Most job descriptions for the role of chief financial officer will offer the usual list of requirements: team building, sound financial analysis, board experience and so on. However, companies are increasingly demanding that the CFO be an agent of change. Given the levels of confusion over the last four years brought about by the global financial crisis, for most CFOs change is more likely a simple fact of life.
'Change management' is a term that means different things to different people, but fundamentally it can be summed up as the discipline and process that gets you from where you are currently, to a better situation.
"And you must get there with the least amount of resistance from the organisation and with the lowest cost, highest quality in the shortest time," says Tim Ringo, partner at corporate strategists Maxxim Partners.
"So in that effort, you're focusing on communicating with your people on why certain things are happening, involving people on the way in order to shape the future."
To some CFOs, that might seem a frightening prospect, and Ringo believes that becoming an agent of change may well require a change of mindset.
"CFOs sometimes don't understand the value of change, and so what happens, when push comes to shove, is that when it comes to budgets for big programmes, finance will cut the change management piece to save money."
In Ringo's experience, CFOs often start out positive and supportive of change, but when it gets tough and projects overrun, "Finance comes along and says, 'we don't need change management or training' and it gets cut. And that does suggest they just don't get it, and see change management as a cost item".
But there are an increasing number of examples of the CFO as an agent of change. Frederick Lotz is CFO of Arla Foods, one of Europe's largest dairy co?operatives, whose revenues topped €6 billion last year. Since joining the business at the beginning of 2010 Lotz has set about dismantling some of its traditional processes in order to reposition the company in order to meet its next set of challenges.
First off, Lotz soon realised, on joining Arla, that its budgeting and forecasting function was no longer fit for purpose and set about changing the organisation's budgeting process.
"What we have done is, we have said, the world has changed," he explains. "It no longer makes sense to try to extrapolate the future by making financial forecasts in the common sense, because the world is changing so rapidly."
A changing mindset
His response has been to abandon the traditional 12-month set budget in favour of a rolling forecast which is constantly updated on a monthly basis. The new system does away with the old patterns of departments lobbying for extra resource, and removes the need to work everything towards simply hitting budget. Radical, to say the least.
"Everybody knew that [the old approach] was a waste of time, somehow, but we had as a company until recently not been able to articulate what should come into being instead of the budget," the CFO explains.
However, despite the widespread acceptance of the need for change, convincing those within the finance department – and out across the wider business – wasn't easy.
"There is a big element of faith in this exercise. You need to take a leap of faith, because the budget is so ingrained in organisations. It's not something you just pull the plug on, just like that.
So if companies have not done it yet, it's not because they are happy with the budget; it's just because they are uncomfortable about losing their comfort zone; the budget and what comes after."