October 27, 2022
The expansion of the role and the necessary skill sets, the state of human capital, and the importance of ESG are all top of mind, CFOs say.
Good afternoon! In today's edition, we asked nine CFOs about the trends they thought others in their role should be paying more attention to. Questions or comments? Send us a note at firstname.lastname@example.org
CFO at CircleCI
Impactful CFOs are ones that go beyond numbers and understand all aspects of their business. In today's business environment, they play an important role in breaking down silos between teams, communicating to external audiences, setting hard and soft metrics, and ensuring all parties are aware of their company’s business model and value proposition.
With Gartner recently predicting that employee metrics like well-being, burnout, and brand satisfaction will override ROI evaluation in 2023, CFOs and financial leaders need to be thinking about the ways in which they contribute to keeping teams engaged and customers happy. It will be critically important for CFOs to not only focus on business metrics and strategy, but also on the employee experience.
In my current role at CircleCI, I've been fortunate enough to work on many parts of the organization (that extend beyond finance), including our People and Places function. During our transition to remote work during COVID-19, our organization was primarily accountable with ensuring the teams were supported and recruiting goals were met. Our team has also been responsible for being the glue between other parts of the organization, whether that's working with the revenue teams on how to best serve our customers or our product teams to provide supporting analysis resources. The role of finance is evolving, and people partnership has become more critical than ever.
CFO at Luminar Technologies
While this is a tough market for financial capital, it's a great market for human capital. Growth companies need to strike the right balance between financial discipline and investing for long-term success.
CFO at Airtable
Market leadership requires innovating quickly and executing company-wide. As businesses try to do more with less, identifying a singular, unifying goal across the company has never been more important. Accomplishing that North Star goal requires speed of decision-making and coordination of effort.
CFOs have the opportunity to strengthen the quality of decision-making, drive cross-functional execution, and enable growth by building legibility across the organization. Efficient growth starts with accurate data, and CFOs need to identify and consistently and correctly capture data around the most important metrics - which is easier said than done in a hyper growth company or global business with teams around the world. By building company-wide data legibility, CFOs can equip leaders to identify and pull on the levers that unlock the most growth with the most efficiency.
CFO at Tipalti
CFOs have more tools in their arsenal than most other executives, and those tools have a broader impact across the entire organization. Yet, we’re seeing stories every day of industry-leading companies clearing house with record layoffs.
CFOs bear the responsibility of considering the massive cost-saving benefits of retaining talent. The reality is that retaining staff is far less expensive than replacing someone, but it’s also a driver of employee engagement and organizational culture. CFOs have the capacity to invest in and directly impact the happiness and well-being of employees, which attracts the best talent to the business and incentivizes the current talent to stay.
While most signs point to a recession in the new year, CFOs should be looking at the company’s tech stack and betting big on efficiency-drivers such as automation and data.
Automating will alleviate time-consuming tasks to allow workers to focus on being strategic and creative. At the financial level, that additional time may mean finding ways to save money or consolidate spending. Automating goes hand in hand with data collection and analysis, which is the best way to diagnose waste and prevent it before it gets out of hand.
Ultimately, a strategic CFO is looking not just for ways to survive economic downturns but to thrive and come out the other side as a stronger company. To do that, they’ll need their team and commitment from the entire organization; I predict those who don’t put their people first will have more tough days than those who do.
CFO & COO at Brex
CFOs — especially in this environment of macroeconomic uncertainty — are always looking to increase return on company investment. A related trend that has me most excited is the move to digital-first operations and workforce models, which actually lower bureaucracy and increase efficiency, especially of the largest expense: personnel. This global shift gives finance leaders the opportunity to be catalysts of organizational change, efficiency, and growth. Traditional finance has always been about command and control, but the shift toward distributed and global work in the last two years has made this more problematic. There is now a massive — and urgent — opportunity for CFOs to rethink the financial tools and look for solutions that empower teams, reduce bureaucracy and overhead, and enable money to flow to where it can have the most impact for the company.
By adopting a consumer-grade, digital-first approach to finance, CFOs can help their companies move and grow faster without sacrificing control or financial discipline. Furthermore, a modern approach, such as that enabled by the Brex Empower software platform, can scale and adapt in a way that other financial services and software can’t.
To survive and thrive, organizations must make strategic investments in digitizing and modernizing their financial systems and workflows. And CFOs are poised to lead this digital acceleration of the enterprise to drive profitability and growth.
CFO at Nuro
Periods of economic uncertainty can be an opportunity in disguise. Decreased capital availability and a higher cost of capital compel management teams to evaluate their capital allocation process and exercise more discipline to prioritize the most critical investment areas for their companies. This means eliminating "nice to have" spend items and eliminating any waste altogether. A lot of us are doing this already, but the past few months have been a reminder that lean operations and thoughtful spending — whether it is in a period of stability or uncertainty — is a timeless, effective strategy. With macroeconomic headwinds remaining persistent, CFOs should be running through a range of scenarios constantly, and have a playbook for a prolonged, multiquarter recession.
CFO at Doximity
One of the most impactful ways we can deliver long-term value to all of our stakeholders is by operating responsibly, sustainably, and ethically. As CFOs, we have a unique opportunity to help deliver that value by investing in and operationalizing our businesses in ways that maximize our purpose.
ESG continues to be an area of focus for CFOs because we know it builds trust and leads to greater long-term value. Over the next few years, I believe we will see more CFOs leaning into ESG, particularly diversity and social impact, and investing in people, products, and services with a more inclusive lens. By investing in these areas, we can not only attract and retain a more diverse workforce, but we can also deliver more inclusive products that better reflect the society we serve.
I also believe we will see a greater focus on corporate purpose. Whether you’re a startup or an established public company, aligning your strategy with your corporate purpose, is critical to creating long-term value. At Doximity, our mission of making doctors more productive so they can better serve their patients is our North Star. By staying firmly focused on this mission, we believe we can make the most meaningful impact and deliver the greatest value for our stakeholders and communities.
CFO at Mativ
Right now, financial and business leaders, especially of global organizations, need to be focused on balance. We all see the ongoing volatility in the global economy, particularly in Europe, and hyper-inflation keeping its grip on the input environment as the prices of energy and raw materials continue to surge. While many once forecasted that inflation would abate and prices would cool, it’s likely that we’ll exist within this hyper-inflationary environment for longer than we expected.
Therefore, a primary objective for global CFOs is to strike the right balance between positioning the business for continued, sustainable long-term growth while preparing for a short or prolonged recession. Our job is to deliver value for all key stakeholders — not just shareholders and investors, but employees and customers as well. We have to satisfy Main Street, where our employees work and live, as much as Wall Street. And so, for coming quarters, CFOs must constantly focus on balancing between raising the sails for growth and battening down the hatches.
This balance is not only in the business decisions we must make and execute, but also in how we communicate and the tone we set with all stakeholders as we navigate the current environment together. Everyone knows that there are challenges and uncertainty ahead, while expectations for growth will always exist. So we must balance realism and optimism to keep credibility and maintain relationships. The CFOs that strike the best balance can best set up their businesses for continued growth.
CFO at Pegasystems
The biggest trend CFOs need to be thinking about is adjusting company strategy to address a more uncertain economic outlook. For the last decade, the economy was growing — a period that included the longest boom in U.S. history. Many companies, including Pega, were focused on revenue growth acceleration for a decade or more. Firms made significant investments in go-to-market strategies.
Between a likely global recession, cost-of-living increases, inflation, and a general gloomy outlook, consumers are wary of spending. The market has shifted from a “growth at all costs” attitude to a demand for responsible growth. Given this shift, CFOs need to be thinking about how to increase cash flow by streamlining operations and increasing operating leverage, and do so responsibly. In my experience, many clients consolidate vendors during times like these, which is one of the reasons organizations may want to focus less on capturing new logos and instead maintain a laser focus on their existing clients — focusing sales capacity on cross-selling and upselling into existing client bases is less expensive than chasing new logos. At Pega, we are fortunate to have marquee customers in our installed base with tremendous untapped potential.
Our current goal is to achieve the Rule of 40 (that a software company's combined growth rate and profit margin should exceed 40%) as we exit 2024. An increased focus on operational efficiency and corporate responsibility will help companies — including Pega — ensure durability so they can weather the uncertain economic landscape ahead.
See who's who in the Protocol Braintrust and browse every previous edition by category here (Updated Oct. 27, 2022).
Kevin McAllister ( @k__mcallister) is a Research Editor at Protocol, leading the development of Braintrust. Prior to joining the team, he was a rankings data reporter at The Wall Street Journal, where he oversaw structured data projects for the Journal's strategy team.
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