Good morning.
The role of the CFO continues to change, from solely financial reporting and risk management to driving growth and value creation. But some finance chiefs aren’t fully stepping into their new realm of influence.
“What’s interesting to me is the data point that only 32% of the CFOs said they would always speak up if they disagreed during the C-suite conversations. I think that speaks to the evolving strategic role of CFOs—do they really understand the value that they can bring, and the fact that they should have a voice in resolving some of these tensions and internal disagreements?” Myles Corson, EY Global and Americas strategy and markets leader for financial accounting advisory services.
Corson's referring to one of the findings in EY’s Global DNA of the CFO Survey released this morning. I sat down with him to discuss the challenges now facing finance leaders and how bold CFOs reframe their roles to enhance performance.
Due to the current market conditions, 76% of respondents said there’s more pressure to drive cost efficiencies and hit short-term earnings targets. And half of the finance leaders said they're meeting short-term targets by cutting funding in areas considered long-term priorities.
For example, despite considering environmental, social, and governance (ESG) programs a long-term priority, 37% of respondents say their organization plans to reduce or pause spending in the next 12 months. Although technology and digital innovation was highly ranked among long-term priorities, 34% of respondents said they’re pursuing near-term cuts in the area. And 34% also said they’re pursuing near-term cuts in talent and culture.
“Yes, investors expect you to deliver on short-term performance,” Corson says. “But we also know from the research that they are looking for organizations to articulate the investments that they're making for the long term."
“It almost becomes a vicious circle. Investors want to hear the long-term story. If they don't hear it, they put more pressure on the short-term performance.”
EY found that 67% of those surveyed said there are tensions and disagreements within leadership on how to balance short- and long-term priorities. But there may be a silver lining to these debates, Corson says: “Strength is built on the diversity of perspective."
It’s important that “CFOs are expressing their point of view and opinion and making sure they’re at the heart of that debate,” Corson says. “The power of the CFO is to bring a very data-oriented point of view and project forward what that means for the future."