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CFOs Are Now Leading a 'Can-Do' Culture

24/06/2014 15:51 BST | Updated 23/08/2014 10:59 BST

It's clearly evident from a multitude of sources that, in a number of countries, the effects of the global recession are fading and being replaced by optimism and growth. In the UK, the Office of National Statistics reported that the economy expanded by 0.8% in the first quarter of 2014, up from growth of 0.7% for the whole of 2013. This means that the UK economy has expanded at its fastest annual pace since 2007 in the first three months of this year, following a period of sustained business investments and rising consumer spending.

As companies turn their attention to nurturing this growth, the role of the chief financial officer as a catalyst has become increasingly important. Instead of being the naysayer, the wagging finger, CFOs are adopting a "can-do" approach: being involved in implementation and action rather than just guarding the purse strings.

American Express' latest research into CFO attitudes reveals that this "can-do" attitude is permeating through companies as prospects improve and customers return. But at the same time, companies recognise that they still need to maintain their control over costs in an uncertain environment. The finance function is perfectly positioned to help companies strike the right balance.

According to our survey, CFOs already are looking past functional boundaries and getting more involved in the bigger picture. Respondents report that CFOs are frequently discussing business challenges not only with their CEOs, but also with the company's leaders in operations, marketing, IT, and administration. The findings show that as CEOs drive their companies forward, they will be looking to their finance chiefs to provide the credible, balanced advice that can help them regulate the speed of their growth, to ensure that growth is sustainable, not just a flash in the pan.

Accordingly, the CFO's role seems to be evolving, from financial expert to that of strategic business advisor, reflected in the 78% of respondents who agreed with the premise that the financial perspective was either an influential or determining factor in an organisation's strategic and operational decisions. In particular, 71% of CFOs in the UK now believe that their organisation's management has a comprehensive understanding of the financial impact of the decisions they make.

The American Express Global Business and Spending Monitor is now in its seventh year, giving us a good understanding of business leaders' opinions on economic recovery, and how this has evolved over time. Perhaps one of the standout statistics from this year's research is that the UK's CFOs are more optimistic about business expansion than their European counterparts, with 93% of survey respondents in the UK stating that they expect to see either modest or substantial expansion. The same survey last year revealed that only 50% of UK CFOs felt this way - an increase of 43% in just 12 months.

The survey also reveals that the differences observed between regions in previous years are now starting to evaporate. In particular, the UK CFO's new positive outlook puts them on par with both China (94%) and Hong Kong (94%) in anticipating growth. In fact, business confidence throughout Europe has seen a notable change: whereas previously it lagged behind other regions, now 68% of European respondents expect either moderate or substantial expansion in their local economy over the next 12 months. Interestingly, the historically high-growth economies of Asia/Australia have seen a trend towards moderation, with 70% of respondents expecting expansion in 2014, a 10-point drop from the 80% level in 2013.

But British CFOs haven't lost their heads. The optimism in the survey is clearly balanced out with pragmatism. Despite their confidence, the UK's CFOs are still following a conservative spending agenda. Just 30% of UK CFOs plan to spend more on headcount, and globally, this figure only rises to 34%, so it's a conservatism that we're seeing across the globe.

The good news is that whilst UK CFOs are following a cautious approach to their spending agenda, there is still notable appetite for making investments in order to boost longer-term growth. These investments are focusing on new markets, business transformation, and innovation. The focus on innovation is particularly exciting as it suggests more investment in R&D. British success stories, like Silicon Roundabout and the invention of graphene at the University of Manchester, prove that there is a wealth of potential and talent ready to be developed by big business. Alongside investment in innovation, companies in the UK are also seeking better information management in order to hone their competitive edge. Approximately half of the respondents from the UK ranked business intelligence and data analytics among their most critical technology needs. The business community's obsession with big data is clearly a long-term love affair.

The significant shift in economic outlook is undoubtedly encouraging. But behind this shift is something that is perhaps more exciting still - the evolution of the CFO's role, now a fundamental part of the wider decision-making process. The picture of "can-do" culture emerging from our research is one that will foster long-term growth.

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