the rescue again.”
How do they do this?
Turning Data into Insights
A CFO mindset naturally embraces uncertainty. CFOs enjoy analyzing and forecasting to anticipate what is coming next and adapting as the future unfolds. Their natural inclination is to advise and collaborate to make the soundest decisions given the available information. Subsequently, it is no surprise that the main CFO skills and competencies are financial acumen and communication.
CFOs are “numbers people” and they thrive in an environment where the advice they give based on their analysis of the numbers will be respected and appreciated. This is critical to any conversation related to how a CFO provides decision support because a CFO’s perspective will always be rooted in the company’s financial data. However, not everyone shares the same left-brain penchant for data.
CFOs help the rest of the C-suite make decisions by communicating the meaning behind the data that makes up their world to advise on strategic business moves. To successfully aid in decision-making an organization must collect the right data with the right granularity, finance and analyst teams must analyze it, and a CFO must present that information in a way that is meaningful to the right audiences across the company to facilitate sound decision-making.
Focusing on the Dollars
CFOs oversee the finances for the entire company, not just one team or product line, which means they can take the wide view to prioritize the company’s best interests as an overall entity. To do this they need to bring everything back to measurable financial objectives. So, while some teams may focus on objectives like “disrupting the market,” “growing brand awareness,” or “building best in class technology” and chase related KPIs, CFOs strive to tie those to revenue figures for better informed decision-making.
And where the numbers already exist, a CFO can speak to the broader cash flow implications of strategic shifts and pivots to determine what their affect will be on the organization’s current and future position. As Michael Newsome explains when he discusses CFO excellence,
“The CFO is the keeper and interpreter of company data, tasked with providing a disciplined quantitative approach to management decisions. More than a numbers cruncher, a CFO should provide a forward vision for company strategy. The ideal CFO has a deep understanding of the economics and dynamics of the business and knows what data, both operational and financial, is required to illuminate critical performance metrics and provide a forward view of the direction of the company.”
This measured approach provides not only a firm backbone for any evaluation of strategic initiatives but also an unbiased impartiality when new plans are proposed.
All the right data and all the best intentions do not amount to much without a culture that embraces change. By providing key decision-makers in the organization with the information needed to create and execute their own plans, the company’s overall strategy will improve. CFOs oversee not only finance, but the financial data being shared throughout the company, putting them in a pivotal position to affect change and support the company’s response to challenges and broader evolution. The result is a company-wide focus that prioritizes controlling costs and increasing productivity to improve the bottom line.
If you need the advisory capacity of executive financial leadership but do not have the budget to employ an in-house CFO, please reach out to us. We have a dedicated team of experienced CFOs that can provide as much or as little decision support as you need. Whether it is in a part-time capacity, on an interim basis, or to handle the surges of work that accompany major business changes, our fractional CFOs have the expertise needed to come alongside your company and help it grow.