Managing data. Planning for human capital. Overseeing the IT function, including cybersecurity. Monitoring supply chains. Making sense of rapidly changing health policies and regulations.
As recently as two years ago, who would have put any of those things in a CFO’s job description?
Well, times change, and perhaps it's high time to revisit the office as a result. From demographics to business strategy, what we're seeing is a brave new (and increasingly candidate-driven) world out there for CFOs — and emerging with it is nothing short of a brand-new blueprint for leadership.
highly experienced CFOs are highly in demand
Allegations of ageism — or discrimination against older job seekers and employees — abound in the workplace today, with equally unfortunate consequences for businesses (like this recent $2.4 million settlement) and people alike. Apple, Google, LinkedIn, Facebook, Tesla and Twitter, among today's most sought-after employers, have all been cited, and one former Google exec recalled being referred to as "an old fuddy duddy" whose ideas were "too old to matter."
So what's particularly interesting for CFOs — and even for CFOs in tech — is that the storyline is playing out quite differently.
Consider Facebook and Snap, for example, both blue-chip tech startups with high-profile young founders. Despite that fact, at the time of their IPOs, both companies deferred to older, more seasoned finance pros for leadership — CFOs who were 42 and 39 at the time of IPO, respectively. (And if that sounds young-ish, note that Facebook's average employee is 28, so 42 still counts as something of an outlier.)
More broadly, this is part and parcel of the higher-level narrative for finance heads, with the average age of CFOs increasing by more than 14 percent in recent years. In other words, CFOs aren't getting any younger, and that's perfectly fine — it isn't diminishing their employment prospects. If anything, in fact, it seems that organizations more than ever are recognizing the value of seasoned CFOs, even those nearing retirement age, for their firsthand leadership experience. And for candidates themselves, given that more than 80 percent of new CFOs are external hires, it’s equally clear that taking on a new role is the fastest path to advancement.
the state of diversity amongst finance leadership
So, at least from the locus of age, it would seem that the status quo for CFOs isn't being disrupted. Put another way, this office isn't exactly bustling with young new faces. But is the same true when we look at the latest data around CFO diversity?
The answer, fortunately, is no.
As of 2020, nearly one in 10 CFO posts at S&P 500 and Fortune 500 companies were held by members of underrepresented groups, a fairly significant uptick from the percentage (8.8%) seen in 2019 and a truly substantial improvement on the corresponding figure (3.5%) from 2010.
That's good news. We are in fact seeing meaningful gains in diversity and inclusion among finance heads. And given the average tenure of CFOs appears to be shrinking, this trend could also start accelerating.
At the same time, there's still a lot of work to be done. It's an area where companies should look to leverage strategic talent partners to really move the needle.
hybrid workforces require operationally oriented CFOs
With the rise of mass remote work and the emergence of hybrid workforces, companies are looking to bring on board highly competent, operationally oriented CFOs in a major way — and it isn't difficult to see why that's the case.
For starters, the pandemic thrust CFOs into the spotlight in unprecedented ways, as companies scrambled to put cash on the balance sheet, draw down on revolving lines of credit and pursue new avenues for capital.
Meanwhile, as most CFOs expect to see additional increases in operating costs, they're forced to enact cost-containment measures of all kinds, including, in many cases, reductions in head count. The result? Extremely lean finance and accounting departments. And for CFOs, that means being tasked with far more hands-on operational work on a daily basis than ever before. Simply put, responsibilities that previously fell to, say, COOs or controllers are now squarely in their jurisdiction.
So it should come as no surprise that organizations looking to fill the CFO slot are increasingly looking for candidates who have "breadth of experience and leadership skills." In fact, that counted nearly as much as having a CPA for many organizations in one recent survey.
Sadly, finding these well-rounded finance leaders isn't getting any easier.
effective onboarding is an essential ingredient
In our recent work pairing companies with seasoned CFOs, we've noticed a phenomenon that can only be described as "the anxious period." It tends to happen early in the engagement, usually the first week or two after a candidate takes office.
What's it all about?
In part, it's another reflection of the fact that new approaches to workforce engagement are required in a world of mass remote work. But it also reflects the increased operational demands being placed on CFOs specifically. For instance, think about some of the following demands from the lens of remote work and organizational visibility:
- How do you make key operational priorities a reality in an entirely new work environment if you don't fully understand how business processes work (or for that matter, which stakeholders are responsible)?
- How can you be perceived as a "change agent" in a 100 percent remote environment? (That is, how is change itself perceived when you aren't working in a physically collocated environment?)
- How do you strike the right balance among operational priorities, core finance and accounting responsibilities and the broader business strategy when you're walking into a decentralized environment where "unknown unknowns" predominate?
For these reasons and more, it's absolutely essential to align early on around what, exactly, hybrid or remote work looks and means for every company (and that should be done before onboarding a new candidate). Otherwise, it's not unheard of for high-value finance hires to simply walk away from new opportunities. After all, the reality is that other recruiters are probably whispering in their ears already.
what's next for the finance leadership at your organization?
At Tatum, we're working proactively with our clients every day to mitigate their executive hiring pain points and position their businesses to move forward with resilience and agility. We also have proven methods of resolving some of the onboarding challenges mentioned above — for example, by auditing onboarding processes before it's too late and instituting best practices.
To learn how Tatum can onboard your next CFO, as well as any other leader, contact us today.