Key themes shaping financial officer leadership for the future
As we enter 2024’s second half, here are the themes we are seeing emerging among Chief Financial Officer leadership talent.
Active is default
All offense all the time
As growth, innovation and demand continues to increase, the profile of the CFO continues to elevate. Today’s CFOs are proactive business partners with enterprise wide perspective, commercial acumen, and impact well beyond the financial.As CFOs elevate, so too must other critical roles in the function, especially technical subject-matter-expert areas of Accounting and Tax.
How is your organization experiencing this elevation of the financial function?
Transformation
Automation and AI’s impacts
Digital transformation, automation, and of course the use of ML/AI are high priorities, even as fatigue is setting in as organizations wrestle with applicability, efficiency and cost.
Firms behind the automation curve are churning junior staff while mid-level managers are burning out – victims of manual processes and lagging technology debt. Firms with more tech-enabled financial capacity are at an increasing competitive advantage in attracting talent at all levels.
How are you assessing the impact of technology debt or enablement on your talent strategy?
Default market preference for strategy and commercial acumen has materially changed the status quo of CFO profiles, as obviated by our research on backgrounds of newly-appointed Fortune 100 CFOs. For example, of the 20 new CFOs appointed in the Fortune 100 in 2023, only 5% were CPA-qualified, while 30% had held investor relations roles. This trend has further obviated the need for stronger executives in accounting and tax.
How does your organization balance technical, commercial and leadership requirements
Changing dynamics
New paths and profiles
A default market preference for strategy and commercial acumen has materially changed the status quo of CFO profiles, as obviated by our research on backgrounds of newly-appointed Fortune 100 CFOs. For example, of the 20 new CFOs appointed in the Fortune 100 in 2023, only 5% were CPA-qualified, while 30% had held investor relations roles. This trend has further obviated the need for stronger executives in accounting and tax.
How does your organization balance technical, commercial and leadership requirements within the financial function?
Diversity
Improving incrementally
As of February 2024, 12.8% of CFOs in S&P 500 and Fortune 500 companies are racially or ethnically diverse, which is more than triple the number from 2013. This is an increase from 59 people of color in CFO positions in 2019. The number of women CFOs has also been increasing, with 18.5% of CFOs being women in 2023, up from 10% in 2013.
Even as the overall numbers slowly and steadily improve, concerns about ‘glass cliffs’ are inherent in these talent pools, emphasizing the importance of onboarding, sponsorship and mentorship.
What steps are you taking to add diverse thinking and experience to your finance leadership?
Chief Accounting Officer
Changing profile
As CFOs are tapped for more strategy and efficiency, the profile of the CAO is changing in parallel. Strong CAOs are expected to successfully influence at the C-suite, Board and investor level.
Increasingly the CAO is another driving force for transformation, primarily in financial controls through technology enablement, data/analytics, outsourcing, and people strategy.
Successful CAOs, themselves vigilant regarding cost pressures, are taking on more responsibilities as their CFOs streamline leadership teams. In addition to finance transformation, CAOs are gaining responsibility for procurement, ESG reporting and in some cases, treasury and tax.
How is your organization strengthening its cybersecurity position to meet regulatory requirements and safeguard against threats?
Chief Tax Officer
Tech sector stands alone
Chief Tax Officers are likewise proactive and strategic partners to the CFO, advisors to the Board’s Audit Committee and to line of business leaders. Communication skills are critical, especially the ability to take highly complex, technical information and deliver digestible and actionable advice to C-suite and Board.Heads of tax are expected to innovate, including outsourcing/co-sourcing relationships and automation. The most ‘commercial’ tax leaders are unsurprisingly those in the technology sector, where embedded automation and outsourcing have enabled them to focus more on strategic advice.
Legacy tax leaders tended towards long tenure which has dampened next generation development/succession. Looming retirements plus a dearth of senior talent has increased compensation and intensified competition amongst employers.
What initiatives is your company prioritizing to enhance DEI and ESG efforts?
Adaptability, resilience, grit and a growth mindset drive leaders to succeed even as their roles change and evolve. As leaders and organizations envision their future C-Suite, Leathwaite captures the pulse of today’s talent. Which of these themes resonates most with your current business priorities, and why?
