Defining the role of today's CFO is far from easy. It formed the core subject of the first Round Table discussion on 1 November organised by CFO South Africa in Cape Town. Mariette and Ronel found themselves in great company, joined by the CFOs of Umgeni Water, Kumba Iron Ore, Shanduka, Olam International, Jasco, Servest Multi Service Group, Randgold& Exploration, Wesgro, Neotel and the Ministry of Finance of the Western Cape Government. One seat was reserved for a financial expert - we invited Ryno Matthee, Executive Director at Accenture, to join us at the table.
Bikash Prasad, CFO of Olam International, poses the idea of the CFO shifting from Chief Financial Officer to Chief Value Officer. He himself has witnessed this trend over the last decade, where the focus on profitability shifted to an increasing focus on value. He lists a number of factors ensuring all systems are in place to support this new focus, such as correct recording, strong balance sheets and adequate augmentation of value. "It's a global pattern," says Indian-born Bikash, being the only non-South African CFO at the table.
"The role of the CFO becomes more and more strategic in nature. A very interesting trend," is how Peter Walsh, CFO of Servest Multi Service Group, refers to the CVO Bikash described. "A strong focus on value and strategy makes the CFO's life and operations more interesting," he remarks. But the CFO can only live up to his role as business partner if there is enough credibility. "The finance department in a company is traditionally seen as a separate function the rest of the organisation shares relatively very little information with. Especially if the focus and visibility of the department is on control and compliance. In order to add value you need credibility from the rest of the company," Peter emphasizes. "A process that sometimes takes years," adds Ronel, elaborating on how she at Spur grew that credibility amongst employees. Her hands-on mentality represents the organisational culture of the company. 'Grilling burgers' helped a great deal in eliminating the defensiveness she encountered in dealing with other departments.
Nica Gevers, CFO of Umgeni Water, mentions the crucial role of the executive team and how it positions itself in the company. "As long as you as the executive team are open enough, you will surely get that trust."
"I spend roughly 80 percent of my time on the floor and less than 20 percent on reporting." Van Zyl Botha, Randgold& Exploration's CFO, is convinced the floor is where the added value is to be found. "We have made a huge shift from financial accounting to operational accounting."
"Even though it's sometimes hard to find the time in our pressured agendas and spending so much time in building relationships sometimes might feel unproductive, it isn't! It adds so much value," reads their joint conclusion.
Another important aspect of the CFO-role is its attitude towards compliance issues.
Frikkie Kotzee, CFO of Kumba Iron Ore, is very clear in his zero tolerance policy as to non-compliance. "Being compliant is now viewed as a given and non-negotiable". Van Zyl agrees. "As soon as you get that sorted and out of the way, you have time for other stuff - like spending time on the floor and adding the aforementioned aspect of adding real value." Does that make the CFO a policeman? "Absolutely not," thinks Frikkie. "When confronted with governance challenges and people who deal with these, the CFO has to not only highlight such concerns but also be the one providing solutions to these. Show them how you can help them achieve their objectives and be a constructive partner, while at the same time being the person setting the lines. It's about finding the balance," concludes Frikkie.
Constructive partnership is a recurrent theme in the discussion. Bikash describes the CFO and finance department as 'introvert'. "We tend to sit inside in our offices and meet very few people," he says. "While in fact we with our knowledge and expertise are best positioned and equipped to go out and explore opportunities. We need to come out of our introvert hiding place." Peter agrees. "We need to have a voice and to be seen. We simply need to get out of the box."
Not only is the CFO called introvert, according to Steven Whiley, CFO of Neotel, the CFO needs to have somewhat of a split personality. "We have to operate in all levels of the organisation to avoid missing out on anything. Besides the CEO, we are the only people touching every single conceivable part of the business. On the one hand we need to have all the financial operating systems, control and compliancy mechanisms in place and play a supporting role to the rest of the business. On the other hand we are involved in strategic decision making, looking forward and providing answers."
The primary partnership the CFO engages in with the CEO. "My CEO expects me to be involved in everything and be his strategic partner," says Frikkie; a trend virtually every CFO at the table hasexperienced. "I want my CEO to feel I want to be his partner and be trusted, rather than him seeingme as a threat in any way," elaborates David Ngobeni, CFO of Shanduka.
Warren Prinsloo, CFO of Jasco, also points out how crucial the relationship with the CEO is for the modern CFO. "Especially these days when we have to do more work in less time." The importance of having a strong team around you is vital, all agree.
Mango Airlines' finance team is relatively small, explains Mariette. The structure of the company and theteam is flat; everybody is involved in strategy. "It's absolutely vital to make sure everybody is performing the right task and is in the right position." Mariette mentions the constant changing, cutthroat industry in which Mango Airlines operates. "A stable and sustainable structure is key, and that's where finance comes in. It is important to be able to put structure around creative ideas and strategies and ensure it is implemented and integrated successfully into the business. Our finance department plays a key role in ensuring that such new strategies find structure within the organisation to ensure longevity of solutions and successful and measurable implementation.
Besides value, trust, credibility, partnership and the team around you, the table also touches upon the cultural aspect of South African companies. Gasant Orrie, Managing Partner of DLA Cliffe Dekker Hofmeyr and host of the event, 'apologises' for not being a financial professional and wonders how the participants see the South African business culture. Especially compared to for instance Indian companies such as Tata where values of the founders are so deeply rooted in the company. How does that apply to South African companies? Nica points to the social aspect of Umgeni, a parastatal company. "It's about the balance between finding policies that add business value and those providing profit for the community." However, a true South African business culture remains undefined.
Not unsurprisingly, government plays an important role in the industry. Alan Winde, Minister of Finance, Economic Development and Tourism of the Western Cape has an important question on his mind. "Seeing how incredibly well rated South Africa is at the World Economic Forum for the way our companies perform - what is it that frustrates you most?" He wants to know what governmental institutions can or should do to improve existing frustrations. Alan can relate to the role of the CFO in the way that his department works with local governments and businesses. All agree that partnership again is crucial, and that both parties have a part to play in that partnership.
Frikkie: "Companies need to approach government not only to tell them what they cannot do, but also on how business can assist in realizing governments goals through constructive dialogue and partnership. It is a joint responsibility to find that partnership and make it work." Nica points out that clarity is essential, implying that government has to be clear on how and where money is spent.
"Without getting those insights, how else can we be the CFOs of the future?" Peter: "We need to find the mutual benefits from that partnership. That way we will both benefit from it in a very tangible way." Alan invites all CFOs to further explore opportunities. The first step towards vital partnership was just set!
Melle Eijckelhoff, co-founder of CFO South Africa and moderator of the session concludes that the boundaries of the role of the modern CFO have only grown wider of the last decade. Which, according to all participants is seen as a good thing. Another thing also strikes everybody at the table: "Despite of all being from different companies, we all deal with the same issues and similarchallenges," voices the overall consensus. "This first round table was just the beginning," Melle says. "You still have a lot to talk about."
Alex van Groningen, founder of CFO South Africa, is thrilled with the positive outcome of the first round table discussion. "Many CFOs told me afterwards at the CFO Café - the reception CFO South Africa organised for all interested finance professionals - how much they enjoyed the session and how they would like to see this as a recurrent event to properly utilize the forum.
Which is exactly what we intend to do - the next CFO South Africa Round Table Discussion is scheduled to take place in Johannesburg on Thursday 14 March 2013. Save the date!"