Simplicient Controlling 7 – The CFO Profile to Fall in Love With

Back in September 2014, doitinvest.com published a researched white paper on the perfect profile of a Chief Financial Officer (in Central & Eastern Europe). It was quite well received, so I decided to revisit the topic today in this blog post, with more general notes.

After browsing several articles (see bottom for sources) on the CFO job profiles, I found quite interesting conclusions, even if you are not a boring finance professional trying to make his/her way to the top. Whilst reading them, I had two major surprises:
– The articles on the topic were few and far in between, and quite old (we are in 2014, they were from 2007-2010, when probably the enthusiasm and the PR needed to recruit high-caliber professionals for CFO jobs were substantially higher);
– Surprise surprise – despite their aging, the CFO blogs had some interesting insights which are still valid so far.

What were the key findings of these headhunter blogs related to the ideal CFO?:
– CFO’s need to have superior technical finance knowledge, especially related to the complexity of accounting standards, fiscal requirements, M&A’s and financial analysis (the Western Europe CFO’s who deal with much fewer and more developed countries need paradoxically less of such technical skills);
Communication skills are highly valued for the senior financial leaders, especially in the emerging markets & fast changing sectors such as industry, tech, pharma, IT;

Adaptability to change and tolerance towards the variability in various national cultures is essential for CFO’s survival (remember, the average senior finance leader deals with 10-20 countries from emerging democracies to tightly nationalistic and regulated economies);
– Coaching and developing the finance talent prevail to strategic vision and understanding of where the business will lead.

Interestingly enough, the CFO was very often hired for a developing organization or for a company which had problems surviving thie turbulent environments. 5 years later, some things changed dramatically:
– emerging markets, once seen as the ultimate semi-emerging economies, poised to overtake in one decade the BRICs, have actually stalled or even declined.
– This stagflation and de-leverage has actually put most companies on survival mode, with very few exceptions (I estimate that less than 20% companies have seen meaningful turnover growth – above 5% p.a. – in the last 5 years or so).
– The CFO job in many global markets has become a marathon one – with incumbents not focusing anymore on developing talent and fueling the growth, but rather on playing very carefully their cards with the ROI’s of the options available from their investments portfolio.
– CFO’s have become technically proficient, but paradoxically this was not required from them – instead they slowly adapted to the new agile business financial management requirements from the business leaders (albeit very slowly – several Big 4 studies estimate than less then 20% of CFO’s currently have the strategic mindset which is required nowadays but not developed in the past).
– With the soft global labor marketsand the weak salary trends, finance talent management is no longer a big issue for the CFO’s, who find it much easier to retain god people and the young generation more and more available to work more for the same entry-level salaries.
– Experience prevails knowledge – for most of the CFO jobs, a 5 years of more of experience in the same type of position makes the recruitment market a closed one. Internal promotions to the top job have also grown and the openings – slowed down substantially.

What do these factors within the CFO jobs mean for the companies?:
– Pool of talent for the top finance leader job in CEE is shrinking – with less flexibility towards change and risky commercial strategies;
– Home-country controlling CFO’s might take again control in the CEE and try to do their best to re-ignite growth;
– Paradoxically, despite lower turnover and (apparently) lower responsibilities associated with the CEE region, the CFO job has become more demanding in East compared to West Europe;
– Financial talent has start to become slightly de-motivated by the grinding of the prolonged crisis, which makes succession planning and career advancements for the current incumbents much more difficult;
– Several strategic issues need to be addressed quickly by the CFO’s, and their ability to do so is hampered by the day-to-day firefighting: keeping abreast with the new regulations (Basel 3, new IFRS’s etc), re-starting the sales growth, creatively develop existing markets and enter new niches etc).

All in all, these factors are making not only the CFO’s jobs more difficult – they are pushing further the capabilities of the finance headhunters in the East Europe region. With requirements increasing and fees going south, executive searchers are now trying to keep abreast with the new trends and make sense of this brave new world, where ROI is stalling, sales are declining and companies are risk averse. All in all, not a bullish market – which makes the 2019 outlook for the CFO jobs development mildly optimistic – and not more.

Appendix – A List of Selected Blogs & Articles on the same topic (compiled initially in 2014 for the original CEE CFO article):
https://www.pedersenandpartners.com/articles/cfo-search-ideal-job
http://www.ey.com/Publication/vwLUAssets/The-DNA-of-the-CFO-2010/$FILE/The-DNA-of-the-CFO-2010.pdf
https://content.spencerstuart.com/sswebsite/pdf/lib/CFOtoCEO.pdf

 

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