|"The only way for me to attract and retain top talent is to tell them, ‘I’m going to help you become a CFO someday."|
|Ron Jadin, |
Once CFOs do move to another role — whatever choice they might make — their company needs a successor.
Two factors affect the choice of such successor: first, whether they have viable internal candidates and second, whether any one of them has the requisite experience for the role. What should that experience look like?
At a minimum, of course, is deep skills in finance. Another imperative is a breadth of experience across the business.
Again, here, reflecting the findings of our surveys in EMEIA, CFOs in the Americas insist on the importance of a promising CFO candidate being broadly familiar with multiple aspects of the business, possibly including direct commercial experience, but certainly exposure to international markets.
A global perspective
Another recent Ernst & Young study, A tale of two markets: telling the story of investment across developed and rapid-growth markets, offers a window into the challenges faced by companies that operate in mature and growing markets at the same time — and that must reconcile two fundamentally different business propositions.
TD Bank Group’s Colleen Johnston shares the opinion of many that with the tremendous expectations and responsibilities placed on the CFO, having a highly qualified team is critical. So is grooming future leaders:
“Leadership development is something we take very seriously ... It isn’t enough to be a star performer yourself. It’s really not about how good I am. It’s about the strength of my team. The key is being able to go out and recruit and then retain the best people. What do the best people look like? They have that great blend of strong technical skills, and smarts.
Work ethic comes into play; you need a lot of capacity to do this job. But relationship skills, the ability to think, to be a good business partner, to think strategically about the business.
[T]hen I think you have to give people in the organization the breadth of exposure to different opportunities. We do look at who we think are our top performers, those that have succession potential.
What I like about what we do is that we actively engage our existing executives in thinking about succession for their role… [Y]ou have to create that sense of ownership around succession and around grooming the right people and giving them the breadth of experience that they need.”
Companies face slower growth in mature markets, even though operating efficiently and managing risk can be easier. They realize faster growth in emerging markets, but encounter other risks, including less sophisticated cultures of compliance, unpredictable or more volatile markets, different regulatory requirements and other challenges.
Today’s top executives manage a portfolio of investments that offer different profiles for risk and return across the enterprise and, concomitantly, have different time frames for realizing returns. That creates challenges for CFOs, since they are not only responsible for providing financial reporting, but also must articulate a coherent and plausible narrative for company shareholders.
These executives’ understanding of the necessity of conducting business globally — and the awareness of its risks — suggests another later finding of our Americas-based survey: that without international experience, the CFO candidates of tomorrow have a gap on their résumés.
Key developmental areas for aspiring finance leaders
Our original research, validated through our interviews in the Americas, suggests that candidates for the CFO position today must present a skill set vastly more varied than the traditional career path has entailed. Aspirants should look to:
- Gain a breadth of finance experience; diversity is more important than vertical focus
- Develop commercial insight; consider stepping outside finance
- Build a balance between traditional finance and other skills
- Gain international exposure, especially in emerging markets
- Participate in or lead finance transformation initiatives and major change programs
- Seek M&A experience — both in transaction planning and post-merger integration
- Get exposure to the market and its stakeholders; communications skills are a differentiator
- Proactively build effective relationships with the board
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