- 84% of Romanian CFOs declared they will not reduce the number of employees in Finance functions
- More than half respondents (52%) declared they will expand remote working in Finance department
- The concept of long-term value creation represents the critical priority of 87% of Romanian Finance leads
According to EY Romania CFO Imperative study, the current role of Romanian CFOs today is more oriented on protecting value and optimizing value (38%) and less on growing value (24%), while the future ideal state shifts the focus of the Finance leaders towards the growing value activities (40%) and less on protecting the value (22%), keeping a significant interest for optimizing the value (38%).
The survey was conducted at the end of 2021, after more than one year of experience in working in COVID-19 pandemic conditions and provides a deeper understanding of the unique experience CFOs have faced.
Guillaume Macczak, Associate Partner CFO & GBS Advisory Services, EY Romania: “Despite a very compliance-rooted culture in Finance functions, Romanian CFOs surveyed express their wish to catch up with their western countries peers on creating value for their business. This is visible from Strategy design and roll-out to technologies like Analytics and Intelligent Solutions to increased focus on forward-looking data-driven metrics shared with stakeholder communities. They also envisage participation to the climate change challenge through European CSRD (Corporate Social Responsibility Disclosure) implementation.
This shift from results-oriented traditional profiles to future value creation ones requires an evolution of CFO’s role and their teams, by assuming their new identity as long-term value creators, adapting new ways of empowering talent towards re-skilling and transformative programs, on top of massive investments in Digitalization already started. Nevertheless, I would agree with two thirds (67%) of Romanian CFOs surveyed declaring that <<Despite an extremely challenging period, there has never been a more exciting time to be a CFO>>”.
COVID-19 an accelerator for Finance transformation?
The onset of COVID-19 two years ago brought a new normal and a new way of doing business for all organizations and functions within, bringing challenges and opportunities for Romanian Finance leaders.
To manage through these challenges and position their organizations for recovery, CFOs considered various measures in the last two years, mostly centered on cost optimization and cost cutting initiatives (41%), followed by deferring or cancelling some projects (23%), while use of Governmental measures represents only 21% of respondents. Worth noting that only 2% of responding organizations declared they did not consider any special actions to mitigate impacts of COVID-19.
In 2022, the primary goal of the respondents remains costs optimization (42%), followed by restarting some of their deferred investment projects (13%), while still benefiting from usage of Governmental measures (19%). Yet, 16% of the respondents are not considering any special additional measures related to COVID-19.
On an opportunistic approach, COVID-19 crisis accelerated organizations need for a new kind of growth. 69% of the respondents said their companies have identified a range of COVID-19 related improvements for their business.
This crisis provided an unparalleled catalyst also for Romanian Finance leaders to take on the digitization of the function. Digital adoption and cost savings from working from home have taken a quantum leap towards Future of Finance, for most organization respondents (55%).
Despite engaging in cost optimization initiatives, 84% of Romanian CFOs declared they will not or probably not reduce the number of employees in Finance functions. In the meantime, 80% of them declared they won’t create new positions either. Nevertheless, there are some new post-pandemic positions in Finance function that are likely to increase in popularity: Chief Digital Officer, Crisis Manager, Data Analytics Officer and Risk Manager, as mentioned by some of the respondents.
Building the necessary infrastructure to support a digitized world and stay current in the latest technology was essential for 62% of the respondent CFOs. The benefits from these heavy investments in IT technologies will have a long-lasting impact on the new way of doing business if companies want to remain competitive in a post-COVID-19 world.
There have been significant variations in how CFOs were able to respond to the unexpected challenges on productivity of their teams in a fully work-from-home environment, some of them being relatively stress-free (38%), some being particularly hard hit (32%) or not having a clear outcome (30%).
However, as lockdowns lift, the hybrid work culture, with certain days in the office and others remote, is becoming more and more appealing for most of Finance leaders. More than half respondents (52%) declared they will expand remote working in Finance department, while the other half prefers to return to the old way of working (28%) or have not decided yet (20%).
CFO’s perspective on the Finance of the Future
The culture and deeply rooted behaviors of the Romanian Finance function are also changing. Or at least they ought to if leaders want to realize the full potential of the Finance transformation.
CFOs desire is to become true business partners for their organizations and the best of achieving this is, if they start role modelling the new behaviors within Finance functions.
Most Finance teams are using already RPA to drive efficiencies, but this intelligent solution can only automate simple, repeatable tasks, it cannot automate the complex processes and workflows needed to improve business agility and efficacy. Adding AI-powered technologies offers the next level of automation for Finance, and CFOs must identify the most appropriate use cases.
Main areas where technologies related to Intelligent automation are used in Romanian Finance functions are transaction processing (43%), consolidation and reporting (31%) and data hosting and data management (29%).
Transforming the role of Finance leadership: from CFO to CVO
The majority of Chief Financial Officers is involved in Accounting & Control, Audit & Regulatory matters, Corporate Reporting and Tax strategy (38%), and less on FP&A insights, Investor relationships, M&A, Talent strategy & HR decisions (24%).
To bridge this gap, this view requires a call on CFOs to include a broader set of stakeholders (e.g., employees, customers, communities, etc.) in their decision making, beyond just their shareholders (83%). Long-term-oriented companies must be attuned to long-term changes and a first step towards this is CFOs new role becoming perceived as delivering long-term value oriented (69%). Nevertheless, pressure from activist investors requiring short term value is still a reality for 58% of CFOs in Romania.
Moreover, the concept of long-term value creation must become tangible, this representing the critical priority of 87% of Romanian Finance leads, who plan to identify key performance metrics for long-term value. 69% of them (vs 80% globally) are willing to give the Board greater assurance of non-financial reporting, 67% are specifically considering measuring and reporting societal impact and climate change impact, and only 37% of CFOs plan for reporting on non-financial performance related to talent and culture when this represents 72% at the global level of this EY study.
Identifying and monitoring financial and non-financial indicators will help Finance leaders to explain how investments in talent, innovation, social objectives, and corporate governance create value for both, investors, and other stakeholders.
Over the next three years, Romanian Finance leads think about becoming more of a business partner to their organization, with 78% who think they will be significantly involved in strategy development and executions, followed by 69% involved in business model innovation and new revenue opportunities, these figures being overall aligned with global trends, respectively 80% and 80%.
Besides this strategic role, Romanian CFO will remain the main stakeholder to drive cost efficiency in the organization with 88% of them declaring they will need to advise business leaders on this topic, 81% by providing data-driven decision support and 73% by setting targets and measuring the outcome of enterprise-wide business transformation. On the contrary of their peers globally, only 54% (vs 74% globally) of CFOs see cost benefits of adopting new technologies.
In the Finance of the Future, CFOs purpose will be to add value to the business by serving with a strong focus on trends and scenarios, acting as one agile service, providing insights and analytics in almost real-time at significant lower cost. To realize this shift, Finance leaders will have to leverage upgrading the Finance operating model and optimizing organizational structures, adopting new technologies, enterprise Performance Management and predictive analytics, real-time information, and reporting.
About the survey
EY Romania CFO Imperative study is a benchmark on the Finance roles in Romania from the leader’s perspective: digital transformation, the Future of Finance and the priorities in terms of long-term value creation and how CFOs influence enterprise strategy and help reframe their future
The survey was conducted end of 2021, after more than one year experience working in COVID-19 pandemic conditions and provides a deeper understanding of unique experience CFOs have faced, dealing with new pressures, and overcoming new responsibilities in their critical role they have played.
Around 100 CFOs, Financial Directors and Senior Finance Executives were surveyed to understand the challenging balancing act that CFOs must negotiate every day – helping stabilize the company in the near term, creating the right conditions for growth as we emerge from the crisis, and building the resilience the company will need to get through the next several cycles.
Respondents were split across Romania’s major big cities (e.g., Bucharest, Cluj, Brasov, etc.).
Ten main sectors were represented, with majority being from Advanced Manufacturing & Industrial products, Consumer Products, Automotive, and Financial Services (e.g., Banks, AM, Insurance, PE).
The insights in this report are part of EY CFO Imperative series, which addresses critical issues and actions to help finance leaders reframe the future of their organizations. To explore future insight, visit ey.com/CFO.