As we talked about in our blog here (The CFO 2.0: From Bean Counter To Someone You Can Count On), today’s top finance execs go beyond measuring performance: now creating value is their remit.
McKinsey just published this article, “Building a competitive finance function: An executive roundtable,” based on the perspectives of CFOs from Novo Nordisk, Microsoft (former), Novartis, and Lloyds TSB.
Here are the key takeaways:
CFO’s common responsibilities:
• Ensure the company has a highly effective capital structure,
• Setting expectations for investors—and then not surprising them.
• Setting stretch goals for revenue and profitability that meet the company’s long-term aspirations.
CFO’s less-common responsibilities:
• Contribute to and orchestrate the relationship between the board and executive management
• Set an effective rhythm to the planning processes and the review processes,
• Expose areas of under-performance and those that are a real drag on value.
• Work with every business function to identify areas to improve productivity and efficiency
• Look for performance benchmarks, and set ambitious goals for them.
In the Business Foundation methodology, we work with CFOs to help them discover, for every business function, what those areas of improvement are. We take a holistic look at the business and document the interrelationships among the key drivers of value while aligning them with the company’s long-term corporate strategy.
This provides the CFO with a roadmap of the top areas of performance (the ones that have the most impact across functions, and are aligned with their strategy). He or she then works with their CIO to update the IT portfolio with, among other things, those systems and processes that:
- Model
- Measure
- Plan for
- Report on
- Analyze, and
- Organize
those key drivers of value.
The result is a new level of performance accountability where all levels of the company have “line of insight” into how their piece of the business adds (or subtracts) value.
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