Businesses today want the CFO to contribute widely to the business, often incorporating aspects of a COO or even a deputy CEO role. Boards in particular want CFOs to play an increasingly strategic role when it comes to innovation and value creation.
But what does this mean for aspiring CFOs – especially in the wake of the turbulence engendered by the global pandemic? And for senior financial professionals looking to take on their first CFO role, how do you instil confidence in a prospective employer? To provide insights, we’ve put together a guide to help you on your journey to CFO, taking in some of the most established routes, as well as emerging and alternative paths.
As a Divisional CFO, you are required to provide key support to the business and position yourself as a trusted advisor to the CEO/Managing Director whilst managing the P&L. This role allows you to demonstrate not only your operational, commercial and strategic skills, but also your emotional intelligence (EQ) and influencing skills. A Divisional CFO has the ability to direct the business to success, whilst steering it away from potential pitfalls. Ultimately, this role demonstrates your ability to drive value in a business.
A Group Financial Controller role, meanwhile, allows you to show the board and investors that you have the technical wherewithal to fill the trusted financial stewardship of the business. Furthermore, the exposure to the Audit Committee and the City will broaden your network and provide powerful references when you are applying for your first CFO role. Increasingly, we’ve seen the Group Financial Controller become the key sponsor of finance transformation programmes, which can provide you with a great opportunity to demonstrate your ability to lead others through change.
"Gaining experience in FP&A, which is so integral to the future role of finance in an organisation, is particularly valuable for aspiring CFOs."
Often called “Director of Group Finance”, this role incorporates responsibility for financial planning and analysis, alongside the traditional FP&A role, and effectively operates
as the internal CFO, allowing you to knit together many key CFO responsibilities before
taking up the official mantle.
Speaking of FP&A, it’s worth gathering experience and expertise in this area. FP&A teams help businesses understand the environment they operate in and respond to new challenges, while driving operational improvements and supporting the strategy of the wider business. And with the increased frequency and magnitude of economic shocks in the last few years, created through war, inflation, supply chain and energy (WISE) challenges, this business area is of significant importance. 49% of companies in our 2022 survey of senior finance and C-suite professionals said that FP&A was a key area of investment for them.
Increasingly, we’ve seen candidates move into a Deputy CFO role from a Director of Group FP&A position. Gaining experience in FP&A, which is so integral to the future role of finance in an organisation, is particularly valuable for aspiring CFOs.
"Being the CFO of a failing cash strapped business was an incredible learning experience, combined with taking over a brand new finance team where a transition had not been successful. In this type of role, you are required to learn everything and understand all the nuances, and you gain such transferable skills from this. Another pivotal role was a global Finance Director position, where I had to work with multiple entities and cultures whilst the business was in hyper growth.”Tamsin Ashmore, CFO at Ultima Business Solutions
“Spending seven years in general management was incredibly useful. I learnt
new skills, gained a different perspective, and it taught me to think about value
creation in a more holistic way. I’d encourage all aspiring CFOs to spend time working outside of the finance function. Get as broad an experience in your careers as possible because dealing with issues in different situations is going to inform the judgement you rely on as a senior leader. Ensure you know your business from a customer and operational perspective as much as a financial one, and always link value creation to what you are doing for customers and what you need from the operation.” Ben Fletcher, Chief Finance & Transformation Officer at The Very Group
For those looking to work for a PE- or venture capital-backed business, there are certain skills and experiences to develop in order to maximise your chances of success in progressing along this route.
It’s important to note that it’s often easier to move into PE from a second-in-command role, than to try to move into PE as an established CFO with no prior PE experience. If you see PE as your future, move into a PE-backed business as early as possible in your career. Working in private equity will give the PE house confidence you understand the culture and expectations of PE, as it is not for everyone. It will also give you exposure to the PE house and allow them to build confidence in your ability. We frequently see candidates secure their first No1 role in another of the PE houses portfolio companies.
PE houses have the most confidence in CFOs who have created strategic value in a PE-backed business and delivered a successful exit. Any exposure you can get in supporting M&A activity, refinancing the business or supporting an exit will increase your profile as a CFO.
Additionally, try to build broad experience (outside of finance) as early as possible in your career. PE-backed businesses often have leaner senior management and executive teams. Overseeing teams in functional, commercial or operational areas positions you as a business leader and therefore offers more value to a PE house.
Steve Callaghan, an experienced Chair of both listed and PE businesses, also stresses the importance of having razor-sharp commercial, strategic and operational skills. PE CFOs, just like CEOs, need to have a good grip on the fundamental dynamics of the operating business, so it’s essential to be all over the trading performance of the business today. Put
yourself in a difficult operational role and meet your customers. Talk to the people who interact with your business, listen to what they have to say and use everything you learn to make those relationships more profitable in the long-term.
According to Simon Drew, Group CFO for PE-backed Key Group, a key skill for a PE CFO is to be able to communicate effectively with the PE house. He recommends actively engaging with them, and making sure you can quickly interpret the data into something short and sharp. “They want data to be accurate and timely. Remember that you are often the spokesperson for the business and the conduit to the PE house, so learn the language of PE, understand the business drivers and how it will deliver strategic value.”
PE-backed businesses are often highly leveraged, leaving limited cash to invest in creating strategic value, so it’s important to sharpen your cash management skills. Making the most of the cash resources available to you can make a real difference in a business’s ability to execute its strategic plan.
And finally, build a strong PE network, if at all possible. Many PE houses have in-house talent teams or keep a register of CFOs that they could bring into a potential investment. You could also offer to help evaluate a prospective investment. And if you have sectoral knowledge of the company, this can be especially helpful.
Between March 2021 and March 2022, a total of 753,168 new startups were founded in the UK. Furthermore, 40% of all active enterprises operating are start-ups that launched within the last three years. This is a market that presents a huge opportunity to aspiring CFOs.
To be a successful start-up CFO, you need to understand the unique challenges and opportunities of working in a start-up environment. There are many small start-ups that would benefit from a finance leader’s expertise on an advisory or fractionary basis, so consider giving a few hours of your time each week in this capacity to gain valuable practical experience.
Lucie Harwood, an experienced PLC CFO who recently moved into a start-up CFO role, highlights the need for strong operational experience and an understanding of how businesses really work. Having a wider world view and broad experience across all elements of finance, which is often gained in the more comfortable surroundings of a PLC, is integral to dealing with the multifaceted day-to-day work of a CFO at a start-up.
Visibility and accountability can also look very different as a start-up CFO, as will your exposure to various stakeholders. The principle that underpins a successful move into the start-up world is a willingness to deal with ambiguity and constant change. “You need to be quite willing to roll with uncertainty,” Lucie adds. Your resilience will also likely be tested at a start-up. “Being able to deal with those curveballs and being able to just keep going is vital,” Lucie concludes.
If you are considering this as a move, it is important to seek out opportunities to take on challenging issues or problems in larger organisations, especially those which are critical to the company and to which you can add value. This will enable you to draw upon that experience during turbulent times in a start-up. One avenue to consider would be to set up a new division or product within your current environment. This will give you experience in building something from the ground up, whilst having the broader structure, knowledge and revenue to lean upon.
“To be a successful start-up CFO, you need to understand the unique challenges and opportunities of working in a start-up environment.”
Whilst we have seen this work in the past, it is not the most common route. Professional interims typically find their calling within certain pockets of finance, whether that be FP&A, M&A, group controllership, or PE/PLC CFO, and aim to become the go-to person in that field when an opportunity arises.
Although interim is a potential way to condense your experience and surge ahead of your peers early in your career, the experience needed to become a trusted business advisor and provide comfort and confidence to a board is usually gained in tenured, challenging and varied roles at the No. 2 level. In our experience, businesses will find it difficult to justify bringing you in for the top position if you haven’t held that post previously.
However, we have seen this work in situations where individuals take the No. 1 role at a much smaller company on an interim basis. This may be a viable option for some, but you will need to be aware of your long-term aspirations as moving back into larger companies as the No.1 might prove to be more difficult.
“Professional interims typically find their calling within certain pockets of finance, whether that be FP&A, M&A, group controllership, or PE/PLC CFO, and aim to become the go-to person in that field when an opportunity arises.”
Influencing skills: “Today, the scrutiny from investors and lenders means that CEOs and CFOs spend a lot of their time reporting and explaining performance,” says Steve Callaghan, Chairman.
Either internally to colleagues or externally to investors and advisors, a CFO is expected to influence thinking. Whether they are explaining past performance or setting the vision of the business and how it can be achieved, the CFO needs to inspire confidence in peers, employees, investors and advisors alike.
To demonstrate these skills, you’ll need to give examples of your:
Values, integrity and judgement: It’s important that your values, integrity and judgement are in harmony with the business. The CFO is at the apex of driving an organisation forward commercially, operationally and strategically, whilst managing risks and protecting the interests of both internal and external stakeholders.
Companies are also increasingly conducting business under the glare of social media, which can magnify any miscalculations on the part of the board and have far-reaching consequences. Being able to consider all factors, make sound judgements and position your decisions are essential skills for today’s CFO.
To demonstrate these qualities, you’ll need to give examples of times you’ve:
Resilience: The upheaval of recent years has dealt macro and micro challenges to the business world, and there’s little to suggest things will calm down. Understandably, businesses are placing increased emphasis on resilience in their leaders and building resilience in their teams. As a leader, a CFO needs to be able to empathise with people and the challenges they are experiencing, whilst getting the best out of them over a sustained period of time.
To demonstrate this, you’ll need to discuss how you:
Transformation projects provide a great opportunity to work with people in other areas of the business, including technology and operations, and potentially also procurement and sales depending on whether supplier management and billing is in scope.
As Damien Maltarp, Group Financial Controller at LSEG and former CFO at BT Enterprise explains, “Transformation is generally not for transformation’s sake – there is generally huge value to unlock and finance people can be right at the centre of that. That could be as simple as cutting costs, but I think it could be more about driving productivity. But equally, managing through change is really important; it’s a great way of testing and building your leadership credentials.”
Whilst the ability to deliver finance transformation has become an increasingly important development point for aspiring CFOs, it’s important to acknowledge that the skills required to successfully implement change are often different to those that make successful Finance Directors.
Individuals on the CFO track will have developed a strong understanding of financial concepts, how a finance function should run, the ability to think strategically and strong communication skills. All of these are required to understand what is required from finance transformation, however, the process of transformation itself is dependent on:
Finance leaders typically find taking responsibility for programme management the most challenging aspect of leading transformation and this is understandable as it fundamentally requires a different skillset to the ones they’ve most likely developed in their careers to date. As a finance transformation leader, timelines for delivery move away from familiar monthly, quarterly and annual reporting cycles to often multi-year programmes with a range of scheduled delivery dates across complex organisations with challenging stakeholders and seemingly endless pools of data.
Ben Fletcher, Chief Finance & Transformation Officer at The Very Group offers this advice: “Take an interest in change programmes as soon as possible. Not financially but from the practicalities involved – vision setting, planning, execution, course-correction. Start with your own teams and functions: what change are you able to drive and execute well in your own area of responsibility?”
Aspiring CFOs may also find they need to draw upon different leadership skills to deliver Finance Transformation.
As Gerald O’Shea, CFO for Finance Transformation at Experian explains, “there is a soft power that comes with being a functional finance leader that one can’t always rely on when in a transformation role.” Overcoming cultural resistance to change is crucial and understanding how to get others to buy into your vision without them feeling that you’ve told them what to do is one of the most important skills that finance leaders will need to develop.
Before starting the journey, if you have been asked to deliver transformation, you should look closely at what experience and skills you possess. This will help you to identify any development points you may have and what resource you will need to bring into their team to achieve success.
BIE identifies and attracts CFO & Financial Leadership talent across all sectors, geographies and ownership structures. With a deep knowledge of the finance function and strategic finance agenda, we offer interim, executive search and change solutions for world-leading brands. If we can help with your career or search requirement, please contact our CFO & Financial Leadership Team.