Role of CFOs highlighted

The Chief Financial Officer (CFOs) should be a regulator of risks and a master of change as these are the requirements of the future CFOs.

The role of CFOs is getting maligned due to the activities of CFOs and they are becoming mere statistics, said Group Finance Director John Keells Holdings Ronnie Peiris speaking on The strategically agile CFO.

Addressing a meeting organised by the Association of Chartered Certified Accountants (ACCA), he said that according to statistics at present more and more CFOs are retiring, changing careers, resigning or being fired.

In 2005 the number of CFOs fired triple the number fired the year before. CFOs are moving from finance to operations due to the pressure they face.

Sixty two percent have said that they are under pressure while 68 percent said that they are under pressure compared to two years before. Forty percent blame the regulators and the staff cuts for the pressure faced by them.

Therefore as a solution we have to be critical of ourselves as the behaviour of CFOs is driving the operations staff away from them. We have not changed with times instead have built walls which do not exist, he said.

The CFOs have very little time to drive decision support as they are engaged with other work which takes 75 percent of their time. In the future we won't be looked upon as valued advisors if we as CFOs continue in the traditional manner, he said. CFOs have to internalise their behaviour with 20 percent into compliance and 80 percent on performance.

Instant replies should be given by the CFO to any question asked by the operational staff including the CEO. In the present trend companies concentrate on intellectual capacity rather than buildings and equipment.

The world is changing rapidly therefore our resources must be crafted to change with time. We have to strive for continued operating success as our prime responsibility is to keep the customer happy. CFOs should not be obsessed with regulations as regulations make them adopt a cover my back attitude, Peiris said.

Shareholders are becoming more demanding and vociferous therefore CFOs must be very articulate so that they can answer all the questions of the shareholders. But as the CFOs have not made a positive presence the role of the CFO is being questioned. Less of compliance and more of decision support is needed of a CFO.

At present according to statistics the decision support is 11 percent but it should be increased to 52 percent.

Peiris said that most board meetings spend more time discussing trivialities and spend less time or no time at all to discuss strategies. The strategies will make the customer happy.

Expressing his views on budgets he said that it is a resource allocation exercise and requested not to let budget decisions constrain the strategic decisions.

People are unwilling to let go of the control mentality. This is harmful for the development of the company as well as the individual.

He said to be a valued and trusted advisor start changing now and concentrate on the key values thereby eliminating the details.

(SG)