Today’s chief financial officer (CFO) is vastly different from her counterpart 25 years ago.
Whereas the latter CFO would have spent her days solely on financial statements and the bottom line, today’s CFO also has a more strategic focus.
That means contemporary CFOs need a wider range of skills—both personal and professional—that are far beyond simply an accountant's role, says Deedee Myers, CEO of DDJ Myers, a consultancy firm that assists credit unions with executive recruitment and retention, and strategic planning.
"CFOs need to be leaders, financial gurus, employee developers, and 'board savvy' presenters of complicated information so the board of directors can lean in and understand," Myers says.
CFOs also must establish strong cross-functional relationships with other departments because they are “compelling peers who help others understand the significance of their roles and impact on financials," Myers says.
This also includes demonstrating the profitability of products and services, and encouraging innovative thinking and problem-solving.
"Today's CFOs add significant value to strategic thinking and sense-making in the organization,” Myers says. “The goal is to provide the best value to members while sustaining the credit union’s productivity and growth."
‘CFOs are now involved in so many aspects of the organization, they can't afford to be shy or reticent.’
Myers attributes this shift in roles to the recession, when many boards began promoting CFOs to the CEO role.
“They were looking for fiduciary safety and financial management to help them through tough times," she says.
"They were relying on CFOs' financial acumen," Myers continues, "including understanding balance sheets and knowing the interrelationship between investments, loans, and liquidity. Credit unions needed the ongoing monitoring and fine-tuning CFOs offered."
Another factor is increasing regulatory pressure.
"A lot of regulatory stuff comes at us,” says Shari Weber, CFO at $934 million asset Honor Credit Union in Berrien Springs, Mich., and member of the CUNA Finance Council Executive Committee. “Having only a bookkeeping background prevents CFOs from thinking strategically on how to satisfy regulators' expectations. You can't get stuck in just the numbers."
Plus, increased regulatory pressures accelerate earning pressures, says Steve Arbaugh, CFO at $3.6 billion asset SECU in Linthicum, Md., and chair of the CUNA Finance Council Executive Committee.
“The cost of digital infrastructure is high and has forced CFOs to look through every part of their organizations to find ways to improve the bottom line,” he says. "People used to stereotype CFOs as introverted and intensely focused on accounting. But that has all changed. My CEO jokingly laments, ’Why did I get a CFO with an outgoing personality?’"
That question is being answered throughout the credit union industry. Because credit union CFOs are now involved in so many aspects of the organization, they can't afford to be shy or reticent when it comes to chairing meetings or addressing the organization, Arbaugh continues.
“I'm involved with every part of SECU's business,” he says, “and that requires an outgoing person."
Myers says two other forces have created a need for strategy-minded CFOs:
1. External competition has created shifting perspectives. The market now demands CFOs to be savvy in areas of enterprise risk and external market forces.
“CFOs need a broader, richer set of leadership competence and capabilities,” Myers says.
2. Boards don’t want surprises. To avoid this, high-performing boards ask high-level questions that are “far beyond trivial oversight queries,” Myers says.
These strategic questions concern future opportunities and how today’s decisions and actions affect future outcomes.
Arbaugh echoes Myers' observations about boards. " My CEO gave me some great advice when I came to SECU: 'The board does not like surprises.'"