This chapter of the book helped me focus on the various and changing roles of a Chief Financial Officer. Over the past ten years, a CFO’s role in a company has become more than just making sure the numbers being analyzed are correct. The new role now includes mitigating risk, processing pertinent financial information for the company, and implementing policies and processes for analyzing income statements, balance sheets, and more. Many CFOs are also heavily involved in investor relationships because of the way they can understand and interpret data and discuss with investors what specific data means. Mending and forming these relationships is important for company growth, and according to Tersant many investors report to the CFO rather than the CEO of a company.
The CEO and CFO both have important roles that intertwine with each other and have to use each other’s data in order to make decisions that would best impact the company. Without the CFO the CEO may not interpret and understand data the same way. Thibault De Tersant is the executive vice president and CFO of Dassault Systemes when he joined the company in 1988 and then was appointed senior vice president in 2006. Tersant won France’s Chief Financial Officer of the year in 2002. This book will be important to my research because it defines and shows the role of a Chief Financial Officer and why they do what they do. It will also help connect and link my research endeavors and help in further understanding the CFO career as a whole.
Chief Financial Officers come with a variety of different backgrounds. These backgrounds can range from anything that has to do with business. Typically, these backgrounds stem from Finance, but Hoitash offers a viewpoint on whether or not accountants make better CFOs than people who have earned a degree in finance. Just because it says finance in the job title does not mean that is where their job ventures stop. It goes way beyond just analyzing the financial position and outlook of a company. One of the main and well known differences between people who study accounting and people who study finance is that people who are in the accounting field tend to avoid all risk and uncertainty a company might face. While on the other hand people who have a finance background might understand sometimes risk needs to be involved in order to try and expand the company. Hoitash states in this journal article that in high growth industries accountants as CFOs are risk adverse and associated with less investment endeavors than people who do not have an accounting background.
Meaning without some risk, it is hard to grow a business, especially in these high growth industries. In low growth industries CFOs are not associated with investments, external financing, and cash holding as much as they are in high growth industries. When revenues are increasing, cost efficiency is 19% higher among low growth industry firms with CFOs that have a background in accounting. This is important because it points out that in situations where companies take less risk, accountant CFOs can help the business be more cost efficient. This journal article points out some interesting statistics and information on why an accounting degree background might not be as beneficial as a finance degree in some areas of this job. However, it also points out when and why putting someone with an accounting background in charge can also help a company depending on the type of industry they are in. The way that I will use this in my research is by showing my readers why or why not people with certain backgrounds and degrees might be more successful in a position like this and why. This is not to say some are less qualified than others, but people with finance backgrounds know when and how to take risks when necessary.
The Chief Financial Officer is sometimes misunderstood and thought to be on the board of directors. This is not always the case, as the main job of the CFO is understanding and interpreting quality financial data in order to understand the financial position that the company is in. However, the CFO knows the financial position of the business better than anyone else, so having them sit on the board of directors could be beneficial. CFOs can find any potential financial drawbacks that a company might suffer from, and it is a very important skill that CFOs possess. Another important quality of the CFO is that they understand and know current economic positions in not only the company but in the state and country that the company is in.
Economics is a hard thing to understand so having this specialized knowledge is important to interpreting financial data. Another key factor that is important to look at when deciding whether or not to put a CFO on the board of directors is that there is less likelihood of employee turnover in this position. This is due to the chance of higher compensation for having a two in one job, these employees are likely to stay with the company longer and not bounce from one company to another. This journal article is important when trying to understand how important the CFO role is to my research. Not only do they just reconcile and interpret a company’s data, they can help explain to others what this data means instead of someone just reading of numbers in certain scenarios. Learning and showing readers just how important this job is and how to utilize a person in this position is very important to the success of a company.
This is not the type of job that someone can just apply for and get the position. The amount of time and effort necessary to put in to becoming a CFO is long and ultimately rewarding. The first step needed in order to gain a position like this is to know more about the business than just the financial aspect. Having a broad understanding of business strategy, accounting, and economics is on a short list of being able to make it in the corporate world. Working in a corporate field is also necessary, starting out in a smaller position in this industry allows one to gain understanding of what it takes to move up in this field, and to have real world experience. This positon comes to those who work hard and wait until they have a fully understanding of what it takes to be a successful CFO.
Loyalty is another key trait when it comes to becoming a CFO of a company. If the Chief Executive Officer does not know that you would like to be a CFO one day and does not know the integrity and loyalty you have for the company, make it known. Networking is also important because there is no specific path to take in order to become a CFO, so knowing people in high places and making these connections makes it easier once you gain corporate experience. This journal article is important to my research, because it provides an understanding what is needed in order to take yourself to the top of a company and that it comes with hard work and determination. There are many different paths that one can take to make it as a CFO, and there is no specific way to guarantee that you obtain a position of this stature. Key qualities like loyalty and integrity is beneficial, as is networking, but a lot of experience in the industry ultimately will help you reach the top.
Time plays a big role in the everyday life of a Chief Financial Officer, and it varies based off of many different factors. The factors that play a role in determining how many hours a CFO puts into their work is company size, time of the year, if the company is acquiring more business, etc.… There are many things that go on throughout the day that is not just reconciling financial statements, and going over assets and equity. CFOs also have meetings with the board of directors, the CEO, and the staff that works under them to make sure everyone has the same understanding as to what is getting done and when it should be done. Also, it is important to let everyone know where they are in terms of processing information and on projects to keep it moving along. While a majority of the time is working with financial statements, preparing sales reports and commissions, there is a lot of other things that this job entails.
This article will be a great source in my paper to show my readers that being a CFO is not just working with financial statements and balance sheets all of the time. Communicating and being able to work with a team and interpret information in meetings is also important and plays a large role in this career. I also wanted to point out that there is not a set time schedule for this job, depending on the time of year it is and how large the company is, the work will come home with you. There are CFOs that work the normal 40 hours a week and there are some that work well over 80 hours. Time management skills are an important asset in this field and you will have to put in the time and effort to succeed. This article will show my readers that there is no ordinary day for a CFO and it varies based off of multiple different factors. Some CFOs will work more than others and some have changing schedules every day. There are varying tasks needed to be completed at different points in time and using your time management skills is necessary no matter what size the company is.
All Chief Financial Officers have similar skill sets, and this is not only because they have business degrees. Everyone has started somewhere and eventually worked their way up into this position. Some of these skills that are important to this position is being able to manage people, having great communication skills, staying up to date with evolving technology, ability to make effective decisions within a company, ability to mitigate risk, and more. The CFO of a company must be able to offer these skills in their field in order to gain experience and be successful. Each skill that a person in the position of CFO makes them that more of an asset, because the more they know and understand the better they can meet their company’s needs. Ash Noah, who is featured in this article, gives insight on the tasks, struggles, and skills of a CFO. He has a lot of experience in this position. Noah is the former CFO of the international unit of TNT Express, which is a global transport and logistics provider. He led the finance teams in 45 different countries while holding the position at TNT. This article will play a big role for my audience to understand how important a CFO is to a company and how many things they do for a company. This will allow my readers to better understand the skill sets that will increase their likelihood of holding a position of this stature once they have had a lot of experience in this career path.
This argument is based off the fact that the CFO’s role has been growing rapidly over the last decade. This position has been addressing certain demands of new marketplaces all while recruiting more people into the field. One of the main objectives in the financial field is to maximize shareholder wealth, which is not always an easy task. Having the priority of maximizing others’ money is very important, and if done incorrectly it falls on the CFO rather than the CEO, because understanding how to do so is in the job description of the CFO. Market structure is constantly changing which makes it difficult on the CFOs to gain their footing and grasping the new concepts every day.
This article is talking about the CFO of Apple, Peter Oppenheimer. He is the CFO of the biggest company internationally and is said to play a more vital role to Apple than the CEO. Oppenheimer is the one who makes decisions on the company’s financial plans and interprets it to shareholders, the board of directors, and in some cases the CEO. This is eye opening because everyone expects the CEO to be the most important positon in a company, which is clearly not always the case. This article will show in my research that just because the CEO rank is technically higher in a company it is not the most important. It will show my readers that the CFO is the first line of fire when shareholders and the board of directors are not pleased with the financial position of the company. This is because understanding financial matters leads to a successful business, which is the priority of a company.
In order to gain financial expertise in the business field, you have to have more than just a Master’s in Business, Finance, or Accounting. This journal takes four categories to gauge the amount of expertise someone has based off of if they are a Certified Public Accountant, Master of Business Administration, age of the Chief Financial Officer, and length of time one has spent as the Chief Financial Officer. There is a certain regression model that is followed in order to determine a CFO’s financial expertise and concerns about what is going on in corporate governance. However, just because someone is a CPA means that have financial expertise but not might be the best in running the financial aspect of a company. The way that I would use this journal article in my research is to show the positive and negative correlation of the study between experience, certifications and degrees affect expertise in the position of the CFO. Ultimately, the study showed that while some of these factors do play a role in how successful a person will be, CFOs come from a wide variety of backgrounds.
However, his responses to the questions that I have asked will be essential to my research because of the years of experience he has in the finance world and in positions of high prestige. I chose Mr. Batchelor as the person I do not know personally but have heard a lot of great things through people I know. I would like to know what Batchelor thinks about obtaining a Master’s Degree in Finance in order to gain a position like Chief Financial Officer, and how that would advance my likelihood of becoming a CFO. He is not currently the CFO of the company he is with now but has an extensive history of this line of work.
He previously was the CFO of Equity Homes and obtained a degree in Finance from East Carolina University, which was interesting for me to learn while asking for him to allow me to interview him for this research paper. I would like to understand the steps that Batchelor took in order to make his career as successful as it is today and to accept any extra advice he has to offer for me for my future career in the Finance world. The information from this interview will not only be valuable to myself but my readers that would like to pursue a career in this degree. The questions I asked will help them have a better understanding on how to get their foot in the door, decide whether or not furthering their education will be a vital role in taking a job as CFO one day, and what they can do to gain experience and pad their resumes to make them stand out from other possible candidates.
My interview with Robert Hodge was very beneficial because he provided some insight on how to get my foot in the door and stand out from other potential candidates for a job. Hodge received a Bachelor in Science in Finance from Augusta State University, and has held many positions in the finance industry for over 25 years. Currently he is the Vice President of Trademark Residential and helps manage finances of many different rental properties. One of the things that Hodge focused on was getting involved in clubs, and internships in order to get a job when graduating college. He told me that being part of a business networking club was really beneficial to him because it introduced him to people, so he had a job waiting on him once he graduated. Creating relationships and taking advantage of networking is the big thing that he had emphasized on because that is the main way to get a position like CFO once having proper experience.
Hodge also stated that having a Master’s in Finance can help, rather than just having a Bachelor’s Degree. This was not to say people with Bachelor’s degrees in Finance would not succeed, just simply that the more education distinguishes and sets one apart from another. Another thing that I thought was interesting and important that was said in my interview was find a drive and passion for what you do or else you won’t succeed, or get anything out of it. Loving what you do is important or else it will seem as if you are just going through the motions which is important to show to my readers to help them succeed in this career. What I am hoping to show my audience is that while a degree is great, knowing people, networking, and valuable experience is the best way to have a pathway to becoming CFO one day.