Finance

CFO expert Agrawal says talent, uncertainty will top priorities in 2023

Listening, influencing, and leading are top finance chief priorities in the new year.
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· 5 min read

As 2022 draws to a close, it’s fair to say that no one can really predict what the economy is going to do in 2023. But there’s one thing that seems certain: The CFO’s role within organizations is going to continue to evolve and grow.

To find out which trends finance professionals should be looking for next year, CFO Brew met up with McKinsey partner Ankur Agrawal. He’s been researching and writing about the evolution of the CFO role for years and is a longtime contributor to McKinsey’s research on the CFO role, co-authoring its New CFO Mandate survey.

CFO Brew spoke to Agrawal about how the CFO role is growing, and what effective CFOs will be doing over the next 12 months.

This interview has been lightly edited for length and clarity.

How have you seen the CFO role change in this era of disruption and economic uncertainty?

I think the demands on the CFO and the expansion of the role hasn’t changed. That trend has continued to stay consistent. What has changed is the focus, where the CFOs are spending more and more of their time. Given the uncertainty and volatility in the macroeconomic environment, CFOs have spent most of the last year making sure that their business stays resilient. They’re taking actions to preserve and even compete in a better way and take advantage of this uncertainty.

I think that theme will stay in 2023, because the uncertainty and volatility is not going to change. And even if we recover, there are lots of opportunities and challenges that creates: how fast to invest, should you invest? And that’s going to be a recurring theme for 2023, this notion about speed, and how do you respond in a very agile way to the changing context? I think that will be the focus in 2023.

What do you see as the most important skills for CFOs, particularly soft skills, not just in 2023, but moving forward as this change you’re describing is taking place?

The first is listening. CFOs were always quite in tune with what’s happening within the organizations as it relates to their role. A lot more listening outside organizations has become quite important and relevant for their role…because they’re getting a lot of data, a lot of insights, lots of information, but their role is to get the signal from the noise. For that, listening would be quite important.

The second is influencing, which has always been important for the CFO role. Being able to influence the right decisions, sometimes contrary to what the business wants, I think it will get more heightened, given the speed and the velocity with which changes are happening…I think that’s going to be the focus in 2023: Are we getting the signals from the noise?

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Where do you think CFOs will be spending most of their time, and what will they be prioritizing in 2023?

The first would be managing uncertainty, which is classically risk management, but also where they should take risk…Second is talent. The war for talent is continuing despite the challenges we see in the environment. How do you build and motivate employees, given the hybrid work environment we live in? I think that’s an important part of the role and is getting a lot of their focus.

The third would be enabling and understanding technology within the finance function and outside. The fourth would be big moves. Because if we look at our resilience research, companies that really thrived made big moves…Some—not all—companies will indeed spend a lot more time on big moves.

What do you see as the big talent trends, not just for CFOs, but for finance in 2023?

First and foremost, the recognition that you need different kinds of talent for the finance function of the future. That is going to get even more heightened awareness among CFOs, because they are experiencing that each and every day. So what has worked in the past is unlikely to work in the future. That’s going to be quite an important theme in 2023 and beyond.

And that has implications on how they structure their team, what kind of people they hire, how they retain and incentivize the finance teams. I was with a CFO before, and his whole mission is around preparing for 2025 or 2027. The next five-year plan. And it’s all about talent for 2027.

What are effective CFOs doing over the next 12 to 18 months?

Really understanding what creates and drives value for their business and aligning the top leaders on decisions that will help them thrive and survive the next 12 to 18 months, but even beyond.

It sounds simple, but for most companies there are only two to five initiatives and areas which really contribute outsized value. Focusing attention and aligning top teams and making sure execution happens [as it should]. That’s going to be an intense focus for the CFO role.

I call it the zoom-in and zoom-out mentality…The zoom-out is listening to the macro and really understanding the external environment. The zoom-in is where the value is going to be created. I think they’re going to live in the zoom-in, zoom-out worlds for the next 12 to 18 months.—DA

News built for finance pros

The latest news and insights corporate finance professionals need to know to keep up with their constantly evolving industry.