CFOs from leading companies in the Washington, D.C., region gathered to discuss, debate and share best practices on this topic at the University of Virginia Darden School of Business‘ Institute for Business in Society Strategic CFO Roundtable held at the offices of Sands Capital Management in Arlington, Virginia. The session, convened on 26 June 2014, revealed insights into the types of decisions frequently made by CFOs in their companies.
A new report, “Views From the C-Suite,”describes how CFOs take into account multiple stakeholder groups in their decision-making. A survey distributed prior to the report asked the following question: “As CFO, when determining allocation of resources, how important is each of the stakeholder groups in your decision on average?”
“Even in the world of corporate finance, business leaders must think about stakeholders in a strategic manner if they want their firm to be successful in the long term,” said Darden Professor Kenneth M. Eades.
For the gathering’s top-of-mind discussion question, the responses identified the top three stakeholder groups — shareholders, customers and employees — which together account for 80 percent of stakeholder groups. The study identified shareholders as the most important stakeholder group at 38 percent of the time. One participating CFO commented that most decisions are not characterized by a tradeoff between one group for another, and that there is a lot of alignment among groups.
Another CFO commented on the interconnectedness of these groups, “Ultimately, the employees want to do the right thing for the customers and that’s going to flow through to shareholder value.”
A frequent concern voiced regarded the short-term incentives of institutional investors. The concern revolved around pressures that publicly traded companies face from some investor groups on its quarterly returns.
Eades concluded the discussion with findings about how CFOs make decisions along with questions for the future. Questions for future roundtables include, “How big of a role does the ‘intuitive return on investment’ versus ‘measurable return on investment’ play in corporate resource decisions?” and “What is the connection between CFO strategic decisions and the role of their businesses in society?”
In 2009, Eades and Jane-Scott Cantus, principal member at ILEX Leadership Associates LLC. established the Strategic CFO Roundtable. In 2013, the Strategic CFO Roundtable was adopted as an important initiative of Darden’s newly launched Institute for Business in Society.
The roundtable members are CFOs at leading publicly traded and private companies representative of Washington, D.C., metropolitan regional industries, including aerospace/defense, financial services, media, professional services and technology. The Strategic CFO Roundtable meets quarterly to discuss the executives’ responsibilities in asserting influence in the C-suite and board room and on corporate strategy, as well as the impact of financial and corporate strategies on the workforce, shareholders, the national economy and society as a whole.
About the Darden School of BusinessThe University of Virginia Darden School of Business is one of the world's leading business schools, offering MBA, Ph.D. and Executive Education programs. The unique Darden experience combines the case study method, top-ranked faculty whose research advances global managerial practice and business education, and a tight-knit learning environment to develop responsible and complete leaders who are ready to make an impact.
About the Darden IBiS Strategic CFO RoundtableThe Strategic CFO Roundtable is a quarterly convening of leading chief financial officers in the Washington, D.C. metropolitan area to discuss, debate, and share best practices for enhancing the strategic role of the CFO. With over 300 years of collective strategic financial and leadership experience, the roundtable members share their views on the challenges and opportunities facing their companies and the overall economy. The Strategic CFO Roundtable is organized by the Institute for Business in Society at the University of Virginia Darden School of Business.
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