The Modern CFO’s Role in Shaping Spending Culture

As the world of business continues to evolve, so too does the role of the CFO. In the past, CFOs were primarily responsible for managing the company’s finances. However, today’s CFOs are increasingly involved in shaping the company’s spending culture.

Spending culture refers to the way in which a company approaches spending money. It includes the company’s expense policies, the way in which employees are reimbursed for expenses, and the overall attitude towards spending within the company. With rumors of recession and widening income parity, it is more important than ever for businesses to have a united spending culture. This will help businesses to weather the storm and emerge stronger on the other side.

Deloitte’s categorization of CFO orientations—responder, challenger, architect, and transformer—offers valuable insights into the distinct impacts these orientations can have on an organization, specifically its spending culture. While each type brings a unique approach to strategy development and execution, here are my assumptions about how these orientations may influence spending culture based on their core characteristics.

Responder: CFOs with a responder orientation are likely to impact spending culture by emphasizing accountability and data-driven decision-making. By focusing on quantitative analysis, they can shape spending culture by establishing clear guidelines and metrics to evaluate expenses, promoting a culture of financial responsibility and efficiency.

Challenger: CFOs with a challenger orientation play a pivotal role in minimizing risk and ensuring returns on capital investments. By critically examining the risks and expected returns, these CFOs promote a culture of rigorous evaluation and scrutiny when it comes to spending decisions. They may encourage a conservative approach to expenses, requiring justifications and business cases for significant expenditures, and fostering a culture of prudence and financial discipline.

Architect: CFOs with an architect orientation collaborate closely with business leaders to shape strategy choices and maximize value. In terms of spending culture, they may emphasize the importance of strategic investments and foster a culture that values long-term value creation over short-term cost-cutting.

Transformer: CFOs with a transformer orientation act as lead partners to the CEO, actively shaping and executing future strategy. They may challenge traditional spending norms and encourage experimentation to achieve growth and profitability.

It’s important to note that these assumptions are generalizations, as individual CFOs may exhibit characteristics from multiple orientations or adapt their approach based on the organization’s needs. The impact on spending culture will depend on the CFO’s ability to effectively communicate their vision, gain buy-in from key stakeholders, and create alignment between financial strategies and organizational goals.

It is crucial for CFOs to pay attention to spending culture, as a poorly managed culture can lead to unnecessary costs that impact profitability. Traditional expense policies often constrain employees, leading to confusion and frustration. To foster a positive spending culture, CFOs should design policies that align with company culture, support strategic goals, and empower employees to make responsible spending decisions. There are a number of things that CFOs can do to shape their company’s spending culture. These include:

• Setting clear expense policies. The company’s expense policies should be clear and easy to understand. They should also be fair and consistent.
• Encouraging employee participation. Employees should be involved in the development of the company’s spending culture. They should be encouraged to share their ideas and suggestions.
• Setting a good example. CFOs should set a good example by spending money wisely. They should also be transparent about their spending habits.
• Using technology to manage expenses. There are a number of technology solutions that can help companies to manage their expenses more effectively. These solutions can help to track expenses, identify areas where savings can be made, and improve compliance with company policies.

Building an expense management culture requires aligning spending practices with company culture.

• Netflix: Netflix’s expense policy is only five words long: “Act in Netflix’s best interests.” This policy reflects the company’s high-trust environment and its expectation that employees will spend company money wisely.
• Basecamp: Basecamp has no spending limits or pre-approvals for expenses. Instead, employees are trusted to manage their own expenses responsibly. This approach has led to significant cost savings for the company.
• Salesforce: Salesforce uses a customer relationship management (CRM) system to track and manage expenses. This system gives the company real-time visibility into its spending, which helps it to make more informed decisions about where to allocate its resources.

These are just a few examples of how CFOs can shape spending culture. By taking a thoughtful and strategic approach to this issue, CFOs can help their companies to save money, improve profitability, and create a more efficient and productive workplace.

In times of economic hardship, it is more important than ever for businesses to have a united spending culture. This means that everyone in the company should be aware of the company’s spending policies and should be committed to spending wisely. A united spending culture can create a more equitable workplace. When everyone is aware of the company’s spending policies and is committed to spending wisely, it can help to create a more level playing field for employees. This can help to reduce resentment and build a more cohesive workforce.

The role of the CFO in shaping spending culture is likely to become even more important in the future. As businesses become more globalized and complex, the need for clear and consistent expense policies will become increasingly important.

CFOs who are able to successfully shape their company’s spending culture will be well-positioned to help their companies achieve their strategic goals.