Good afternoon, and thanks for joining us. My name is Jean-Pierre Lacroix, and I'm going to be your host today at Design Lounge. I'm very fortunate to have with me Michael Conway. Thank you for joining us, Michael. Oh, thanks for having me. Michael is the CEO and president of Financial Executives International Canada, better known as FEI Canada. And we're very fortunate to have him today. He's going to be sharing with us some insights on the changing role of the CFO within organizations. Michael, would you like to talk a little bit about FEI Canada and the value and services you provide your memberships and the benefit to organizations? It is an all-industry professional association of financial executives across the country. And our members are involved for probably three reasons. One is peer networking amongst themselves, to help each other solve challenges, both business and personal. Second is continuing professional development.
Most of our members are qualified accountants who require CPD, continuing professional development, and through our association, can obtain many of their CPD credits that they require. And third is insights, both research and
thought leadership. So we have seven thought leadership committees in our policy forum with subject matter experts representing a wide array of subjects that CFOs need to know about, from taxation to corporate governance to treasury and IT. And these individuals bring forward matters that, number one, our members need to learn more about, and second, they represent the views on behalf of the association in front of regulators, standard setters. For example, on an annual basis, we make a presentation to the Finance Committee of the House of Commons. And finally, our research arm is the Canadian Financial Executive Research Foundation, or CFERF to its friends. We produce research studies such as the one that we're very happy to release with yourselves on branding the CFO. This presentation is really about branding the CFO. What was the nucleus of the study? Why did we do this study? Well, it was a couple of things. The role of the CFO
has evolved. We did a study a couple of years ago called "The Evolving Role of the CFO," which noted that the role of senior financial executives has changed over time. It's not the traditional scorekeeper role solely. It's evolved to broaden to have a far more strategic role within the organization. So the "Branding of the CFO" study continues looking into that, reaffirming that, in fact, CFOs have become a much broader role within organizations, and considers how CFOs should brand themselves within their organization. So Michael, the study, what was the structure of it? Who were the respondents, and how did we go to market to get those insights that we're going to be talking about shortly? Well, our studies are comprised of normally two or three pieces. The first is we develop survey questions, which we send to a large selection of financial executives, and they respond with their insights.
So when you're looking at the report, all those nice bar charts and pie charts are the results of the various questions. Second, particularly for this study, we thought it was important to do interviews because the branding of the CFO talks about the perception of the CFO. So it's nice to know what the CFO thinks their role should be, but we also thought it was key to understand what the CEO thought the CFO's role should be. So we did 10 interviews with CEOs of various size Canadian corporations. And finally, we did a research forum in which we brought together a dozen and a half financial executives and CEOs to discuss the various subject matter related to this. The research methodology and the process we took, so it was pretty arduous. You spent a lot of time speaking and getting insights from various stakeholders. What was the big ahas that came out of the study? There were several. Number one, it reaffirmed that, in fact,
the CFO's role has continued to broaden to involve many different aspects than just the traditional scorekeeper role, to be a broader strategic advisor and partner to the CEO and the board. Another aha was that all lines aren't straight up. So what I mean by that is not all individuals necessarily go from Say, a controller or VP finance role into the CFO role, or may even want to.
Often, what happens is they are, say, in a VP treasurer role. I'll use the example of one of our past chairs, Louis Marcotte. He was vice president, treasurer of Intact Insurance, and he was put into a broader role within the operations outside of finance. And I guess Louis did well because it was just recently announced that he's been named CFO of Intact. So he went outside into the operations to broaden his involvement with the business leaders and get to know the organization more, and then come back as CFO, and we see that happening a lot. And I guess the second similar insight is not all CFOs necessarily aspire to become CEO. First off, the CFO position is a pretty nice position. And so, a lot do very well at being the CFO of their organization, full stop. But we also see that some CFOs go from the CFO role to other divisional leadership roles, or operational roles as the president of a division, et
cetera, after the CFO role. Michael, you talked about some of the ahas. And you also talked about you did research with CEOs to get their insights. So give me some of the highlights that came out of the conversations that happened with CEOs about the role of the CFO. Wow, there were a lot because we got a lot of great input from the presidents and CEOs that we talked with.
One of the things that came out loud and clear, that is illustrated in the study by what we call the CFO Trust Pyramid, is that there's trust layers that the CFO has to ascend to in order to achieve what we would call the ultimate role of strategic advisor. So it starts with the understanding layer.
Financial executives have to understand their organization very well, not just the finance, the entire organization. And so the foundation is made up of several steps in the understanding layer. The first of which we heard from, it was unanimous amongst all the CEOs, is that there's a heavy reliance and table stakes, that they have to have strong financial capabilities and reliability of financial reporting. That's a given. If that doesn't exist, they don't do anything else. It's very clear, particularly for public companies, who have to certify their financial statements. The CFO signs first before the CEO picks up the pen. So that really is a given. And then it goes on to the next two steps. And so if you looked at this pyramid of trust that came out of the study, the insights, what would be the second tier and what were the key factors? Because obviously, it's laddering up to this strategic advisor.
So what would be the second and third tiers? Right. The three tiers are understanding, facilitation, and leadership. And each of the layers have three steps. Mm.
In the understanding layer, it's strong financial capabilities, knowledge of the business, and reliability of financial reporting, as I mentioned. In the facilitation layer, the CFO starts to separate from the stereotypical scorekeeper. They're often seen as the conscience of the organization, promoting ethical business practices.
And so they will ensure that there's controls in place and the reputational risk of the organization is not in danger.
Next comes offering solutions to the business.
Having the divisional heads not see the CFO as a confrontational guy or gal. It's someone who actually helps them achieve their business case and structure their deal, and is really a partner to them in achieving what they need to accomplish. And finally, it's coaching the business units and adding value to the organization brings to the top of the facilitation layer. And obviously, leadership is the last tier of these steps, and ultimately, that is the platform that allows them to become strategic advisors. So what are those three steps? Well, it's being able to now go above and beyond, drive future business performance by working with the businesses to plan two to three years out To communicate strategic direction and start being one of the spokespersons, or continue being a spokesperson of the organization, aligning with the organizational vision,
leading town halls with employees, and being a spokesperson for the organization in front of investors and the like. And finally, is the level of strategic advisor, being viewed as the trusted partner to the chief executive officer and the board to move the organization forward. Well, it's interesting. You talk about these three different tiers and the different steps within each. It looks like the foundation is really looking inwardly, backwardly, looking at what has been accomplished historically and numerically. And the ultimate outcome at the top tier is to look forward, visionary, looking at the long-term horizon versus next quarter or the next earnings statement. Is that the case? Is that what the study validated? Yeah, that's a good summary. As I said, the CEOs were very careful to make sure that they didn't lose their trusted partner who was making sure the finances were all in order. That is the base. That's the
foundation on which things are built. I used to say when I was working as a CFO, the books were the morning job that had to be well in order before you went on to do other things in the afternoon. To work with the businesses and to
help them solve their problems, ultimately to plan with the CEO the future path of the organization. Well, it's interesting you talk with the CEO. The study really did identify some opportunities and
the importance of the CEO's role of influencing the level of involvement the CFO has in the organization. Can you talk a little bit about this? In our discussions with both CEOs and CFOs, they stressed the importance of the relationship with them. In an earlier CFER study, CFO succession planning, one of the call-outs on that was you could have the best succession plan in place, but if the chemistry between the CFO and the CEO wasn't right, they would go to the next person on the list. Hmm. So that was key, found to be really key that they work well together. And what surprised me when we went through the results of the study, one of the surprising insights was that the key needs to evolve the role of the CFO are more centered around soft skills than functional, practical skills. You want to talk a little bit about that? Because that was, for me, a big surprise. Yeah, it wasn't a surprise for me.
When you think of most of the people that go into the CFO role, they do have a grounding in finance. So they probably don't have to be taught how to balance the books or do a budget.
One of the key questions we asked CFOs was, "When you took the CFO seat for the first time, what things would you have liked to know more of?" And they were pretty unanimous. They would've liked to have a little bit more preparation, how to walk into their boardroom for the first time, how to make an investor presentation, how to lead a company town hall. And we summarized that by the term a little work on executive presence. As well, the other more strategic roles were things like strategic planning and governance and risk management. Those were things which
needed to be worked on, needed to be adapted to the organization that they were in, because they're quite specific in order to do them in the most value-added manner. So Michael, this is all great. Thank you. Yeah. A lot of work. And really, thank you, because we worked with Chicoutimi, Leclaire in doing this. Yeah, it was a lot of fun getting some insights in a category that we have very little knowledge. So we learned a lot. Could've fooled me. Yeah. And really, that became the premise and the foundation for where you're taking the association. Talk to me a little bit about what that means, what this study has influenced, and where the association is heading. It was great, actually, having the conversation with you folks, because it pushed us a little bit to look exactly what our members need, what financial executives need, and we invented the trust pyramid. And it led us to come up with a new
tagline, Leadership Beyond Finance. And probably the best thing that personifies that is another quote from the study, from a fellow who certainly knows a lot about leadership beyond finance, Claude Mongeau. Used to be the CFO of CN, and when he was, he was awarded the Canada's CFO of the Year award. And he went on to become their president and CEO. And Claude said, "What's critical for CFOs is to have a more strategic role and then improve their brand, is actually to be able to move upstream from the numbers and from the project." So it's leadership beyond finance, beyond just the numbers. And really that's one of our big learnings from the study that we're orienting the organization towards now. Michael, thank you very much for joining us. Thank you for listening on this presentation. We're going to leave the lines open. Look at the bottom of your screen, you'll see a call-in number. And we welcome your questions to Michael about Branding the CFO
study and where the association is heading. Thank you very much for joining us. Look forward to the next session of Design Launch. Thank you.
