Over the last few posts Managing Director of Stanton Chase, Paul Herrerias, has joined us to discuss some best practices for recruiting chief financial officers (CFOs) and how you can retain this new hire through great onboarding. In this final installment, Herrerias will discuss some of the issues that are redefining the role of the CFO.
Recruiting Daily Advisor: So far, we’ve focused on some interesting issues regarding the CFO. Today, we’d like to discuss the nitty-gritty aspects of this important position and how it has changed.
Herrerias: Yes, that’s a critical topic because of evolving technologies, shifting organizational ownership, evolving responsibilities, and the multinational aspects of this position.
Recruiting Daily Advisor: Let’s drill down to these topics. Please elaborate from the organization’s perspective?
Herrerias: In our role as executive search consultants, it is important to acknowledge how the CFO position has changed on both sides of the aisle. Client organizations have changed, which have shifted their demands on and desires for their CFOs.
For example, Private Equity (PE) as an industry has acquired control of many companies, increased demand for strong CFOs, shifted cultures to focus more on earnings before interest, tax, depreciation, and amortization (EBITDA), and rewarded those CFOs who can work with transparency, speed, data analytics, teamwork, and open communications.
Companies have become more aware of their marketplace valuation, even if not owned today by PE firms. They, too, are asking their CFOs to guide them to a stronger valuation, which means profitability, financial dexterity, balance sheet optimization, and investments in updated technology platforms, stronger brand recognition, and product portfolio.
We haven’t even touched on the push for increased international sales, shifting supply-chain partnerships, foreign investments, and other international dynamics.
Recruiting Daily Advisor: Please elaborate from the CFO’s perspective?
Herrerias: We’ve identified a trend toward CFO candidates who want to work with more sophisticated organizations, technology that enables data analysis and decision support, and greater financial rewards through long-term incentives.
The leading candidates stress their desire to shift from being financially-focused silos to playing an integral part on the leadership team. They want to impact strategy as well as tactics in their roles, bring technology into decision making, and influence financial success for their organization, their teammates, and themselves. Today’s CFOs want to spend more time working outside of their Accounting and Finance departments rather than inside them.
Recruiting Daily Advisor: So, what you’re saying is that for today’s CFO, it’s about much more than crunching numbers.
Herrerias: Exactly. Today, CFOs see themselves as strategists using the financial platform as the launching pad. They pride themselves on being able to be strategic partners while executing traditional financial roles, such as reporting, forecasting, analysis, and cost-saving initiatives.
Recruiting Daily Advisor: You mentioned digital transformation. Please elaborate on how this is changing the role of the CFO.
Herrerias: In addition to the shift in sales channels with customers (think Amazon.com, brand stores, online ordering, etc.), technology also plays an enabling role in emphasizing the CFO’s role of a strategist. New technologies will further automate traditional financial processes, such as data analytics, financial reporting, and some components of risk management.
Global systems, mobility, cloud, client integration, and artificial intelligence (AI) are top headlines for CFOs. These technology tools allow CFOs to offer more insight into an organization’s business activities, enabling them to further embrace their role as a strategic corporate partner.
Recruiting Daily Advisor: You mentioned skills related to implementing strategies on a multinational basis.
Herrerias: This is critically important to a CFO’s skill set. Virtually every company, regardless of size, does work internationally or is impacted by global shifts in the business world. Consequently, CFOs must understand international dynamics when working strategically.
Politics, tariffs, technologies, work force migration, foreign currencies fluctuations, and the spread of new competing products crossing borders affect strategic plans. Once engaged economically in another country, understanding different cultures is yet another skill set.
One example of how this is happening is in the supply chain—coordinating the design, production, and transport of goods to and from other countries. A large part of financial management is identifying the most efficient and cost-effective methods of sourcing and moving product.
These skills and successes are now an active part of how a CFO is regarded and measured within an organization. The successful ones are adapting, thinking strategically, and facilitating strategic organizational success.
Recruiting Daily Advisor: Thank you, Paul, for this valuable insight!
|Paul Herrerias is the Managing Director of the San Francisco/Silicon Valley office of Stanton Chase, a globally retained executive search firm with more than 70 offices in 45 countries. He cofounded the Global CFO practice and currently leads the Professional Services-North America/Latin America Industry Practice Group. Herrerias earned a master’s degree in Human Resources and Organization Development and a bachelor’s degree from the University of San Francisco, as well as a CPA license in the state of California.|