CFOs weigh in on trends in the C-suite and the 2013 Outlook
An Exclusive Pearson Partners International Survey
Editor’s Note: Pearson Partners International, Inc., together with the University of Texas at Dallas Naveen Jindal School of Management and the Institute for Excellence in Corporate Governance, recently surveyed Chief Financial Officers on a broad selection of topics relating to their key role in the C-suite. The survey respondents represented a diverse group of North American companies ranging in size from $50 million to Fortune 1000 multinationals. Read the full Executive Summary.
Fortune 1000 snapshot: The majority of Fortune 1000 CFO respondents have been with their current company for more than 10 years. Only 11% are female. Well over half (63%) are over 50. Nearly all Fortune 1000 CFO respondents would advise others to follow the CFO career path—an indicator of a high level of job satisfaction.
Successful CFOs: The most important factors for a successful CFO are providing accurate financial results, managing risk and working with the CEO’s agenda. Respondents overwhelmingly indicated that the CFO’s most important role is company strategy (80%), followed by reliability of the reported numbers (63%) and reliability of budgeting and planning (22%). Regulatory compliance, managing financial relationships and managing cash flow were other important roles cited by respondents.
Changing environment: The majority of respondents (60%) reported seeing increased shareholder activism and lack of trust from investors and boards of directors towards C-suite officers. Smaller companies appear to experience more shareholder activism, while risk management requirements are higher with larger companies.
Greater responsibilities: Respondents agreed that CFO skill set requirements have increased in the last decade, primarily because of increased risk management (94%), increased regulation such as SOX, IFRS, etc. (91%) and globalization of the economy (92%).
Global issues: Are today’s CFOs adequately prepared in their formal and professional education to manage how the global economy will impact their businesses? Half of the survey respondents said yes. Those who disagreed or were unsure cited insufficient exposure to factors such as the global/political economy, varied cultural experiences and critical thinking skills.
Career path: The majority of Fortune 1000 respondents (75%) believe that a successful CFO of a $100 million company would not be as successful at a company of $5 billion or more. The top three reasons were insufficient exposure to multiple functions in a large organization, insufficient years/depth of experience and insufficient global exposure.
Recruitment patterns: A significant portion of the respondents (72%) were recruited from outside their company, while only 28% were promoted from within, indicating that companies are seeking CFOs with varied exposures and experiences. The survey also indicated that small companies tend to hire more from outside than large companies.
Succession planning: A majority (85%) of Fortune 1000 respondents agreed that the CFO is the logical choice for the successor to the CEO. One reason they cited is that regulations such as Sarbanes-Oxley and Dodd-Frank have brought the roles of the CEO and CFO closer together.
Positive outlook: A majority of CFOs have positive expectations for the economy over the next year. Approximately 50% of respondents indicated that their company’s hiring plans in the next six months will remain the same as last year, while 25% indicated they will hire more employees and 25% indicated they will hire fewer workers.