CFOs at big companies are no longer content to manage just finances or operations. They want, and say they need, a prime seat at the table when setting strategy.
So said the roughly 60 big-company finance chiefs at The Wall Street Journal's inaugural CFO Network annual meeting last week.
Many of these CFOs already count strategic planning among their responsibilities, a shift from the past, and one that primes them to possibly take the chief executive spot some day.
Their desire to take on more responsibility became clear when meeting participants were asked to propose, and then rank, priorities for action in business and government policy. The CFOs divided into five groups to discuss managing in uncertainty, next steps on the career path for CFOs, managing cash, managing conflicts between reporting lines, and preparing for growth. Then, of the 19 recommendations for action from the working groups, four of the top five, as voted on by meeting participants, related to making CFOs more strategic and preparing them for broader roles -- like that of chief executive.
Related: Top Five Priorities for CFOs
The top priority, attendees concluded, was to "become a strategic CFO," and get deeply involved in the overall direction of the firm by setting the framework for strategic discussion and drawing upon their own finance support function to help drive the agenda.
The objective for CFOs in terms of strategic planning should be "guiding it, framing it, and developing the appropriate measures to help the organization prioritize," said Tracey Travis, CFO of Polo Ralph Lauren Corp.
To focus their attention on strategy, however, CFOs first have to make sure their own houses are in order, Travis said.
"The reality is we're CFOs," she told the conference. "You have to make sure that your day-to-day responsibilities are adhered to."
CFOs can insert themselves into strategic discussions by leveraging the financial data they possess, the working group on the topic recommended. In particular, the group said, CFOs should define and measure free cash flow and use that information to shape how the company allocates capital.
Connecting free cash flow to capital allocation "really does allow you to articulate to your shareholder base how you're utilizing that annual free cash flow and what the prospects are for returns," said Michael Angelakis, chief financial officer of Comcast Corp.
Their familiarity with the details of company performance makes CFOs valuable, but threatens to pigeonhole them, PepsiCo Inc. CFO Hugh Johnston warned.
"One of the occupational hazards we all face as CFOs is being accused of being too short term in nature," Johnston said. His working group said CFOs need to give their boards a balanced look at how their companies operate in the short term and will grow in the future.
Cash, and how to use it strategically, was frequently discussed at the conference. As DuPont Co. CFO Nick Fanandakis pointed out, cash "is a means of fulfilling your strategy, whether that be maintaining your rating from a credit-rating agency to give you access to commercial paper, funding a strategic acquisition, or dealing with seasonality in your business."
Another priority endorsed by the meeting: comprehensive tax reform that would allow companies to bring home more foreign income at a lower tax rate.
Lewis Booth, CFO of Ford Motor Co., noted that cash levels at U.S. companies have soared since 2005, the last time there was a repatriation holiday. It wasn't unanimous, Booth added, but "as a group we didn't favor another one-off [tax-holiday on] repatriation."
Republican Congressman Dave Camp, a guest speaker at the conference and chairman of the House Ways and Means Committee, said that as part of tax reform he would favor a bill that allows U.S. companies to repatriate foreign cash on an ongoing basis at a tax rate lower than the current 35%.
Responding to the priorities put forth by the CFOs, another guest speaker at the conference, Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission, noted that many of the topics, such as governance, transparency, and communicating with boards and shareholders, were areas previously reserved for chief executives.
"This is a group that's been empowered," Levitt said of CFOs. "It's been empowered because CEOs no longer can do it by themselves. It's been empowered because regulation is moving more in your direction."
Levitt said the issues of concern raised in the discussion groups were the right ones. But he challenged the CFOs to execute on their own recommendations.
"Whether you can deliver on them depends upon your personalities, your relationship with your CEOs and your board and your shareholders," Levitt said.
"To hear a group of this kind talk about shareholders and get into governance issues, that's very unusual," he said. "That would not have happened 10 years ago."
Related: Top Five Priorities for CFOs
Matthew Quinn is a reporter for the Wall Street Journal, where this story originally appeared. Write to him here.