A third of CFO positions (33%) placed this year were filled by first-time candidates, found the CFO Movement Study from Cowen Partners Executive Research. According to Cowen Partners' President Shawn Cole, this inaugural group of CFOs shares a trending similarity in their work experience.
“The deciding factor is FP&A, business analytics, and business intelligence, that is the modern CFO,'' said Cole. According to him, experience in budgeting, forecasting, and analysis can set a candidate apart from others, separating their resume from another candidate who may have more experience or academic credentials.
Changing Educational Credentials
While he didn’t dismiss the notion of higher education being a fundamental part of a CFO’s experience and skillset, Cole noted pricey MBA degrees aren’t reaping the benefits they did for candidates in the past. “I think having an MBA helps and I wouldn’t tell anyone not to get one, [but] I think we are seeing trends that [show] the MBA doesn’t have the value it used to have.”
While the study noted less than a third of first-time CFOs were CPAs, Cole believes this type of experience — despite being on a downward trajectory in first-time CFOs since 2014 — can still pay major dividends when it comes to being able to perform the duties of a CFO from a number’s perspective. “The CPA is definitely still a bonus because [they] know where the numbers came from and they understand how the numbers are created,” said Cole.
I think having an MBA helps and I wouldn’t tell anyone not to get one, [but] I think we are seeing trends that [show] the MBA doesn’t have the value it used to have. - Shawn Cole, Cohen Partners
While the possession of either a CPA or MBA in new CFOs is shrinking, according to data from the study, the research shows the number of new CFOs that held both a CPA and MBA in 2022 was 9%, a drop from 10.4% the year prior.
Despite the drop of first-time CFOs being CPAs or holding MBAs, these credentials played a key role in the hiring process. The study also found first-time CFOs of color were over-credentialed compared to their white peers. Findings show 63% of first-time CFOs of color were CPAs, along with 63% also holding MBAs. Those same credentials were only held at a rate of 40% and 30% respectively by their white counterparts.
Diversifying the C-Suite
As organizations across the board look to diversify their executive leadership, Cole spoke on how companies seek people of color who have held titles such as vice president and corporate controller or vice president of finance to diversify their C-Suites.
“It’s also a tactic for diversity hiring,” said Cole. “We would look at someone with those titles that is a diversity candidate to fill a CFO spot.”
The hiring of female CFOs by public companies has been on the rise as well. Data shows 36% of chief financial officers brought on by Fortune 500 companies this year have been female. According to the study, these numbers may suggest a steady incline of female representation among finance chiefs.
36% of CFOs brought on by Fortune 500 companies this year have been female.
Outside of diversity hiring by organizations, specialization of industries and leveraging of experience make a big difference in not only the hiring process but the career trajectory of a first-time chief financial officer as well. “There are a lot of director and vice president level finance professionals that have leveraged their time at a [large] company into CFO roles at other smaller companies,” said Cole. “They perhaps never would have been the CFO of [that large company], but they have successfully leveraged that big company experience to a mid-market company.”
Younger individuals entering finance who are looking for the CFO position for the prestige of the title or to meet goals of sky-high income seem to be shortsighted, according to Cole. “You really have to think about it as far as industries are concerned, you can be the CFO of a small company and make $100K per year,” he said. “It’s not just the title.”
Career Path to CFO
While tomorrow’s finance chiefs still need to have a good understanding of accounting, a career path to the C-suite isn’t a foregone conclusion for a potential business-minded person without that accounting-based skillset, should they strategically develop the right game plan for work experience.
As he referred to the finance route to a CFO position as “less defined,” Cole spoke about how a candidate with more FP&A skills than accounting skills is most likely going to have success in a larger organization. “The smaller organizations are going to see value in an accounting skill set,” said Cole. “So when you see people that have the finance degree that went through the finance side, they’re usually from much larger organizations.”
If someone is looking for speed to the CFO route, I would think getting a [role] in a private equity backed company, having that accounting degree and getting that [FP&A] experience, you can be a CFO within eight to ten years. - Shawn Cole, Cowen Partners
Although the study didn’t mention a range of ages of first-time CFOs, Cole made it clear that with the right combination of experience and education, a career path from entry-level to CFO can be obtained in a reasonable career timeline.
“I think that if someone is looking for speed to the CFO route, I would think getting a [role] in a private equity backed company, having that accounting degree and getting that [FP&A] experience, you can be a CFO within eight to ten years,” said Cole.