[IMGCAP(1)] Understanding what makes a Chief Financial Officer tick has always been important, but today a CFO’s role goes beyond number cruncher to board liaison and CEO advisor—among a number of other demands outside of their typical purview. This means that one of the major issues facing CPAs is the need to be able to speak the CFO language of today and not rely on just the numbers. Korn/Ferry International surveyed CFOs to get a baseline of their sentiments on talent development and other issues, including succession planning and regulatory changes.
Accountant to CFO
Twenty years ago, it may have been the case that taking an accounting job out of college and working your way up the corporate ladder could position you for the CFO job. Today, the path is less obvious and more demanding. Professional stints across international borders are less of a distinguishing factor and more of a mandatory résumé builder. A sound strategy should include a breadth of strategic career moves beyond accounting.
According to the Korn/Ferry Pulse Survey, the CFO role has taken on new plumes, growing in scope from a strictly financial management focused position, to a mix, with 75.3 percent of respondents saying that they are being asked to take on more operational responsibility. This further underscores the belief that accountants with ambitions for the CFO seat should actively round out their experience beyond traditional accounting and finance roles.
What are the real implications for a young accountant? A CFO needs to understand how to maximize and grow company assets, in addition to leading an organization’s financial strategy. So, if you planned on achieving career success through keeping your head bent over a ledger, consider taking on more managerial responsibility, or a project that will allow you to touch other functions of the business.
A CFO’s Worries
Want to know what your CFO worries about? The answer is probably the same thing every professional worries about: Whether they possess the professional skills to deliver on their promise to accomplish the job.
For CFOs, the last decade posed great challenge, from a precipitous shrinking of the economy, increased public scrutiny of how business is conducted from a financial perspective, to a widespread practice of cost-cutting. Now, despite inconclusive evidence and opinion around a true economic turnaround, they are being tasked with driving growth. The survey showed that revenue growth ranks as the number one thing to keep them up at night, followed by having the talent to achieve the organization’s goals and an increasing regulatory environment.
Despite the current hurdles that CFOs face today, predictive analytics and the increased use of big data will likely drive financial strategies when a new generation of accountants comes to age. According to the CFO Pulse Survey, this practice will help give CFOs more data supported hypotheses and provide guidance during times of difficult decision making.
Additionally, nearly 50 percent of survey participants said that if they were to leave their company today, an external hire would be brought on to succeed them. This doesn’t bode well for the internal bench of financial talent looking for a promotion to the CFO spot. Therefore, building your network and name within the financial community could help position you as a likely contender for the job.
To Board, Or Not To Board?
Board participation is often a career milestone. However, despite aptitude and distinguished leadership achievements, women have been less likely than men to serve on boards. Yet, a large majority of CFO respondents (97 percent) do not agree that the only way to increase female board representation is through a legislative mandate, despite the success in increasing female board participation seen in some European countries that enacted a gender-equality law. Further compounding the issue within the financial tract could be the overall lack of female representation at the top. As of June 30, 2013, the KF500 database showed that out of the CFOs at the top 500 U.S. companies only 57 were women.
Additionally, male participation on boards among CFOs also appears to be low. The survey showed that the vast majority of respondents (75 percent) do not serve on the board of another public company. A number of factors could be leading to this anomaly, but the two most forefront reasons could be that CEOs are still dominating the chairs around the board table and CEOs may not be allowing their CFO to serve on an outside board. However, this is likely to change for the new generation of CFOs, as certain financial technical experience and knowledge will be necessary to have an effective and impactful board.
Regulations, Regulations, Regulations
Accountants must adjust to an ever evolving regulatory landscape. While there is a lot of waffling around how and when to implement financial regulatory changes, there is little to indicate that looser standards will once again fall into favor. And, as The Financial Accounting Standards Board and the International Accounting Standards Board continue to deliberate on how to reconcile inconsistencies between the various reporting methods, the super majority of CFO respondents (80 percent) said that they do not believe that a global set of financial reporting standards will gain momentum this year. On the other hand, the majority of CFOs agree that the Affordable Care Act will have an impact on their company’s bottom-line.
Accountants increasingly face competition for the CFO position from capital market bankers—whose growth strategies challenge CPAs’ cost-cutting tactics. As business and economic conditions continue to be unpredictable, it will be increasingly important to understand how the CFO role is evolving to meet new demands and for CPAs to help CFOs implement strategies to deliver on bottom-line promises. Those accountants looking to become a CFO can better position themselves to muscle out the competition by making calculated career moves early on, gaining board experience over time, and staying abreast of how the job and regulatory environment continue to change.
Joshua Wimberley is a senior client partner and lead partner for the Financial Officer Center of Expertise, North America, at Korn/Ferry International.
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