Amid Downturn CFO Jobs are Front and Center
The current recession is an opportunity for smart companies to upgrade their talent. That’s the conclusion of The McKinsey Quarterly this month which states that downturns place companies’ talent strategies at risk…but that outcome is avoidable. “As deteriorating performance forces increasingly aggressive head count reductions, it’s easy to lose valuable contributors inadvertently, damage morale or the company’s external reputation among potential employees, or drop the ball on important training and staff-development programs,” the report states. It goes on to add however, there is a better way to deal with the turmoil. “By emphasizing talent in cost-cutting efforts, employers can intelligently strengthen the value proposition they offer current and potential employees and position themselves strongly for growth when economic conditions improve.”
When it comes to upgrading talent, Chief Financial Officers are among the executives in greatest demand. Executive search firm, A.E. Feldman, says CFOs are front and center. Right now the demands of the job are undoubtedly growing and opportunities are opening up for experienced finance professionals. A.E. Feldman says demand is mounting for CFOs who can manage a balance sheet and get funding for growth opportunities, CFOs who know the debt markets and Chief Financial Execs who are strong on valuing assets. Flexibility and the ability to adapt to the dynamics of the market as the crisis unfolds are also critical. In short, capital markets experience is weighing more heavily in CFO recruiting.
Upgrading Talent
In today’s challenging economic climate, companies can attract and retain talent by using cost-cutting efforts as an opportunity to redesign jobs so that they become more engaging for potential candidates, says McKinsey. The firm also notes that streamlining existing resources, breaking down silos and expanding the span of control for challenging managerial roles improves the odds of engaging key talent in redesigned jobs.
Using slowdowns to uncover and hire displaced talent is often fruitful, according to McKinsey. The report points out that studies show the quality of professionals hired during recessions rises. McKinsey also states that opportunities to find and hire displaced talent may be particularly valuable during this downturn, as massive downsizing in the financial-services sector makes available a large pool of highly educated and motivated professionals who previously might not have considered jobs outside their previous employers or industries. The report adds that a number of organizations are moving surprisingly quickly in response to these opportunities in the talent market.
Although cost cutting during a downturn is often necessary to ensure a company’s current profitability and future competitiveness, McKinsey argues that companies should use this period as an opportunity to upgrade talent and better engage existing staff. The firm contends that organizations should reinvest a percentage of the capital liberated from cost cutting into certain programs, such as selective recruiting and development to safeguard company culture and redesign jobs so that they are more attractive to talent.
New Pressures for CFOs
The credit crisis and slowing economy are creating new pressures for CFOs, spurring turnover and increasing demand for experienced finance professionals, according to the WSJ. The report states that in the first seven months of 2008, 70 CFOs departed 659 companies, compared with 49 over the same period last year. Moreover, the average CFO’s tenure is 4.8 years, down from 5.5 years a year ago. Additionally, more than 25% of companies hired a new CFO last year, sometimes more than once, according to CFO.com, citing Mercer research. The WSJ concludes the surge in CFO turnover puts a premium on finance veterans who are forward looking, know how to talk to the markets and set financial strategy.
As demand for CFOs rises, so does pay, notes the WSJ. The report states the median compensation for finance chiefs in the S&P 500 rose 5.2% to $2.9 million last year, including salary, bonuses, the value of equity grants and other compensation. The increase was bigger than the 1.3% jump in CEO compensation, according to data tracker Equilar Inc.
Experts agree that greater CFO accountability will persist along with higher turnover. According to one veteran CFO, “It’s imperative to be ‘battle tested’ with regard to capital markets experience.” Why? Because lenders (be they banks, institutional investors or bondholders) currently “want their money back” so that they can re-price it. Money was too cheap for several years, and now there is a rush to change the terms. CFOs need to be nimble and skilled enough to side-step the capital markets “call,” in any way they can (avoiding defaults, selling non-core assets, tightening working capital, etc.) Otherwise, they will inadvertently transfer value to lenders from shareholders.
Looking ahead, few experts see CFOs stepping out of the public eye any time soon.
Are you a CFO? If you want to grow your career or your company’s bottom line, contact A.E. Feldman’s President, Mitch Feldman now. Find out more about CFO jobs today!
