Recent Statistics

CFO Volatility – 2014

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The latest Crist | Kolder Associates volatility report was recently released. Those releases are always fun reading in my office as I compare what they say with what I’ve been seeing. This report is no exception!

Here are a few highlights, along with my thoughts.

CFOs and COOs

For quite some time we saw upheaval in the C-suite as Chief Operations Officers were being replaced by operational Chief Financial Officers. While, according to Crist Kolder, that situation seems to have stabilized, COO turnover is expected to rise while CFO turnover is expected to drop. Maybe that has a good deal to do with long-term incentive compensation plans.

That said, despite the seeming trend, I agree with Mr. Kolder …

Tom Kolder, president of the recruiter, says he wouldn’t be surprised if there were a solid or even “dramatic” uptick in CFO turnover over the next few months.

… which is based solely on the number of prospect inquiries I’ve been getting over the last few weeks. According to the CK report, we’ll see the highest CFO turnover within the healthcare and industrial sectors.

Investment banking vs. CPAs

Crist | Kolder reports that while 30% of Fortune & S&P 500 company CFOs hold CPAs, for the first time ever 10% have investment banking backgrounds.

Will we see the CPA requirement begin to lose its luster? I know lots of non-CPAs who hope so.

External candidate hires

According to Crist | Kolder, an astounding 55% of external hires were sitting CFOs.

In my opinion, that’s good news on both fronts. Sitting CFOs are still marketable (with the right value message to the right target audience) and there’s a 45% block of opportunity for the rising stars.

Women in the CFO Seat

And one last tidbit.

The number of female CFOs is at an all-time high, having doubled in the last 10 years. Competition for the coveted Finance Chief role is coming from yet another direction.

See, I told you there was exciting reading in the Crist | Kolder volatility report!

The Value of a CPA Credential

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Nothing generates responses – positive and negative, mostly the latter – like the discussion of the CPA credential. So here goes.

Perception is Everything
Perception is Everything

Perception is in the eye of the beholder. In the case of the hiring process, the beholder is the company who is hiring. The ONLY eyes that matter in the HIRING process are those belonging to the beholder (company). The company is hiring you so it has the right – good, bad, or indifferent – to decide what it perceives as necessary and required in its next Finance hire.

You, the Finance Candidate, do not have the right to determine what a company needs. You might like to have that right. You might believe you have that right. The reality is, you do not.

You can choose to get a CPA and make yourself more competitive –or– choose not to get a CPA and forever fight the perception that candidates with a CPA are more valuable. There is absolutely nothing wrong with choosing not to pursue a CPA. In making that decision though, one needs to accept the reality … it makes competing against CPA Candidates much more challenging when companies list a CPA credential as a requirement of the position.

It sounds harsh and I don’t mean to be. It is a reality. The belief system of the candidate that CPA Candidates are not better than non-CPA Candidates does not matter IF a company – who is hiring – perceives otherwise.

Why, you ask, is she bringing up this painful, hotly contested, very controversial, emotion-producing topic again? Here’s why.

A recent article in Crains Detroit says …

The competition to hire CPAs in metro Detroit has heated up, and accounting professionals are in enough demand that in some instances, salaries are rising and sign-on bonuses are possible.

Where do “most” Chief Financial Officers cut their accounting and finance teeth? This article points to the reality that the CPA is far from dead and gone, replaced by other finance and accounting credentials … and I don’t think this reality is geographically limited to metro Detroit.

Let me be very clear. I do not personally believe CPA Candidates are superior to non-CPA Candidates as a general rule. I have worked with accomplished Finance Chiefs on both sides of the fence.

What I am saying is that if you don’t have a CPA, you may not be competitive for positions requiring that credential (from the company’s viewpoint). Should you successfully network your way in and find yourself with a fighting chance, you are going to have to prove your value far beyond what the CPA Candidate must do.

Internal vs. External CFO Candidates

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There is an ongoing discussion in my Linkedin CFO Careers group over an article written by executive search consultant John Touey about the shrinking CFO candidate pool. While that potentially spells good news for those who are seeking their first CFO position, it is also creating risk for companies who hire external or promote internal – inexperienced – folks to those strategic positions.

Here’s one comment from the group …

I think Touey is right on target with this article. I have had a number of recruiters contact me about open CFO roles in the last year. Each one I have asked why they are not promoting someone from within. Almost every one has said because the internal candidates lacked the breadth of experience that the company desired. Most of the time they were talking about a controller who had been with them 10+ years.

Coincidentally, in doing research for a Proformative webinar I conducted back in 2012, I found stats that indicated the average internal promotion to the CFO seat did not happen for an average of 11 years. Apparently, that has not changed in the last few years.

Good-fitting CFO
Good-fitting CFO

Here’s the conundrum.

With internal candidates you have fit-for-culture but limited experience. With external candidates, you might get transformation, but culture fit could be an issue.

Companies want – and need – both. Proven leadership and a track record of measurable impacts (experience, not necessarily title), along with a clear fit within their established culture.

CFOs or Chief Everything Officers

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Can you even remember the days of being “just” a finance guy? If you can’t, it’s no surprise since those days seem to have gone the way of the dinosaur.

Just in the last week, I’ve read numerous articles that speak to the expanding role of the Chief Finance Officer.

CFO.com, in its article about holding the CFO and CEO role simultaneously points out …

Daily Journal CEO Gerald Salzman is also the firm’s president, CFO, treasurer, assistant secretary and principal accounting officer, as well as a member of the board. “How one man can do all these jobs by himself is beyond me,” Weil wrote. “Usually the CFO reports to the CEO. Here he’s the same person.”

CGMA Magazine just released data on the trend I’ve been noticing for the past couple of years … the elimination of the COO role as it morphs into an expanded Chief Financial Officer role.

Just 35% of Fortune 500 and S&P 500 companies employed a COO last year, according to executive search firm Crist|Kolder Associates’ Volatility Report 2013. That was down from 39% in 2012 and is the lowest percentage since at least 2000, when 48% of companies in the survey had a COO.

Trending NorthWhat can you take away from these evolving and growing statistics?

–   Those Finance Chiefs with broader skill sets than those of pure bean counters will remain the more marketable candidates of the future.

–   There has never been a better time for the operationally-focused Chief Financial Officer, with his sights set on the Chief Executive Officer seat, to make his move. After all, he is already the Chief Everything Officer, right?

Discrimination of the Unemployed

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Following up on last week’s post, I found this link to an ERE article that confirms my belief that the unemployed have a much tougher time in the job market. If last week’s blog didn’t jolt you into beginning to take action BEFORE you need to take it, think about these words from the author …

When I first heard the term “long-term unemployed,” I thought it referred to people who had not worked in years. But the definition is six months or more.

There are NO guarantees that you won’t lose your job at some point in your career, but taking steps TODAY to ensure that you are managing your finance career to minimize that possibility is part of a smart career strategy. And it is just plain smart today.

The comments from recruiters following this article are very interesting. Whether you take time to read all of them or not, here’s an important concept from them …

Stand Out from the Crowd
Stand Out from the Crowd

Despite a “change” (merger, acquisition, sale) and the conundrum of two Chief Financial Officers and one available CFO position and with both candidates being equally qualified, there is still one winner and one loser … through no fault of either executive. However, the winner retains his employment and thus the “perception” (true or not) of being the more qualified candidate. The loser now dons the mantle of “unemployed” and carries the perception (true or not) of the lesser qualified candidate. It is the “still employed” CFO who will be on the radar screen of recruiters.

If you want to be, and remain, findable by recruiters, then it is incumbent upon you to begin solidifying your credibility and viability as the most-qualified CFO candidate while you are still employed. And just to be on the safe side, launch those strategies a good 9-12 months before you anticipate a move.

At the CFO-level, age discrimination has a new rival … unemployment discrimination.

Today’s CFO: Growth vs. Numbers

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Last week I conducted a poll in SmartBrief for CFOs asking if the ability to grow a company trumps accounting wizardry when you are CFO. I was a little surprised that only a slight majority responded that it did.

My surprise came because …

— Over the past 2-3 years, we’ve seen that operational CFOs are in high demand;

— A recent article confirming the road to the CEO is paved through operations; and

— Another article suggesting the CFO should really be the CGO (Chief Growth Officer).

What are your thoughts? Growth? Numbers? Or both equally? Since the poll is closed, please feel free to leave your comments below.

Be a Purple Cow, not a Chameleon

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At the FEI Dallas chapter meeting a couple weeks ago, I talked about the difference between Purple Cows and Chameleons. What are you? And, why does it matter? For candidates generally and for Finance Chiefs specifically, it matters greatly!

According to the Harvard Business Review, the executive fail rate hovers between 30% and 40% after just 18 months. Ouch!

While there are undoubtedly many factors that feed into that percentage fail rate, one big factor is culture fit. Culture fit is always the most challenging piece of the hiring process, and the one companies routinely get wrong. It is made even more challenging for both companies and prospects when candidates choose to be chameleons, trying to be all things to all people … rather than purple cows, the right fit in the right company.

It might seem counter-intuitive. It probably even sounds counter-intuitive to make the decision to play in a small space. Particularly in light of the “public job boards” deception which lulls us into thinking if we just put those specific key words from the ad in our resume, THIS TIME the call will actually come through.

And there is a slight chance that a call will come … but … will it be for a position that is a fit with your strengths and your brand? Is it a position that will challenge and grow you? A position that will allow you to grow your record of contributions? Is it a place that is aligned with your values?

The "I-can-be-whoever-you-need-me-to-be" chameleon
The “I-can-be-whoever-you-need-me-to-be” chameleon

If you have to revise your resume to make it appeal to every different posted position to which you apply, perhaps you need to ask yourself whether you are being true to your authentic brand … your particular shade of purple cow … or whether you are morphing into a well-disguised chameleon. And the moment you morph, you compromise your brand, your strength positioning, you’re fit for opportunity, and even … your future contentment within that new position.

Poaching & Promoting

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It’s the new job search game … poach a qualified candidate and then leave the poached company to promote from within. Well, maybe not “new” as much as today it comes with different rules.

Take, for example, the recent poaching by Stryker of the Dentsply CFO. And the internal promotion of its COO to CFO (not a common promotion, is it?). So what exactly is new about this “Poach and Promote” strategy?

Poaching

It benefits, and greatly favors, the passive candidate. Greatly favors. As in, it took Stryker 6 months to fill its opening … and you can bet they waited -patiently- to lure away the “right” CFO. Waited to poach rather than hire the many unemployed, readily available CFOs that were undoubtedly knocking at its door.

The concept of poaching isn’t new, it’s always been the “feather in the cap” of top-notch recruiters. What is new is the dichotomy of the job search process … 6 candidates for every one opening. Ready and available, albeit unemployed, CFOs who are routinely passed over in favor of hiring – poaching – someone who is employed and perceived as somehow being a major hiring coup.

There is a perceived, and therefore very real, value around being employed, visible, and marketable.

New Rule: While not a new rule in the context of my blog posts and evangelizing, but perhaps new in terms of actually nudging you to take action … leverage your passive positioning long before you intend to make a move. If you’re currently unemployed, begin positioning yourself for your next move as soon as you land. Passive candidates have greater appeal, and that isn’t changing anytime soon.

Promoting

Promoting from within isn’t new either, although promoting an operations guy to a Chief Financial Officer role isn’t exactly the norm.

The challenge with effective internal promotions is ensuring that the company has a career succession plan in place, and that the plan is being executed. For most companies, that’s often not an actionable top priority … at least until it becomes a need.

A recent Russell Reynolds study on career patterns of Fortune 100 CFOs and a Volatility Study from Crist Kolder on Fortune 500 and S&P 500 Companies showed that …

— There are vast pay economies among internal and external hires, with internal hires falling into the bottom 25% of compensation packages.

— While 69% of Fortune 100 CFOs were promoted internally, on average they waited a very long time for that promotion. Statistics cited were that well over half had 11 years of tenure while 41% had 20+ years with their companies.

— Of the “heir apparents,” meaning they were the #2, only 15% had 5 or less years of experience when promoted into the top slot.

New Rule: It might be a safer move, but it will undoubtedly be a longer move and overall compensation may not be competitive with making an external opportunity.

CFOs Really Can Move On and Up!

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Business Finance Magazine recently published an article about the many choices open to CFOs, once they’ve made the decision to move on to bigger and maybe better options. The author included 8 keys he felt would provide career attractiveness to Finance Chiefs. I have my own thoughts on a few of his.

1. Develop a coherent CV. Recruiters are now often looking for particular experience, such as M&A, capital markets or rapid-growth markets. If you have deep experience in a particular domain, such as M&A, then this will give you a good chance of being matched with certain positions on certain boards.

Here in the states we call them “resumes.” Being a subject matter expert matters not unless it is accompanied by a clear track record of being able to solve problems that arise within your area of expertise.

And please, don’t fall into the “job board” posted position game. It’s rarely effective, particularly at the C-level.

2. Develop a personal profile. A CFO seeking a directorship or onward executive step should still work on building a public profile of expertise and accomplishments that extends beyond his or her core role.

I can’t stress how important it is to have a visible, credible presence today. At minimum, a professional Linkedin profile should serve as your Web 2.0 version of yesterday’s paper corporate bio.

3. Gain international experience. Companies increasingly expect board directors and senior executives to have spent time in different countries. Experience in rapid-growth markets is particularly desirable.

It is one thing to manage global teams from the comfort of a US office, and quite another to have actually lived in another country guiding those teams. A recent Russell Reynolds survey revealed that 43% of CFOs named within the last 3 years worked outside the US prior to their last appointment vs. 25% of CFOs appointed more than 3 years ago who held that international experience.

4. Start planning early. It is never too early to start planning the next step. CFOs who spend their entire careers in the finance function will be at a disadvantage to those who have taken a more structured approach to career planning.

You must know I agree with the “planning early” for your next move. At least 9-12 months before you plan to move and while you are still a high-value target as a passive candidate, is not too early. And once you land, continue executing those good career management habits so you never have to “hunt” for another job again.

Mattisms

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I always enjoy reading the FENG (Financial Executives Networking Group) newsletter Matt Bud sends out several times a week. If you are a financial executive or CFO and you aren’t a member of FENG and receiving the newsletter, I do recommend it.

Matt’s dry wit and sharp insight routinely deliver what I call “Mattisms.” Those little tidbits of truth – often prickly – that pack a big punch.

In a recent newsletter, Matt uttered this little gem …

I call them work opportunities instead of jobs, because they don’t generally last long enough these days to be dignified with that “job” label. 

Ouch! Tenure so short it doesn’t even qualify to be labeled a job? If it weren’t true, perhaps the comment would only be worthy of laughter. However, among S&P 500 and Fortune companies, the average tenure is 5.1 years. That means, change is coming.

And, Matt has provided yet another tidbit of wisdom around “change” …

“I’m not sure why human beings resist change. It is truly the only constant in our world.”

And a bit of my own … perhaps facts more than wisdom …

— You will change jobs at some point in time. Statistics bear out that statement.

— If in the course of a move, you wait until you need a job rather than preparing well in advance of deciding to make a move, change will be infinitely more difficult.

— If you are in a job search and not getting the results you want, but continue doing what you’ve been doing rather than changing your strategy, you will likely keep getting what you’ve been getting.

Bottom line: Today’s “work opportunities” necessitate embracing “change.”