As finance executives are having a hard time finding the silver lining in the credit crisis, its no wonder that the recent problems on Wall Street have forced them to revisit their bank relationships, redo their forecasting, rethink their cash management strategy, and worry a lot more about what tomorrow will bring. But under the gloomy talk lies some good news for the future of CFOs, their careers. As the executives most in tune with what’s going on in the economy and how the crippled credit markets affect their organization, CFOs are once again in the spotlight after all the high-profile financial meltdowns.
This rise of the chief financial officer differs from the rise that followed the corporate scandals earlier this decade. Now, CFOs will be viewed as more than just sticklers for accounting rules. The recent turmoil has not only elevated their role, but increased the importance for high level expertise. The good ones are also being valued for their sound financial judgments and their unique perspective on the business as a whole. Seemingly overnight, employees and their executive colleagues are turning to finance chiefs for their foresight and guidance during a period in time when no one seems to have the answers.
The skill-set for CFOs is shifting in the heat of today’s economic turmoil and the credit crisis. For many companies, the accounting and financial reporting expert that was ever so crucial in the early years of SOX compliance has gone down on the wish list over the past year. The realignment was gradually taking hold anyway, with many companies having taken control of their SOX controls. Now, with events changing faster then ever, what they’re looking for instead in CFO candidates depends on how the crisis is affecting them.
The demands may be contributing to the high rate of CFO turnover. It’s not uncommon these days for a CFO who was the perfect person for the job last year to fall victim to this year’s circumstances. Holding onto the job often demands nimbleness. The most valuable trait a CFO can possess today is flexibility and responsiveness to the mad swing shifts in the dynamics of the market. A marked shift in companies’ CFO preferences began to take shape in late 2007 and early 2008 away from the CPA. Depending on the company, in greater demand now are MBAs, with their broader education and finance perspective, and people with treasury or financial analysis backgrounds.
In many cases companies are opting to hire CFOs with heavy experience in operations. So many companies have undergone such dramatic changes in the past year, they’re looking for people who can manage a restructuring and cut costs. Operations and services backgrounds will become even more coveted to the extent the financial-markets turmoil lengthens and deepens. In that scenario, companies will be pressed to make dramatic moves just to survive, but it’s not just knowing how to push the operational buttons that’s important. There’s also having the vision to make a link between operations and strategy. Many CFOs and controllers are so entangled with all the SOX compliance and risk requirements that in many cases they don’t have an opportunity to demonstrate their true abilities. Some of them are very successful, but only if they’ve had the experiences that let them to be at the table doing strategy formulation and helping to use financial data to make business decisions.