What makes a good Chief Fnancial Officer according to headhunters

1. Liquid skills: communication, emotional intelligence and creativity

As Stacey Keith, a consultant at London-based Marlin Hawk, says, “a great CFO must be persuasive, influential and an attentive listener”. They must show steadfast values, maturity and adaptability to change. Credibility and commitment are required, both within and outside the organisation, which requires building solid relationships of trust with investors and opinion leaders, as well as with other members of the board of directors. These are the soft skills mentioned in job offers for CFOs:

2. Strategic positioning, linked to the business

This is one of the most radical changes experienced by CFOs in recent years, as noted by the CFO Frontline Report: a new financial director with a strategic profile and business orientation, as was seen in the article, The CFO of the Future. The skills required go in that direction:

• “Financial position, closely linked to the business”.
• “Solid strategic and business vision”.
• “Experience in people management”.
• “Proactive participation in strategic decisions”.
• “Becoming a partner in other areas of the company”.
• “Support in the company digitalisation process”.
• “Across the board leadership to design the strategy that drives commercial success”.

3. Ability to lead merger and acquisition processes

The first quarter of 2022 saw historical investment from private equity and venture capital in Spain, with an increase of almost 90% compared to the same period the year before. This trend has placed the acronym M&A (mergers and acquisitions) in the foreground. The leadership of the CFO alongside the CEO in this matter is beyond doubt, as is seen in the criteria requested of a financial director.

Korn Ferry partner, Loreto González, who spoke at the ranking presentation in Madrid, mentioned the growing presence of foreign institutional shareholders and, specifically, of UK and US origin, as one of the factors that conditioned the work of the CFO in Spain and subjected him to more pressure. This is reflected in the skills most requested by selection consultants:

• “Creation of an optimal financial structure for investment operations”.
• “Being accustomed to leading top-level negotiations”.
• “Working on potential mergers and acquisitions, while monitoring and nurturing alliances and acquisition opportunities”.
• “Being used to working hand in hand with investment funds”.
• “Ability to operate in an intense acquisitions and mergers environment”.

Equality in the search for CFOs: more and more women are reaching this position

If you ask financial directors who is the highest paid CFO in the world, few will know that it is Ruth Port. After serving as financial director and vice-president of Morgan Stanley, she was recruited by Alphabet (Google) in 2015.

The fact that a woman is the highest rated CFO does not reflect the reality of most of the profession: only 15% of the 500 companies in the S&P index have a woman as a CFO. However, in companies as important as General Electric, Accenture, Microsoft, Harley Davidson, Walt Disney, Amtrak and Marriott, as well as the aforementioned Alphabet, we find a woman holding this position.

The encouraging fact is that 32% of new CFO appointments announced in 2021 were women. That percentage was only 8% in 2019, but has quadrupled in just two years. Most of the women who become CFOs do so through internal promotion: in fact, 8 out of 10. In other words, only two are recruited externally.

The main recruiter of a CFO is the CFO

Where do new CFOs come from? They usually come from within the company: this happens in over half of the cases at a general level, according to studies by the main consultancies. The CFO himself is responsible for identifying and training whoever he considers his potential substitute.

However, according to a recent report by consultancy firm Korn Ferry, there is some desperation among CFOs due to the lack of internal talent; not because of their lack of technical knowledge of their subordinates, but because of their weakness shown in other skills. 81% of the 700 CFOs surveyed from around the world confessed they would like to prepare the next CFO internally, but do not believe there is a really viable candidate.

According to Korn Ferry, this is because traditional training programmes do not take into account the new role required by the Financial Director. Specifically, they cite two skills that need to be worked on urgently: leadership skills and strategic thinking.

“The current CFO is tasked with identifying and developing that talent and, since they are the ones who best know the skills required for the new challenges, they are realising that their potential substitutes are not fully prepared,” says Bryan Proctor, partner of Korn Ferry.

In the presentation of Bankinter's annual ranking, Loreto González, also a partner at Korn Ferry, stressed that the CFO “in recent years has had to become more sophisticated with more presence”; evolving towards a more strategic and less operational profile. Are your subordinates prepared to take on that role? The training must permeate the entire financial department and not be limited to its number 1.

How the search for CFOs has changed during the pandemic

According to Deloitte, not only has the role of CFOs changed, but so has how they find work and how companies select them. In his report on the evolution of the financial role after the pandemic, he asked the opinions of experts from the five main global consultancies, from Heidrick & Struggles to Korn Ferry and Spencer Stuart.

Many things have changed since 2020: the areas where they interacted with each other - financial managers, firms and headhunters - have ceased to exist. With fewer conferences, trips, congresses and events, networking has disappeared. It has also changed the hiring landscape: the oldest CFOs delayed retirement and the youngest were busy saving their companies, without being tempted elsewhere, so the market has become paralysed. The report notes certain changes in selection systems:

• Highly digitised and faster hiring processes.
• Greater involvement in the process by the board of directors.
• Internal promotion opportunities for the CFO position have been reduced.
• Greater emphasis on communication and collaboration skills.

According to Deloitte, the response to the pandemic showed that leadership qualities traditionally considered "softer" (empathy, reflection, openness and communication) are at least as effective as traditionally "stronger" traits: dominance, risk taking and a more assertive style. One positive consequence of the new skill hierarchy is that it could help widen the pool of CFO candidates.

What traits are companies currently looking for in their next CFO?

According to the Deloitte report, these are the traits that companies demand of their new CFO, which candidates should know how to respond to intelligently:

Can you reinvent yourself in real time?

Active CFOs have shown it during the pandemic; however, they have to know how to explain how they achieved it. Probably, their management during the two most difficult years is their best covering letter: The way they led delicate negotiations with suppliers, employees, regulators and investors to ensure business continuity.

Are you a flexible thinker?

We speak of flexibility, of breaking with established routines. What we saw previously in a job offer about “thinking outside the box”. Planning changes practically every month, geopolitical developments are unpredictable, and the CFO must quickly adapt to that reality. It also highlights the ability to adapt to new online business models or to design new metrics that track demand more closely, as demonstrated during the pandemic.

Do you have digital fluency?

This is a must in the CFO position. It is not just about mastering technologies, but about leading digitisation and turning data into business intelligence. According to the report, boards of directors, and especially audit committees, view finance technology competence as a priority.

Are you eager to learn?

Every crisis presents an opportunity to learn, and the pandemic is no exception. CFOs can absorb useful information by looking at what other companies are doing, even in other countries, . Or learn by listening to shareholders and stakeholders. And “they can draw lessons from the data, as long as they don't use it to confirm their pre-existing biases”, according to the report.

Can you lead in a virtual world?

We are moving towards hybrid models, where leadership has to adapt to another way of organising work and extracting the best from internal talent remotely. This also applies to their relationships with suppliers, investors and financial entities.

What if I am a CFO looking for a headhunter?

We have talked about how recruitment companies today value the profiles of CFOs. What happens when it is CFO who is looking to change companies or who aspires to a different position, like the CEO? According to various studies, 10-20% of company CEOs have previously been CFOs. This is a natural succession, as seen in another article, From CFO to CEO: natural evolution.

A study by Sandra Beckwith on the US professionals reference website, www.cfo.com, gives 6 tips or initial steps for all CFOs to consider if they are thinking of by resorting to a headhunter to change companies:

• To know who you are and where you want to go. Headhunters need to know your motivations and be clear about what you aspire to, both professionally and financially. It is about anticipating, not only the money issues and the target you are aiming for (Ibex 35, for example), but also where you can fit in. "Part of our job is to assess, not only technical capabilities, but also cultural compatibility. Where will the CFO thrive? That's when the magic happens," explains Alyse Bodine, a partner at Heidrick & Struggles.
• Examine the headhunter. Beware of offers received by internal mail through LinkedIn and similar channels. The position of CFO of a medium-sized or large company is covered through highly professional and confidential processes. There are large firms specialised in the search for Senior Management and they do not exactly contact an automated email or mailbox of a social network.
• Pick up the call. You have to be on the radar and move certain strings, if you are looking for a change of company or a promotion. According to the experts consulted on the web, we are living in a time of mergers and acquisitions, where “two CFOs do not fit into one”, and these changes will be increasingly frequent. You have an advantage if there are headhunters who know you because, when you did not need a change, you were open to talk.
• See yourself as a brand. It is still surprising how many CFOs there are who do not work on their personal brand or who do not take proper care of their LinkedIn profile, for example. This is one of the tasks in which a headhunter can help you. Headhunters recommend that candidates should always show enthusiasm, whether or not they need a position. A lack of interest may be understandable if you are not motivated about changing jobs, but perhaps that image will stick with the recruiter in the future.
• Opt for honesty and transparency. This is the most important part, according to the experts consulted by CFO. They talk about not hiding weaknesses. That's why it is important to work with headhunters who have known you for a long time. As well, of course, as not sharing anything confidential or controversial about your current company.
• Invest time. The relationship of trust with headhunters works both ways: The candidate is in the best position for a new job, but the CFO can also help the recruiter in his search for candidates for other positions. As an active CFO, you can also become a valuable resource for him. The article talks explicitly about “multiplying karma” .

The consultant, Spencer Stuart, one of the largest CFO recruiters in the world, sees difficulties in large firms finding new financial directors in the context of the pandemic. When a CFO decides to change, it is usually for one of these three reasons:

• He is looking for a more strategic role in the new company.
• He cannot find the professional evolution towards becoming a CEO in his current company.
• He is attracted to more powerful financial management in a larger company. When they move, four out of five CFOs move to a larger company.

After all, according to Spencer Stuart, the number of CFO appointments as CEOs has doubled in a decade. The reputation of Financial directors was put in the shade by other managerial profiles following the global financial crisis, but they have since regained their positions. This is also reflected in the CFO Frontline Report.