Could you look beyond the finance team for your next CFO?
The CFO job is changing. Numbers skills are still important, but it may no longer be necessary to fill the spot with finance-first candidates
Look at the CFOs for most major companies and you’ll see a group of people with similar backgrounds, usually built on solid accountancy and finance experience. However, the changing nature of the job has opened the door to a wider range of talent.
The challenges facing businesses in the future of work are turning the CFO position into an increasingly strategic role. Yes, bookkeeping, financial reporting and compliance are still important, but these tasks are being delegated down the chain.
Instead, CFOs are focusing on influencing business strategy and outcomes, leading teams and navigating complex data and analysis. The era of the pure number cruncher is coming to an end, with finance leaders now coming from backgrounds as diverse as marketing, science and pharmacology.
McKinsey & Co’s latest global survey on the role of the CFO shows how its remit is evolving. Between 2016 and 2021, the percentage of CFOs responsible for investor relations grew from 44% to 64%. It was a similar story in post-merger integrations (from 32% to 43%), procurement (34% to 42%) and digital operations (9% to 31%).
In this context, it’s unsurprising that the profile of CFOs at forward-looking organisations is evolving. But what benefits can such experience bring?
Sabrina Castiglione is CFO at information security software provider Tessian. Her academic background is in chemistry. Despite five years’ experience as an actuary, she believes a traditional accountancy background isn’t the most important thing for her role.
“A modern finance function is split into two arms. One is business as usual, looking backwards at compliance and regulation,” she explains. “As a CFO, once you have a good team running that, that isn’t where your time is spent. It’s on the financial analysis and planning side, where you’re optimising for business outcomes.”
Castiglione came to Tessian in its infancy, becoming the organisation’s seventh hire. She joined as chief of staff, growing to be responsible for finance, legal, people, talent, information security and IT. As the organisation developed, she became increasingly involved in financial modelling and fundraising, with her role formalised as CFO in 2018. It was only then that she took her accountancy exams.
Relationships and roles
Castiglione believes the challenges faced by startups and scaleups mean their CFOs need to be more operationally minded than those in traditional corporations.
“Startups move so fast that even quarterly plans can be ripped up as things change so quickly. Having a CFO who is aware of the big picture is key, especially for venture capital-backed businesses where the constraint is time, not money. It’s about understanding the drivers and blockers to making the business go faster,” she says.
Like other C-suite roles, this requires CFOs to effectively build relationships across an organisation. Emotional intelligence is important, as is the ability to understand the specific operating model of your company.
“If as CFO you are spending all your time on accounting rather than with the sales team, people team and tech team, your focus is wrong. Accounting is important, but it’s about influencing business outcomes, and that requires developing deep relationships with other departments,” says Castiglione.
Catherine Birkett is at the other end of the experience scale. She spent 14 years as CFO of telecommunications business Interoute, growing revenue to £750m and managing the company’s eventual acquisition by GTT Communications in 2018 for $2.3bn. She is now CFO at fintech unicorn GoCardless, a recurring payments specialist.
Like Castiglione, she thinks the changing requirements of the CFO role mean we’ll increasingly see candidates from other areas take the top role, particularly at high-growth businesses. However, she believes it will take time for them to emerge.
“The modern CFO skill set is about getting a founder or CEO to believe you’re not going to inhibit growth, that you’re going to support the business in growing its top line, that you get the commercial side and that you’re strategic, all while still having that solid accounting basis,” says Birkett. “The problem is that there aren’t masses of candidates like that out there. In 10 years’ time there will be, but right now they’re coming through the ranks,” she adds.
Birkett was a pioneer of the business-minded finance leader, having been promoted aged just 31 to CFO at Interoute with a focus on strategy and business development. Her background was five years at KPMG in training and transaction services, followed by four years as head of financial planning and analysis at Interoute.
She admits to a lack of experience in audit and the financial controller side of finance. However, she says that “hiring good people” to deal with the accounting side was crucial to overcoming early difficulties. “It was quite unusual to come at the role from that side at the time and in retrospect I had nowhere near enough experience to do the job. I was thrown in at the deep end and my first job was to raise some money to stop us going bankrupt,” she smiles.
Big data demands
Birkett’s career with Interoute covered the dot-com bubble, 2008 financial crisis and an eventual acquisition, before she took her second executive role at GoCardless in 2019. These experiences have proved invaluable to helping the payment provider navigate through the pandemic.
“I went from someone who at 31 was the most inexperienced member of the C-suite – and continued being so for most of my time there – to coming to GoCardless and being the experienced one,” Birkett says. “I’ve lived through real step changes in our world and know how you need to adapt to chaos, which has been a massive plus to the business.”
Does she think future CFOs will move even further away from the figures, focusing more on organisational design and operational management? Not with big data on the horizon.
“As a CFO of any business, small or large, having that strategic side is super important. But the thing that is going to be increasingly important is analysing and understanding data. Having the ability to deal with data is going to become massively important, so a mathematical or numerical background will always be needed.”