The changing role of the Chief Financial Officer (CFO) is throwing up fresh challenges for recruiters and organisations. This is happening at a critical time, when businesses are relying more heavily on CFOs to navigate external change.
BIE Executive’s latest report, ‘The Future CFO: Drivers for Success’, confirms trends we’ve experienced in our work in the finance profession. CFOs are increasingly being recruited from elsewhere, rather than promoted within the business, suggesting that businesses are struggling to put in place effective succession plans.
A good succession plan is pivotal to the future success of a business. Building a steady pipeline of talent ready to step into new roles means potentially a more diverse portfolio of leaders, enhanced career development opportunities for those already in the business, and a “future-proofed” workforce.
Interestingly, though, while businesses agree that succession planning is key to future success, few manage to orchestrate it well. Our 2019 survey reveals that 83% of CFOs have been recruited from elsewhere rather than promoted within the business. 15% have been in their role for more than five years, while more than half have worked in their role for under a year.
In an era of unprecedented rates of change, and a climate where leaders are often required to focus on delivering near term results, traditional succession plans alone, which involve identifying and developing internal talent pools for future leadership roles, are no longer practicable.
The effects of evolving technology, changing national economies, and a shifting competitive landscape are creating immense transformation in the way businesses organise trade goods, invest capital and develop new products and processes. And, subsequently, it is also impacting the way leaders identify potential future leaders.
To obtain the top positions, finance professionals are now expected to find a balance between specializing in a financial discipline, as well as getting broad exposure across all aspects of the function. In today’s heavily siloed business environment, this is often difficult to achieve without habitually moving role and/or business.
Some organisations would rather risk a period of uncertainty and a temporarily empty C-Suite position than moving internal candidates into leadership roles before they are ready simply because there is no one better to take over.
They are often willing to look externally to ensure they attract the best talent into the organisation. Especially if they are planning to move in a dramatically different direction or orchestrate a large-scale transformation.
Our survey supports this assertion, revealing that 66% of respondents believe their successor will come from external sources.
Trends also suggest that many senior leaders today are less focused on creating a legacy within a business and are instead driven to deliver a set number of initiatives, before seeking new challenges – and larger salaries – elsewhere. Changing one’s job every few years is now the norm. Businesses that therefore continue with static structures and traditional succession plan models may come unstuck when their top performers move on.
If organisations want to be prepared for the future, they must be able to link long-term business strategy to the talent landscape and the components of job roles critical to the organisation’s success.
They need to invest in employee and leadership development and nurture their top performers through the business. HR has a key role in working with the wider business to implement effective talent programmes to retain top talent and prepare them for future roles. Our survey last year revealed under half (45%) were regularly catching up with their HR Director to discuss succession planning.
Building a workable talent pipeline will also require identifying gaps in the current talent pool and looking externally. It’s vital that the right search consultants are brought into the business to help advise on and build the people capability needed to future proof the business. They will ensure that recruitment costs are invested wisely and that placements are more likely to be successful.
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