The C-suite has a new member: the Chief Performance Officer (CPO).
Combining finance, HR, planning, operations and business strategy, the Chief Performance Officer is a relatively new role – at least in Australia.
This position is the result of a business revolution driven by the financial crisis, globalisation and digital disruption.
The CPO title first rose to prominence in 2009, when US President Barack Obama appointed one of his staff, Anthony Politano, to the position.
Politano describes the role to have the ‘six Cs’: “Collect, consolidate, and condense performance-related data; communicate the results; collaborate with others; and control and govern the process."
Who will be the Chief Performance Officer (CPO)?
So who gets to fill this new seat?
In their Chief Performance Officer report, PwC predicts the Chief Financial Officer (CFO) is the most suitable candidate and executive with the requisite financial background and technical knowledge to step into this role. “Professionals working within the CPO function will need to combine business understanding, analytical acumen and the ability to communicate and engage on an equal footing with boards, executives and business leaders.”
The finance function is already seeing rapid evolution, as the role of CFO shifts from number-crunching to delivering strategic insight. Leading finance teams spend 17 per cent less time on data gathering, according to PwC, and 25 per cent more time on analysis.
In order for CFOs to provide sound, data-driven strategic advice, they must have the capacity to reconcile a range of financial and non-financial indicators, translating them into strategic choices for a company – a “mastery of complex analytical processes”, as PwC phrases it.
"The world is going through a once in a lifetime disruption on the scale of the Industrial and Agricultural revolutions,” says Brendan Sheehan, MD of White Squires and a council member and ambassador of ACCA (Association of Chartered Certified Accountants). “This creates enormous uncertainty and decision-makers need help to give them confidence in their decisions. The CFO is uniquely placed to provide this support, combining a broad organisational perspective with deep technical detail to help ground decisions in solid risk-based analysis."
Is the finance industry prepared for a CPO?
According to ACCA, the rise of the Chief Performance Officer reflects the way in which expectations of senior positions are moving away from traditional core skills, and into a 360-degree strategic understanding of how modern organisations operate. The issue then, is how ready finance professionals are for such a radical change.
“Finance and accounting professionals are aware of the coming changes and can see the challenges and threats it will bring, but many just don’t know what to do about it,” Sheehan says. “The ones that will thrive will be those who are more naturally skilled in the competencies outlined in ACCA’s recent report: creativity, vision, emotional intelligence and digital understanding.”
Sheehan concludes that it’s probably those outside the accountancy profession who need to be better prepared. The popular misconception of professional accountants as ‘bean counters’, rather than forward-thinking and highly-skilled business leaders, is one that needs to change.
Getting ready for the next chapter
The Chief Performance Officer promotion requires a much broader and holistic set of competencies than many current C-suite roles, combining a universal understanding towards business and analytical acumen, as well as the ability to engage with executives, boards and business leaders.
“From a practical point of view, the most important thing finance professionals can do is to get out into the operations of a business and talk to the people who live and breathe it,” Sheehan says.
“Every high-performing organisation I have ever worked with has one thing in common: the deep commitment to integrating accountants and finance teams into the business. Finance transformation is not about cutting costs anymore. It is about changing the way you think about your business.”
“This takes work. It’s not enough to just try and ‘think differently’ about business. The CPO needs to understand exactly what the business does, and how this can be supported more effectively.”
Sheehan uses the analogy of a race track to define the CPO’s role. The Chief Performance Officer is like the boss in a pit crew, the race track is the business world, the car is the business and the pit crew are the finance team – their job is to understand the technical details of how the car works, what drives it and which levers can be pulled or tweaked to make it work better.
“The boss of the pit crew is there to help the car win the race,” Sheehan says. “The Chief Performance Officer is responsible for driving the performance of the business, and they need a team with a strong technical and operational understanding of how the business works.
“They need people who actually know how to drive the car so they know how to make the small adjustments to improve performance. The only way to know what drives a car is to get into the driver’s seat once in a while, and this is the same in business.”
As PwC puts it: “There is an opportunity here for innovative and forward looking CFOs to carve out a new role for themselves and for finance – one which repositions the function to help drive business performance.”