How do you become a CFO? And if you are already one, how do you continue learning and developing your career and progress to greater things?
These are the questions considered by CFOs and HR specialists in the talent management panels at our various CFO Innovation forums in Hong Kong, Jakarta, Kuala Lumpur, Manila, Shanghai and Singapore.
Now comes a study by Hays Recruiting Experts in Accountancy & Finance that also aims to answer these questions. In DNA of a CFO: The Makings of a Finance Leader, researchers polled 500 senior finance executives in Australia and New Zealand about their careers.
Nearly seven out of ten respondents advise aspiring CFOs to get involved with operational activities and not just the numbers
The study provides insights into what aspiring CFOs can do to reach their goal and what those already in the position can consider in their continuing professional development.
The action steps include:
- Have a finance background. The majority of respondents have a degree in business, commerce, finance or accounting and are CPAs (44%) and/or Chartered Accountants (41%).
- Develop your commercial acumen. Almost two-thirds of respondents rated this as an important CFO skill, followed by people management (57%) and strategic planning (51%).
- Work hard. The majority of the CFOs surveyed are at work at least 46 hours a week (some 9 hours a day), with 29% spending more than 56 hours in the office.
- Accumulate international experience. Nearly six out of ten of the CFOs surveyed have worked abroad; 96% of them say the experience benefited their career.
- Work towards becoming a business partner. Nearly seven out of ten advise aspiring CFOs to get involved with operational activities and not just the numbers; 27% say the most important department to partner with is operations.
Be a Man of a Certain Age
It is an unfortunate fact and something that some organizations are working to change, but the truth is that men dominate the CFO ranks. In this survey, 84% of finance leaders are male. “While women enter the finance profession in high numbers,” notes Hays, “many switch to part-time roles once they have children.”
Anecdotally, most of the top women CFOs who have attended CFO Innovation forums seem totally wedded to their jobs, being single women focused on their career. It is rare to meet a CFO of a big company who is also a married mother.
In terms of age, the Hays survey finds that a large proportion of respondents were aged 41 to 55. Only 20% were under 40 and 12% older than 56. “To reach CFO by the age 30 would appear to be challenging,” says the report.
Why? It is in part “due to the rigor of the professional study required, but more importantly due to the depth and diversity of experience that a board would expect a CFO to bring to the table.”
“At Hays, we found that most managing directors want to recruit someone who is tried and tested,” the report continues. “They want someone they can trust with cash flow and working capital, so the board can have peace of mind that their CFO has enough experience to steer their company through risk and opportunity.”
“This makes it tough to move up the ladder to CFO within a few years of qualifying – although a small proportion of high achievers do manage it.”
Do some Job-Hopping
Do you need to be a CPA or a CA? The study suggests that it is an advantage. David Sturgiss, CFO the Australian National University, even advises a stint in an accounting firm. “It’s not the only way to become CFO, but it is helpful to see a wide range of views from different people,” he says.
Drawing from its headhunting experience, however, Hays says that many employers “are prepared to be flexible and consider alternative backgrounds as long as proof of the required competencies and skills sets are clearly evident on a CV.”
Just 11% of the CFOs surveyed have stayed with one employer. Four out of ten have worked for two or three organizations, with 47% employed in four or more companies
An “appetite for continuous professional development” appears to be a factor in making it to CFO as well. The majority of respondents (62%) have gained between six and 15 years of post-qualification experience before they became finance chief; 23% had more than 16 years.
“Do a role for a few years, then consolidate what you know well and do well, and then add more knowledge to your portfolio,” counsels Richard Moore, CFO of accounting software maker MYOB. “Once you’ve got that consolidated, then you can move on to another role and do the same.”
And don’t stay too long in one job. Just 11% of the CFOs surveyed have stayed with one employer. Four out of ten have worked for two or three organizations, with 47% employed in four or more companies.
“The results would appear to show that, in order to succeed at the top, you need to build up your experience, and to have had the time to sharpen your skill set and commercial acumen,” says Hays.
Become a Business Partner
The dictionary defines “acumen” as “the ability to make good judgments and quick decisions, typically in a particular domain.” The domain, in this case, is the business, not just accounting and compliance.
Commercial acumen is not something you develop cooped up in your office examining transactions and balancing ledgers. “I am talking to our operational General Managers every day,” says Gerhard Ziems, CFO at BHP Billiton Mitsubishi Alliance, Australia’s largest coal producer.
He always asks managers: “If this were your money, would you propose what you are proposing?” If the answer is in the negative, “why is it OK to risk your own employer’s money when you wouldn’t do it with your own?”
“Finance must provide operations with critical analysis that helps them to maximize productivity and minimize costs,” says Ziems.
And not only operations. While 27% say this is the most important department for finance to partner with, 36% say every department – operations, sales, IT, HR, legal/compliance, procurement and marketing/communications – should be part of the partnership.
“The importance placed on commercial acumen can perhaps explain why so many CFOs go on to become MDs or CEOs or take a calculated risk to set up their own business ventures,” says Hays.
The CFO Gene Decoded
Or not. “Perhaps the DNA may never be fully decoded,” concludes Hays. “The role is so broad and varies greatly from organization to organization that it is impossible to define any CFO as ‘typical.’”
And the job continues to evolve. The role of CFO today is far different from what it was 30 years ago because of changes in technology and expectations of the board.
“The CFO has always been trusted and relied upon for the numbers and as a voice of reason, but is now depended on by boards in so many different ways,” Hays observes. “They are seen as corporate governor, trusted adviser, business partner, analyst, economist, risk expert and even technology guru.”
It’s a challenging job, but apparently also deeply satisfying – 76% of respondents say they would still choose to be CFO if they had their time all over again.
“Our advice to the next generation of CFOs wanting to get hired has to be this: have a plan,” says Hays. “Qualify, build a diverse skills set, continuously develop your trade, learn commercial acumen, talk to the business and take time to understand what makes it tick, build networks and finally – one of the most important things of all – use your utmost integrity when making decisions.”
“Personal reputation and hard work are vital in the world of finance and business. Only the most capable CFO can truly challenge perceptions and give peace of mind, at the same time.”
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