For many years, people saw the chief executive officer, or CEO, as the most important position within a given company, but in recent years, this line of thinking has begun to change a bit. When you look at some of the most profitable and successful companies of today, what you will see is the ever-increasing importance of the role of the chief financial officer, or the CFO.
For a long time, CEOs were the “face” of a company and, for many businesses and industries, this is still the case. However, the CFO is playing an increasingly important role in the basic operations of businesses of all kinds, so it makes sense that companies are taking extra care when filling these incredibly vital positions.
Willis Towers Watson, an insurance and reinsurance company, recently announced Michael Burwell as their new chief financial officer, who will replace the long-serving CFO who is retiring. This was a big decision for the company and they are incredibly proud of their acquisition.
Michael Burwell brings with him over 30 years of industry experience. He has experience in many areas of the financial services industry, from CEO to CFO, and even Head of Global Transformation. His skill, education, and experience will be a huge asset for Willis Towers Watson and further illustrates just how much emphasis companies now place on what used to be an important, but secondary role.
All you need to do to further shed light on this changing emphasis is to look at people like Michael Burwell who hold these positions. Take, for example, the highly profitable and successful company, Apple. While their CEO, Tim Cook, is the “face” of the company, the CFO, Paul Oppenheimer is in a position of real power and growing importance.
But Oppenheimer has recently come under intense fire and scrutiny from shareholders and financial experts about what they see are swelling profits with no plans for their use and an unwillingness or inability to be as transparent as the shareholders would like to be. This is largely because the CEO has long been the public face of the company, meaning the role Oppenheimer is now being tasked to fill is something that he was never prepared for. The job duties and requirements of CFOs like Michael Burwell and Oppenheimer are changing before their very eyes but flexibility and adaptability will determine their success in these new realms.
When trying to figure out where this type of shift in expectation and role began, you must look back a few years to 2008 when the world experienced a huge financial crisis. In essence, CFOs like Michael Burwell have had to operate in what is a quasi-crisis mode since 2008. This has led many companies to sit on their liquid assets as a safety net against another crash or market instability in the future.
The thing that people are noting, though, is that this money is going to have to be used somewhere and it will be the CFO who makes the plans for when, how, and for what these funds are used for, further amplifying the already growing role they have been tasked with in business of all sorts.
CFOs like Michael Burwell are ultimately tasked with creating value for the company and, in turn, the shareholders who invest money in said company. That is the end goal of the position and as such, should be the prime focus of all CFOs on a daily basis. As the money has continued to stockpile, investors have begun demanding that these assets be put to use as as means to help create further value, giving CFOs a lot of strategic planning duties in the future.
A CFO can be creative in how they wish to handle the issue of cash reserves. There are many different ways that one can address these issues from buybacks, increased dividends for investors, or even partnerships and/or mergers and acquisitions of other companies. All of these are ways to make use of that liquid capital in a way that will create more value for the shareholders. These are, of course, not the only means by which CFOs like Michael Burwell can put a company’s assets to best use, but they are some of the most commonly used mechanisms.
What all this points to is a changing role and increased load of responsibilities for CFOs of companies large and small. With the market being more competitive than ever before and the economy still quite unpredictable, smart financial management is more important than ever as well. This is why so many businesses have been operating in crisis mode since the financial meltdown of 2008, but this has led to higher reserves of cash across a number of large and small companies, leading shareholders to demand these assets be used to create more value, yet another task falling to the CFO.