The stereotype of a chief financial officer is someone who sits in an office all day crunching numbers and calculating debits and credits. However, in recent years of economic uncertainty, rising geopolitical tensions, and technological disruption, we are witnessing the rise of the modern CFO in real time.
At Fortune’s Most Powerful Women Summit in California on Tuesday, CFOs from major companies discussed this dynamic with Diane Brady, executive editorial director of Fortune Live Media.
“I think the modern CFO is a really evolving role,” said Maria Ferraro, CFO and chief inclusion and diversity officer at Siemens Energy. “Look at what’s going on in the market, at our customers, and around us. The fact is, it’s not acceptable to sit in an office and come out at the end of the month or the end of the quarter. Ferraro said his role as CFO is strengthened by a comprehensive understanding of how inclusion and diversity drive business.
According to MIT, finance executives are required to fully understand the entire business and how it creates value. They are now not only at the heart of a company’s strategy development, but they also need to communicate it effectively to external and internal stakeholders.
Emily Reuter, chief financial officer of grocery delivery business Instacart, said communicating Instacart’s story and strategy to employees has been essential since the company went public last year.
“I spent a lot of time internally doing what I call internal financial education around Instacart,” Reuter said. She summed it up as “demystifying finance for people who don’t know much about finance.”
Enhanced communication is also essential for cross-functional executive partners, Reuter said. ‘What is P&L?’ But what’s the context behind why we make these decisions?” she said. This is a change from 20 years ago, when CFOs might have said to their colleagues: Good luck in solving it,” she added.
Mandy Fields, chief financial officer (CFO) of cosmetics and skin care company Elf Beauty, agreed that the CFO role is much different than it used to be. “I think the financial base is just a stake. It’s just the cost of participation,” Fields said.
It’s a very visible role representing the company, she said. “And in some cases, you have to represent the CEO,” Fields said. “I spent a lot of time learning what was going on in the business.”
That includes working with chief marketing officer Cory Marchisotto, Fields said. Five and a half years ago, the company decided to invest more in its marketing and digital efforts.
“We used to only spend about 7% of net sales on marketing and digital, and now we spend about 25% of net sales,” Fields explained. “These types of investments require a lot of communication and you need to bring people along on the journey.”
Elena Gomez, CFO at Toast, a cloud-based restaurant management software company, highlighted how finance executives are also at the center of technology investments. “I’ve spent a lot of time over the last six months thinking about how AI will impact our business,” says Gomez.
At a recent CFO dinner attended by Gomez, one executive said that while his company’s business would grow over the next three years, its headcount would likely remain at 80% of its current number, she recalled. . “I’ve thought about it at least 10 times since that dinner,” Gomez said.
This not only impacts CFOs in terms of how they think about capital allocation, but it also impacts all C-suite roles. “The structure of companies may change,” she says.
