What do CFOs and godfather of soul James Brown have in common? Reportedly, they are hardest working “men” in their respective businesses. At least that’s the conclusion of a new study that interviewed 60 CFOs from the largest companies in the U.S. and Europe.
Since passage of the Sarbanes-Oxley Act (Sarbox) in 2002, which heaps more accountability on CFOs than other executives, and the spate of accounting scandals that sent companies into bankruptcy and furious investors into shareholder lawsuits, the job description of CFOs has changed. But not all incumbents like their new role. “Hair, golf, tennis — all gone,” quipped one CFO, when asked whether his new duties are taking a personal toll on his work/life balance.
Another, more stoic finance chief, declared that “everything is fine,” when asked the same question — and then proceeded to recount his typical 70 hour work week, four hours of weekend work, and vacationing with the Blackberry turned on.
The personal strain on CFOs is palpable now that the scope and complexity of their responsibilities has mushroomed, concludes a joint study released last week by consultancy Mercer Inc. and executive search firm Russell Reynolds Associates. “We’ve reached a point where the scope of the CFOs job cannot be widened,” opines Mercer Oliver Wyman executive director Charles Bralver. “We just can’t toss any more on their shoulders and expect them to do a good job.” Mercer Oliver Wyman is part of Mercer.
In the report, CFOs admit that “enjoyable” business activities, such as meeting peers or participating in industry working groups have fallen by the wayside. Unfortunately, they’ve been replaced by oppressive travel schedules and certifying stacks of financial documents as CFOs split their time between being a business partner to the chief executive, and a fiduciary to the board, explains Chris Langhoff, executive director of Russell Reynolds.
The dual role that CFOs play is not a new one, but the degree of scrutiny surrounding that role has been elevated, adds Bralver. Nevertheless, the study found that CFOs are clear about their priorities: Their first obligation is to get the numbers right. Contributing to their company’s commercial and strategic agenda comes second, now that accounting and financial reporting has become more of a “value-added” function. During the first year of Sarbox implementation, “there wasn’t a lot of business partnerships happening,” noted one CFO who was interviewed for the study.
Once the numbers are bullet proof, CFOs have a lot of explaining to do, says the study. The universe of stakeholders has grown, and they are craving more detailed information. For example, board members require more handholding than before. Directors want CFOs to conduct informal one-on-one meetings outside of regular board meetings, as well as training on specific topics.
In addition, CFOs are spending longer hours tailoring presentations to board-level audiences. Instead of inundating the board with financial statements and internal documents, for examples, more CFOs are sifting through the material and presenting so board members are “comfortable,” with the details, says the report.