The Three Paradoxes of the Modern CFO

August 18, 2023

EY released research based on a survey of finance leaders titled ”How can bold CFOs reframe their role to optimize performance.” The EY report summarizes the challenges faced by today’s CFOs as follows:

In a rapidly changing business landscape, CFOs face the challenge of meeting contradictory demands amidst market shifts, competition, and cost pressures. They are being asked to drive long-term value while finding short-term cost efficiencies and reinvent the finance function while doing more with less. These contradictory demands form paradoxes that are inherent in the CFO role.

They further explain these challenges can be categorized into three paradoxes named as such because they are often in direct conflict with one another.

These paradoxes are described by EY as follows:

Paradox 1: Near-term vs Long-term strategies

How can CFOs create long-term value when they are under pressure to cut priority investments to deliver results today?

Paradox 2: Managing Safety vs. Boldness

How can prudent, risk-aware CFOs capture the value that results from a bolder and more innovative change agenda for finance?

Paradox 3: Strategic leadership vs Traditional skill set

How can CFOs succeed as “strategic” leaders and achieve career ambitions if traditional finance skill sets do not equip them with all the attributes required?

The pressure to demonstrate short-term results even if it means cannibalizing long-term growth is evident in the survey results of CFOs in this area:

For example, one of the top investment priorities when it comes to driving long-term value over the next three years is “technology and digital innovation.” However, at the same time, finance leaders also say they are having to pause or cut spending on “technology innovation and transformation” to meet short-term earnings targets.

There continues to be a generational as well as a philosophical divide between traditional CFOs prioritizing quarterly financial metrics and the modern CFO who operates more similar to a CEO in terms of making bold bets and having a vision for the future performance of the company.

Access the full report.