The CFO of the future needs these skills—and they go far beyond finance

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We’re taking this week to delve deeper into what it takes to become a CFO. All week we’ll be looking at the next generation of finance leaders and what they should be doing early on to propel their careers to the highest echelons. Know someone who would benefit from this coverage? Forward them this email and let them know they can sign up for CFO Daily here.

So you want to one day be a chief financial officer? 

Yes, your job description will still entail closing the books, reigning in costs, and talking to investors. But that’s just for starters. The role has evolved radically over the past decade, and now includes: being an effective strategic partner to the CEO, creating value, and aligning talent with business priorities. 

Here’s what experts say aspiring CFOs should be thinking about in terms of skill sets, educational background, and credentialing.

First off, what type of degree makes the most sense?

Crist Kolder Associates, an executive search firm, just updated its Volatility Report to capture the end of 2022. The findings are based on data from 681 companies in the Fortune 500 and S&P 500. Sixty-one percent of CFOs have an undergraduate degree in business. Of those, 47% are accounting majors—the highest percentage among business majors (including economics, finance, and business administration). And 51% of finance chiefs have MBAs, while 35% have the certified public accountant (CPA) credential. “CFOs with MBAs have steadily been on the rise, while the number of CFOs with CPAs have been on the decline over the past five years,” Clem Johnson, president of Crist Kolder Associates, says.

A ‘seismic shift’

Finance chiefs are focused on the road ahead that includes the major trends of digital transformation, new e-business models, and a “seismic shift” in corporate responsibility and purpose, says Tom Hood, EVP of business engagement and growth for the Association of International Certified Professional Accountants.

Hood explains what the association’s Future of Finance Leadership Advisory Group (a group of 40 senior finance leaders at large corporations formed in mid-2021 who meet regularly) found to be the top skill sets for CFOs going forward:

-Leadership DNA: The CFO is increasingly the co-pilot of the business alongside the CEO steering the direction of the company. It’s important to highlight experience leading teams and managing change.

-Digital and tech-savvy: This could include experience with financial systems and software, cloud computing, analytics, and other digital technologies.

-Effective stakeholder engagement, communication, and collaboration skills: For a CFO role, it’s important to highlight experience with inter-departmental collaboration.

-Ability to drive value: This could include experience with strategic planning, business development, and performance management.

-Strong financial acumen: Experience in financial management, budgeting, forecasting, and financial analysis.

-Storytelling and experience with data-informed decision making: The ability to tell the story of the business to executives, board of directors, and the Street, if applicable, using data.

-Strategic knowledge of industry trends and regulation reporting: This is necessary to navigate complex financial and regulatory environments. For example, environmental, social, and governance (ESG) reporting requirements. 

In addition, a CFO needs to have a strong ethical foundation, Hood says. “The CFO is critical in maintaining the trust and integrity of the business, both externally and internally,” he says. This can be demonstrated by professional certifications and credentials like the CPA and the Chartered Global Management Accountant, Hood says.

The CFO of the future

Academics are sharing a similar perspective. Regarding the CFO of the future: “It’s someone who’s strong in strategy, risk management, technology, and strong in the numbers,” says Mark T. Williams, a master lecturer in the finance department at Boston University’s Questrom School of Business. “Did you notice, I mentioned numbers last? It’s a given that if you’re going to be elevated to a CFO, you’ve got to know the numbers. But that alone really doesn’t make you a good CFO.”

Before his 20-year teaching career at BU, Williams worked as a senior trading floor executive, a bank trust officer, and as a bank examiner for the Federal Reserve. He says the university’s graduate level mathematical finance programs focus a lot on “evaluating risk, measuring it, and deciding when to take it.” For example, when you look at the collapse of the crypto company FTX, it was about fraud, but there was also a weakness in risk management, Williams says.

When it comes to CFOs being tech savvy, understanding fintech is essential because it’s “permeating all industries,” he says, citing peer-to-peer lending and robo-advising. And fintech is now incorporating the tech trends of artificial intelligence and machine learning, he says.

But once a grad enters the workforce, there’s still more learning to do. “Don’t assume just because you have an MBA, that’s going to make you CFO in the next 10 years,” Williams, who earned an MBA, says. “You really have to view the work environment as an opportunity to round out your skill sets.” And networking is important, too. Take every opportunity to engage with senior management, he advises.

It’s also important for a future finance chief to have communication skills, and understand that better decision making happens when you have diverse teams, Williams says. “That’s really the strength of a good company,” he says.

Barbara M. Porco, a clinical professor and associate dean of graduate studies at Fordham University, echoes this point. “A CFO not only has to be well educated in ESG but has to have an understanding from multiple lenses,” Porco says. “And you only get that in a diverse board, and in a diverse C-suite.”

“For the new CFO’s resume, I would say you’d need communication skills that can reach a wide diverse audience and bring about change,” she says. For example, “You want to be able to understand not just what you don’t know, but what others don’t know in terms of climate risk,” she says.

At Fordham, ESG literacy is infused in the curriculum “from freshman year all the way through our MBA programs,” Porco says. They’re learning how to “consider the impact of not just your shareholders but your stakeholders,” she says. These are skills that should be on an aspiring CFO’s resume, Porco says.

As a CPA, Porco also says that earning the credential builds skills in strategy. “The discernment that comes with being a CPA is part of what I think a successful CFO needs.”

In part 2 of our series for aspiring CFOs will dive into technology. Forward this email to the aspiring CFOs in your circle—they can sign up for the newsletter here.

See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

Big deal

CFOs partner with CEOs to help drive the strategic priorities of the company. PwC’s recently released 26th Annual Global CEO Survey found that inflation and macroeconomic volatility stand out more prominently than other key threats in the next 12 months than over the next five years when the CEOs believe they’ll be an increase in the threat of cyber risks and climate change. The data is based on a survey of 4,410 chief executives. 

Courtesy of PwC

Going deeper

“How Sunk Costs Affect Firms’ Investment Decisions,” an article in Wharton’s business journal discusses research by Wharton’s Marius Guenzel. Companies systematically fail to ignore “sunk costs” in losing ventures, which leads to significant investment distortions, according to Guenzel. Sunk costs shouldn’t matter in investment decisions because those decisions should be forward-looking, he found.

Leaderboard

Sally M. Cunningham was named SVP and CFO at Hamilton Beach Brands Holding Company (NYSE: HBB), effective March 17. Cunningham will join the company on Feb. 13, initially as a senior financial advisor. Cunningham most recently served as a finance operating partner with the private equity firm One Rock Capital Partners. Before that, she served as SVP and CFO at Synalloy Corporation, which is now known as Ascent Industries Co. She also previously served as VP of finance at ICF International, a technology services provider, and held various finance roles at Genworth and Cadmus Communications. Cunningham began her career in auditing with Arthur Andersen LLC. She is a certified public accountant and earned an MBA at the University of Richmond. 

Claudia Jaramillo was promoted to EVP and CFO at Jacobs (NYSE: J), an engineering, technical, professional, and construction services provider, effective Aug. 14. Jaramillo will succeed current EVP and CFO Kevin Berryman. He will serve as special advisor to Jacobs CEO Bob Pragada. Jaramillo joined Jacobs in July 2022 as EVP of strategy and corporate development. Before joining Jacobs, she spent more than 20 years at Schlumberger where she served in multiple executive roles with increasing senior leadership responsibility in finance and general management. Most recently, she served as vice president, group treasurer and corporate officer and had engagement with the environmental, social and governance function at Schlumberger. Jaramillo set up sustainability-linked financing and represented the company on the United Nations Global Compact CFO Task Force. She earned an MBA from The Wharton School. 

Overheard

“It may sound cliché, but I want to reprioritize my health. Preparing healthier meals, exercising five days a week, including on the weekends, and getting back to a daily meditation routine, are at the top of my list.”

—AT&T CFO Pascal Desroches shared in a recent LinkedIn post the conscientious health decisions he’s making for 2023 “a year of personal re-investment” after realizing that over the past three years amid tackling global challenges, his self-care may have been put on the back burner. “I want to encourage each of you to remember that taking time to step away and replenish your own cup is necessary to make positive impacts in both your personal and professional life,” Desroches writes.