CFO appointments have stalled—just a 2% rise over the past year—while CEO and CTO hires continue to climb. Dan Harris, CFO at Colt Technology Services, examines what’s driving the slowdown and what it will take to shape tomorrow’s finance leaders.
The past 12 months have seen just a 2% increase in appointments of new CFOs, according to recruitment firm Robert Walters.
While I’m proud to count myself as one of the 2%, I’m also interested in exploring the reasons behind the CFO hiring impasse, how the role has evolved and how businesses can hire, and retain, the right CFO for their organization’s future by building dynamic, diverse, inclusive cultures.
The hiring hiatus is not the same across all C-suite roles. 2023 to 2024 saw a 15% year-over-year increase in CEOs appointed to Fortune 500 companies. For CTOs, it was a 23% increase. Businesses are hiring across the C Suite. But for CFOs, they’ve reached a stalemate.
A study by Deloitte found that, of the firms it surveyed, one in four is struggling to find its next CFO. Making it harder is the fact that around 75% don’t have a succession plan in place. Churn is a problem: some CFOs are moving to different roles within the C suite.
Then there’s the narrow gap of opportunity between appointment and retirement: the average age of the CFO appointment is 46, according to research, and more CFOs are opting for retirement in their late fifties. 54% of CFOs in another study retired or moved to board roles in 2024.
The representation of diverse CFO role models is improving, but there’s still work to be done. Although ethnic and racial diversity at CFO level is growing, progress is not growing at the same rate.
Currently, the representation is estimated at 11%. In the first half of 2024, 44 of the 163 newly appointed CFOs were women, indicating a promising trend.
While the proportion of women in CFO roles is on the rise, reaching a five year high , there’s room for further improvement.
The role of the CFO has expanded significantly over the past few years beyond the traditional finance position, incorporating strategic leadership and requiring a greater public and social presence, as well as a deeper understanding of environmental and technological impact on their organisation.
Deloitte research considered the skills CFOs looked for in their replacements. 30% cited the importance of a familiarity with new technologies, including Generative AI and cloud computing. 37% said operational experience is one of the three most important factors in their successor’s skill set; 28% cited accounting skills and financial planning and analysis by less than one in four (24%).
Today’s CFOs are:
There’s no shortage of financial skills, talent and aspiration in the UK. A study from the UK’s Association of Chartered Certified Accountants (ACCA) found a high level of mobility among the accountants they surveyed, with 41% planning to move organisations in the next 12 months and 65% within the next two years.
They cite a number of different reasons for making a move, including an enhanced salary, more growth opportunities and a better culture. It’s encouraging, but it doesn’t help the industry address the immediate CFO skills gap.
As an industry, there are some steps we can take right now which will impact the CFO skills gap in a positive way:
In the US, around a third of CFOs have worked with either the big four accountancy firms or major consulting groups; in the UK, many CFOs have a traditional background of Russell Group university, accounting firm then rising through the ranks.
Both routes generate talented finance leaders. But not all accountants want to be CFOs – and not all CFOs are accountants. Two notable former CFOs from non-accountancy backgrounds are Safra Catz, Oracle’s CEO, formerly CFO, who has a background in law and business and Deepak Ahuja, former CFO of Tesla with a background in engineering.
If we promote non-traditional routes to the CFO role – through mentoring programmes, apprenticeships and internships, for example – we widen our access to talent, address skills gaps more quickly, and create a more diverse, equitable workforce.
Problem-solving, decision-making, engagement, creativity and company performance constitute just a fraction of the advantages to a diverse workforce. While the finance industry is improving, there is so much work still to be done.
For example, we spoke to neurodivergent employees across the tech sector and found that nearly half feel impacted by their conditions in the workplace, with a quarter being impacted every day.
We have to address this: we need the right tools, policies and processes in place so that everyone can be productive and fulfilled; we need to train against unconscious bias; we need inclusive hiring processes and we need to build welcoming, inclusive cultures in which everyone is welcomed, and everyone can thrive.
A Russell Reynolds study found companies were twice as likely to have an informal, insufficient succession plan than a formal, proactive plan. A good succession plan will include key stakeholders, outline role requirements, identify talent, address skills gaps, include development and coaching programmes.
It will be intentional around addressing underrepresentation of minority groups and should be reviewed regularly, with built-in flexibility.
While there is an optimism around technology shared by many across the industry – 66% of respondents in an ACCA survey feel that AI will ‘enable finance professionals to add more value in the future’, for example – there is always room for businesses to further support and equip finance professionals.
As cybersecurity risks grow in volume, sophistication and financial impact, it has never been more important for the industry to solve digital skills gaps and drive education around technology, from AI to cloud and cybersecurity.
As CFOs, we have the chance to nurture talent, to address disparity and to embrace transformational technologies. We have a responsibility and a tremendous opportunity to make far-reaching changes, which will have a profound and lasting impact on the future of our profession.
And we have the privilege of perspective, across organisations, businesses and cultures. It’s a privilege I intend to use wisely.