by Julia Salem
Nov 2 2015
BlueSteps chats with AESC executive search consultants about the latest trends for CFOs and finance executives. In this article, we focus on the current outlook for the CFO role accross the globe. Download the full white paper, "Executive Search & Career Forecast: Inside the Chief Financial Officer Role" for more.
James Langston and Julie Kanak, Diversified Search/AltoPartners, USA
We believe the outlook is strong for interpersonally savvy, versatile and strategic CFOs. Given the trend toward expanded involvement in the business and as a close, natural business partner to the CEO and advisor to the board, the CFO wields greater influence more broadly and deeply than ever. CFOs are being required to possess or develop communication, relationship and collaboration competencies. In an increasingly integrated and global economy, CFOs are required to bring high intellectual horsepower to gain a full grasp of the business in order to advise the CEO as well as other leaders within the business. As the CFO develops and rounds out their style, knowledge and experience, they will have a profound impact on shaping the business, better equipping them to ultimately move up to a COO or CEO post.
Kisoon Im, Boyden, South Korea
As a result of the increasing number of multinational organizations in the global markets, the CFO function now requires more commercial understanding. Therefore, the ultimate value of a CFO is focused on the commercial business view on top of the conventional finance and accounting expertise.
Bernhard Dedenbach, Partners to Leaders, Luxemborg, Zurich and Geneva
In Europe, we observe trends very similar to other regions, i.e. an increasing complexity of the CFO function, both technically and in terms of broader managerial skills. The CFO role has become success-critical for companies, thus the position itself has become more valuable; therefore we see an important increase in the compensation for the CFO position. Of course, compensation goes along with substantially increased liabilities and responsibilities related to the position. Due to this, CFOs are amongst the key executives of the company that are under permanent scrutiny. The outlook for the CFO function is both promising and challenging due to its critical importance for the success of companies and the high degree of responsibility and related skillsets needed.
Samuel Dergel, Stanton Chase, USA and Canada
Over the last 20 years, the position of CFO has grown in prominence to be a very important and visible role in most companies. I believe this standing will continue. Companies will continue to look at the chief financial officer position as an important one. Having the best person in the CFO position will continue to be important for business, financial and strategic reasons. For this reason, CFOs need to continue to develop and improve. Staying stagnant and resting on your laurels is not smart for a CFO that wants to continue to be successful.
Caroline Raggett, Russell Reynolds Associates, Hong Kong
The recent high turnover of CFOs in the Asia region and the increasing volume of CFO search work we undertake in Hong Kong and China suggest a robust outlook for the CFO market; and correspondingly tougher competition for companies looking to hire CFOs. While both foreign businesses and local organizations see a generally positive economic environment and continued opportunities for growth in the region, both in key markets and through a proliferation of investment opportunities beyond the major markets, they also see a more complex environment in terms of political and economic volatility. This situation is exacerbated by well-funded privately-owned enterprises and PE-backed companies who are competing very effectively both financially and culturally for best-in-class talent, often ahead of an IPO.
Therefore, companies need to hire or develop high-caliber CFOs, who not only can drive the growth agenda and generate shareholders’ return quickly, but also bring strong governance, regulatory awareness and a high degree of comfort in dealing with ambiguity.
Unfortunately, the supply of CFOs who possess these qualities will remain limited in the short to medium-term. We are currently seeing a “switching premium” in excess of 26 percent of cash compensation to attract the best finance talent in the region. Employers will need to defend their best finance talent rigorously and compete for CFOs on the issues that matter to CFOs the most. Our research shows that when choosing a new employer the three key factors besides compensation that an executive considers in Asia are: a culture based on respect, the quality of the leadership team and empowerment to act.
Mike Beaumont, Search Partners International/AltoPartners, South Africa
Outlook is bright indeed, provided that CFOs focus on the forward-looking strategic business partnering aspect more than the backward-looking “score-keeper” (financial management) aspect. This point was recently highlighted by the outgoing CEO of our largest banking group–himself a CA who came-up via the accounting route.
He also said that, outside the accounting profession, there are two main career streams available: 1) become a strategic business partner or 2) stick to specialist financial disciplines (the more traditional route).
Alan Kaplan, Kaplan Partners, USA
The CFO function has always been a critical role in organizations, but in the post-crisis era the finance function has taken on additional significance for a variety of reasons. During the financial crisis, a few different factors become important to a company’s financial success: 1) financial strength, 2) cost control and 3) finding growth opportunities. Overlaying all of that is a more proactive regulatory environment; this has been a huge challenge on financial institutions and those managing these companies. Any publicly-traded company is under greater scrutiny from the SEC and the investor community. All of these factors have elevated the visibility of the CFO role as being front and center in a much wider range of activities. If you’re a CFO at a growth company or a company that is a large cap company, your ability to interact with the investor community has become more important than ever.
As a result, the demands on CFOs are greater. There is high demand for well-credentialed finance and accounting professionals who can function more strategically, rather than tactically. The demand is greater than the supply for these kind of finance professionals.
Sonal Agrawal, Accord/AltoPartners, India
For India, the increasing effect of the global economy is playing out for a previously insulated economy and companies. Challenges and opportunities lie in the ability to play in the international arena, both in terms of operations and sources/deployment of capital.
As traditional family-controlled businesses scale up and professionalize, the role of the finance executive has evolved from traditional bean counters and protectors of cash to important strategic partners to the CEO and business owners.
With this rise in the complexity and scale of the role, compensation for this function in India has shot up over the last few years and is on par with similar sized enterprises in the west.
Doing business in India is notoriously complicated, and CFOs have to be adept at managing a tangle of legislation and regulations.
Indian companies have become more acquisitive, both locally and globally. This has led to an increased need for valuation, legal, negotiation and integration skills.
Denys Monteiro, Fesa, Brazil
The CFO position is always the number one position our clients demand our expertise on. It is a cross-segment position and due to the recent talent shortage in Brazil it is still in high demand.
Jo Baxter, Hobson Leavy, New Zealand
In New Zealand there’s an increase in outsourcing of low level finance work, allowing CFOs to be more strategic. Businesses are increasingly comfortable with outsourcing accounting offshore, freeing up the senior finance leader to be thinking more strategically about the business. Technology advances are also removing a lot of the day-to-day “crunch” work, once again freeing up the CFO to be adding value at the strategic level.
For more one-on-one interviews and commentary from leading executive search consultants, who specialize in placing CFOs and finance executives, download the full white paper, "Executive Search & Career Forecast: Inside the Chief Financial Officer Role".