Why the Best CFOs are Becoming Chief Value Officers?

Why the Best CFOs are Becoming Chief Value Officers? | Finance | Emeritus

A Chief Financial Officer (CFO) has always played a vital role in overseeing an organization’s financial health. Several crucial tasks, such as preparing financial statements, optimizing cash flow, and complying with regulations, were part of CFO duties. However, the CFO job description has evolved beyond its traditional remit. They are no longer limited to balance sheets but are actively contributing to strategic value creation across organizations. For instance, as many as 6 of the top 10 priorities for CFOs dealt with driving some sort of strategic change, according to a Gartner survey in 2023. The changing tide has paved the way for the inclusion of the title Chief Value Officer (CVO) in the new CFO job description. So, let’s explore this transition, the expanding CFO roles and responsibilities, and how CFOs can embrace this evolution seamlessly.

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What are the Key Differences Between a Traditional CFO and a Chief Value Officer?

The key differences between a traditional CFO and a Chief Value Officer (CVO) lie in their focus and scope of responsibility. Let’s see how:

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1. Traditional CFO

The focus of a traditional CFO is on streamlining financial management and reporting. Moreover, the tasks included in CFO roles and responsibilities at a traditional firm are limited to the following:

  • Ensure accuracy in financial reporting
  • Manage financial resources
  • Plan budgets and forecasts
  • Comply with accounting standards and regulations

2. Chief Value Officer

The focus of a CVO is on strategic value creation, which covers both financial and non-financial aspects. They are not only responsible for all the CFO duties listed above but also need to contribute strategically in the following ways:

  • Manage intellectual capital, employees’ well-being, and environmental impact
  • Identify growth opportunities across the organization
  • Bring sustainable value to investors, customers, and society
  • Communicate initiatives to all stakeholders in a clear and timely fashion

It is prudent to note that the CVO role does not branch off into a separate position despite these differences. In fact, most companies are reimagining the CFO job description to incorporate aspects of strategic value creation within their organization.

ALSO READ: Want to Become a CFO? 13 Skills You Should Master

How Can CFOs Transition Into Chief Value Officers Within Their Organizations?

The evolving nature of the CFO job description impels CFOs to adopt a proactive approach. Here’s what they can do:

1. Offer Strategic Insights

It is important to expand beyond financial management and become your CEO’s strategic partner. For example, a CVO will aim to offer insights on operational efficiency, sustainability, employee engagement, and innovation.

2. Collaborate Across Departments

A CFO will collaborate with departments such as marketing, operations, and HR to seek a deeper understanding of the business and identify opportunities for value creation. It can also help them develop innovative ideas to drive growth and stay ahead of the curve.

3. Engage Stakeholders

CVOs balance the needs of all stakeholders with the long-term objectives of the organization. They need to articulate a firm’s goals clearly and also develop strategies catering to their needs.

4. Acquire Skills

A CFO should not hesitate to invest in their professional development by learning new skills relevant to the revamped CFO job description. They can reach out to mentors, leverage networking, and obtain industry certifications to improve their credibility.

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What Role do Chief Value Officers Play in Driving Business Growth and Success?

CVOs play a crucial role in driving business growth, leading to a change in the CFO job description. Here’s how:

1. Identify Value Drivers

CVOs know how to assess the organization’s internal and external environments. It helps them to pick out areas that drive value, such as product innovation, customer experience, or employee engagement.

2. Develop Strategies

Identifying value drivers makes crafting strategies easier. CVOs can advise the company leadership on increasing investments in research and development, customer relationship management tools, or sustainable practices.

3. Allocate Resources

A company can optimize resources either through investments or cost reduction. CVOs can optimize resources by deploying them on value-creating activities. For instance, they can shut down loss-making projects or reassign talent to high-impact projects.

4. Promote Sustainability

CVOs anticipate future trends and account for uncertainties to prioritize sustainable value creation. As a result, they look to secure short-term profits without sacrificing the long-term impact of business decisions on all stakeholders, including the environment.

ALSO READ: Top 5 New-Age Roles and Responsibilities of a Chief Financial Officer

What Skills and Traits are Essential for CFOs Looking to Evolve Into Chief Value Officers?

There are several skills included in the new CFO position description adopted by companies these days. They are as follows:

Finance Courses1. Business Acumen

It is good to have a comprehensive understanding of industry trends, market dynamics, the competitive landscape, and customer needs as a CVO. The knowledge can help identify growth opportunities.

2. Ethical Leadership

A CVO should know how to lead with integrity. Aspiring CFOs must hone their leadership skills to build consensus across the organization. They should also be ethical in their conduct to earn the trust of stakeholders.

3. Iterative Mindset

CVOs have a penchant for innovation, so it is critical to advocate experimentation and continuously improve. There is a veritable advantage in trying new technologies to keep up with the market challenges.

4. Resilience

A CVO should always welcome change and not be deterred by uncertainties. One must adapt quickly to new market conditions and lead the organization with conviction. It is good to bolster emotional intelligence because it fuels empathy and builds strong relationships.

How Can Businesses Benefit From Having a Chief Value Officer in Their Leadership Team?

Modern businesses are rewriting the traditional CFO position description as they reap the following rewards for hiring a CVO:

1. Enhanced Value Creation

CVOs help the company adopt a holistic view of value that can be derived from different functions, such as environmental impact, among others. It thus results in refined strategies that increase profitability and ensure resources are allocated optimally to support high-impact activities.

2. Streamlined Decision-Making

CVOs leverage various data sources, which enable the company to embrace a data-driven approach to the decision-making process. They are also willing to accommodate potential risks in their long-term view, which can mitigate risks in advance.

3. Prioritized Customer Focus

CVOs understand the needs of all stakeholders so they can help the company gain credibility among stakeholders. Hence, they can steer the company to improve their relationship with customers without compromising social responsibility and environmental sustainability.

ALSO READ: 7 Factors to Consider Before Signing up for a Chief Financial Officer Course

In summary, it is clear that companies today are wasting no time transitioning to a CVO role within the organization. So, professionals need to possess the skills mentioned in a CVO’s job description. Emeritus offers a range of finance courses with a specialized focus on the evolving CFO job description. These courses are designed to equip professionals with strategic insights, leadership abilities, and innovative thinking required to thrive as a CVO. Sign up for one of these courses to boost your skill set and make an impact in the organization. 

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About the Author

Content Writer, Emeritus Blog
Mitaksh has an extensive background in journalism, focusing on various beats, including technology, education, and the environment, spanning over six years. He has previously actively monitored telecom, crypto, and online streaming developments for a notable news website. In his leisure time, you can often find Mitaksh at his local theatre, indulging in a multitude of movies.
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