Fifty-eight percent of CFOs believe the CFO is responsible for imparting digital change at his or her company, according to a survey by Tata Consultancy Services (TCS). Yet, half admit their organizations' execution of change management is falling short.
The TCS 2020 CFO Study, conducted with more than 500 CFOs earlier this summer, found finance leaders acknowledge workforce evolution is a pressing challenge. Within five years, respondents said, they expect to be playing a critical role across a range of leadership priorities far outside finance, and are making significant investments in developing their technology skills.
But achieving their goals requires more than just technological fluency; the entire enterprise must learn to operate differently. To that end, the task of recalibrating the workforce for digitization is increasingly falling to the CFO, the survey found.
"Right now, the biggest challenge is not understanding whether a tool is good, it is ensuring that we can use it to best meet our needs," Arvind Agrawal, finance director at tech company Philips Netherlands, told TCS. "This means before we embed a technology, we must first train the workforce to accept that it is coming, and to make the most out of it."
Nonetheless, findings indicate many CFOs fail to pay due attention to skills development in the digital realm, which may lead their workforce transformation efforts to continue falling short. Nearly half of respondents (47%) believe empowering teams with new digital leadership approaches would most effectively change employee behavior, while over 40% pinpoint the introduction of performance metrics and key performance indicators (KPIs) as being key tools.
Dave Jordan, vice president, global head and managing partner of consulting & services integration at TCS, spoke with CFO Dive Monday about the survey's results.
"Throughout my 30-plus year career as a consultant, with every engagement, I’ve always focused on the CFO as a key stakeholder," Jordan said. "I wasn't surprised by the survey results; the role of the CFO has radically changed over time, certainly in the past 20 years or so."
Jordan says he's observed "a sea change" in the CFO's own expectation of his or her role and responsibilities, moving from being the guardian of financial reporting to guardians of shareholder value.
"The CFO is now basically responsible for controlling the purse strings of an enterprise," he said. "As well as a catalyst for change and innovation. It's fascinating: the majority of CFOs view themselves as the executive responsible for digital transformation."
Jordan says the CFOs he spoke with see themselves as responsible for delivering the synergy benefits through major mergers & acquisition transactions. They also see themselves as responsible for the profitability of new innovative products and service offerings.
"So this role of guardian to innovation is the sea change," he said. "That's really the main fundamental thing if you wanted to sum it up."
Jordan's viewpoint, historically, is that one must work with the CFO as though they're a company stakeholder. But now, you must involve them up-front as sponsors and champions who make positive changes happen.
To this end, the survey results about CFO priorities and concerns validate what he's heard from CFOs personally, and what he's seeing in the market, he said.
CFOs are responsible for ushering in change, and helping their teammates warm up to them. But in times like these, who does change management fall to? The answer, Jordan said, it cuts across the board.
"I think CFOs themselves acknowledge and accept that, as the owner or sponsor of digital transformation, they need to also own the people side of things," he said. "It's the people side that makes the difference; the number one reason for failure in any transformation effort is not prioritizing change management."
The CFO's unique lens into the entire enterprise allows them this specialized vantage point, Jordan said. They'd be remiss not to capitalize on it.
Most often, workforce empowerment initiatives and performance partnerships start small and drive a change in mindset that builds over time. "Traditionally, the finance organization has focused on driving people to get to the numbers," Rajiv Subramanian, who heads finance at Nokia IT, told TCS. "But the future is more about getting people to own the numbers, to get to their annual plans, and to get to year-on-year improvements."
Respondents gave TCS advice on how other CFOs may approach tech adoption if their co-executives or finance peers are initially unenthusiastic. "Identify the 10% of forward-thinking middle management colleagues who have already ... understand the role of technology," an anonymous respondent who is a senior finance director of a global retailer told TCS. "CFOs should use them as catalysts [for implementing] that change in culture; you can’t do it from the top alone."