CFO becomes COO
As business models become more complex, companies need a "guardian of performance"3 to monitor and manage performance holistically and objectively in the best interests of the entire organisation. Finance will play this role in the future.
In this role, financial management will provide guidelines for the allocation of valuable resources. It's no longer just about forecasting, planning, budgeting, tracking KPIs and reporting; it's about solving the multidimensional problem of resource allocation comprehensively.
CFOs need to broaden their perspective beyond traditional financial metrics and act in a value-driven manner. For example, sustainability and societal impact are becoming increasingly important. To fulfil this role and redefine the focus of financial management, CFOs need the right people, which brings us to the next priority for 2022.
Employee engagement
According to a global survey4 of 1,453 C-suite executives, recruitment and retention has risen from 8th to 2nd on the list of business risks for 2022. This year, as many employees return to the office after a long absence and reflect on the crises affecting our world, respondents to a Deloitte2 survey are much more likely to cite 'talent and workforce' as a priority for 2022.
CFOs are already responding to increased employee influence over their compensation and competitive wage increases. As a result, CFOs are planning a 3.9% salary increase this year, according to a survey. This would be the largest increase since 2008. In addition, training and mentoring should be on every CFO's agenda. These training programmes should focus on the role of employees in relation to new technologies. As digital transformation progresses, continuous improvement of technical and digital skills will become increasingly important. In general, every finance employee should have a specialised area of expertise, such as a business area, a financial topic or the interface between business, finance and IT.
To successfully engage your people, you need to fundamentally change the way your team works together. Hierarchical departments and organisational silos should be replaced by focused finance teams. A significant change in mindset is required to lay the foundation for flexible and autonomous teams. In addition, digitalisation opens the way to a unique, functional environment that balances remote working and proximity to business units, allowing your employees to perform specific tasks from anywhere in the world.
Other issues CFOs should be aware of in 2022
This year, rising inflation will guide companies in pricing goods and services, setting wages and salaries, and managing taxes. In a Deloitte2 survey, more than three-quarters (76%) of CFOs say their companies will increase prices on a significant portion of their products and services to compensate for inflation. CFOs in particular will see price increases and should prepare for multiple scenarios and adjust their plans for 2022 accordingly.
CEOs and boards are increasingly demanding liquidity planning scenarios from finance teams to ensure cash flow. Cash flow will continue to be a critical driver of business growth this year. An IDC5 study shows that 80% of companies that have successfully implemented digital transformation are generating cash more efficiently than their competitors. Therefore, it pays to optimise cash planning in 2022.
Cryptocurrencies have established themselves as an alternative form of investment since last year, with high-profile companies such as Tesla, Square and MicroStrategy using bitcoin as a store of value and source of growth. According to a study by Fidelity Digital Assets5, 33% of investors are currently invested in digital currencies. However, companies are mostly reluctant to add digital currencies to their balance sheets. E-commerce retailers are picking up on the trend and are already accepting payments in digital currencies. By 2022, cryptocurrencies may also be accepted as liquidity and hedging options. This presents another important challenge for CFOs: to become more familiar with the bitcoins and ethereums of the world. #CFO #Digitalisation #EmployeeEngagement #FinancialManagement