Over the years various functions have come to the fore as retailers tackle different challenges. Are chief financial officers now in the spotlight?
Commercial departments were king when they exerted power over manufacturers with too much capacity, then supply chain was in the spotlight driving efficiency from factory to shelf. More recently digital teams have commanded most attention – and the biggest budgets; but could this be the era of the chief financial officer?
A clear distinction is increasingly being made between the role of finance director and chief financial officer and the latter may often have other ‘back office’ functions reporting in, such as IT, property or HR.
As businesses become more complex and fast paced, there is a recognition that running them successfully is a team effort and not just about one individual. If the executive directors on a plc board are confined to just the chief executive and chief financial officer, as is now most often the case, the latter will inevitably take a broader role and, in this context, the chief financial officer is seen as the commercial partner to the chief executive and equally comfortable briefing investors, analysts or the press.
At Clarity we have seen a clear trend to ‘upgrade’ financial capabilities in the last 12 months and many chief executives are frustrated that their top financial person is not contributing more widely to future direction. No longer just a “bean counter” the chief financial officer must provide appropriate challenge to the chief executive, while acting as key advisor, confidante and sounding board and is also often the guardian of strategy and external communications.
John Allan, chairman of Tesco, believes that the demands of the modern chief financial officer are such that it is not a one man/woman job: “It’s about a team that is equally successful and influential both internally and externally.”
He adds that the stature of the chief financial officer has become critical following the financial crisis of 2008. “Relevant experience and credibility are even more important when attempting to raise capital in a challenging environment – this has been the most significant change in recent years.”
“Having a grip on the financial data is only half the job. The CEO wants someone who can pull together arguments, not just figures”
David Tyler, Sainsbury’s
In today’s data-driven world information is power and chief financial officers are best placed to analyse current performance and future trends and arguably have the best perspective on what is really impacting the top and bottom line. Faced with the challenge of how to create a truly profitable multichannel model, their helicopter view can provide insights which have the potential to be game changing.
David Tyler, chair of Sainsbury’s (and a former chief financial officer himself) agrees. “Having a grip on the financial data is only half the job. The CEO wants someone who can pull together arguments, not just figures. The CFO needs to form judgements regarding the trade offs we have to make in retail all the time.”
And as we continue to battle the perfect storm of business rates, the living wage and rising costs in the face of a weaker pound, the chief financial officer will continue to extend his/her influence well beyond the finance department.
- Fran Minogue is managing partner of Clarity Search