CFOs are hot property …
...if there aren’t enough to go around, it makes sense for businesses to share them!
I’m not being flippant here, I’m deadly serious.
I’m saying this after being interviewed by Sam Birchall for Raconteur | B Corp™ regarding the trends behind "Surging CFO salaries". It’s a great read and Sam identifies that CFOs are in short supply, they have been for a while, and their price tag is increasing rapidly!
What's behind the surge in CFO salaries?
My view is that this goes all the way back to 2008 and the Global #FinancialCrisis , when the Big Four Accountants severely cut back their graduate intakes. Roll on 15 years, which is about the time it takes for young talent to work their way up the ranks to become experienced CFOs, and there you have it … CFOs are now hard to come by. And if you want to find and keep a good one, you are going to have to pay for it.
But short supply due to smaller historical graduate intakes is only half the reason.
The other half is Covid. The pandemic gave C-level talent the chance to reflect on their lives and what really mattered to them. Many realised that the demands of corporate were taking their toll. Corporates want superhumans to meet all the requirements of their roles;
Superb functional skillsets
Advanced socials skills to mobilise their workforce
Elevated mindsets to cope with ambiguity
Heaps of emotional intelligence
The ability to soak up heavy workloads
Being ‘always on’, available 24/7, even when they are meant to be ‘off’
The result?
Burnout or close to it at worst, and disillusionment at best.
Top talent has started to realise that their personal lives and wellbeing deserve better. They want more meaning, flexibility, variety, and control over their lives.
The #GreatResignation ensued post-pandemic, and many opted out of corporate into early retirement and other roles, some even unrelated to their previous career, adding to the already gaping hole in the talent pool for senior finance leaders.
What does this mean for businesses? Do they just have to fight it out, pay more, and up the ante in work-related benefits?
As Sam shared in her article, some, who can afford it, will take that route and it will work out.
What’s the alternative?
I call it Strategy and Leadership as Service – this is the trend I’m seeing.
Some CFOs who have left corporate have decided to take matters into their own hands. They have effectively switched sides. They’ve joined the access economy and become self-employed. They are wrestling back control by selling their skills back to corporates and SMEs, but on their own terms.
And this means that organisations get to share their CFOs.
Now, I know it’s not for everyone … but it is an extremely good solution for many, both SMEs and mid-to large corporates.
How does sharing CFOs work for SMEs?
For SMEs, who don’t need, don’t want, and can’t afford a full-time CFO this is a perfect solution. Businesses gain access to a fractional CFO who builds up a portfolio of clients, working with each as much as they need i.e., one day a week for one business, two days a month for another, and so on, all on a long-term basis, delivering the vital skills they need to scale.
It’s smart use of a scarce resource.
How does sharing CFOs work for mid-to-large corporates?
For mid-to-large corporates, it’s slightly different.
There are a couple of scenarios here where the CFO access economy comes into its own when there is a shortage of full-time CFOs and getting hold of one is pricey. The most flexible and wide-ranging solution will be from a firm of CFO providers who have the depth and range of experience in their CFO teams to get all the answers these larger businesses need, and probably at a lower overall cost compared to full-time equivalents, if they will consider sharing.
SCENARIO A: HYBRID APPROACH
First, we have the situation where a corporate requires the CFO skillset at divisional or functional level across the organisation to support the Group CFO. I argue that not all these roles are permanent and full-time – that’s just historically the only option available, so they are often padded out with other responsibilities to make it full-time.
In a shortage, creativity is called upon to think differently, and by using a team-based approach from a firm of CFO providers, and carefully designing the finance function, a Group CFO can gain access to the range of depth and breadth of CFO experience they need on a flexible and joined up basis to fit the dynamic nature of the business issue.
Alternatively, larger organisations can use this approach to develop and grow their employed CFOs as the company expands i.e., they can use the access economy to bring in part-time CFOs with a proven Group CFO track record to mentor and transfer skills to up-and-coming CFOs, those new to a larger business, or first-time into the Group seat.
The best thing here is that these fractional CFOs will make the employed CFO look good and aren’t a threat.
They don’t want that role; they’ve been there and done that. They do know what it feels like to sit in that seat though, and can advise, empathise, and help deliver. This of course, saves the corporate having to go out to market to buy an upgrade, something which is tricky and expensive in a tight labour market.
SCENARIO B: THE FULL SHARING APPROACH
Second, and this might sound a bit futuristic, but bear with me. The whole CFO function could be filled with a team-based approach from a firm of CFO providers. In this case there would most definitely be a Lead CFO holding the function and relationships but on a part-time basis, and they would be supplemented with fluid capabilities from a team covering all the geographical, functional, and sector skill and capacity gaps.
I see this working particularly well when there are market shortages of CFOs, and the business is going through deep complexity and change meaning they can’t commit to long-term, stable, full-time roles.
What’s interesting to note here regarding these firms of CFO providers is that they are a relatively new concept. They exist because the senior finance leaders who join them want to belong to a community of like-minded CFOs, they want a home, something that will outlast their individual client relationships and help skill them up to build their portfolios. They are also likely to be the very CFOs who are opting out of corporate for a new way of living and working and as such contributing to the full-time shortage in the first place!
Surely this tells us something about the longevity of the traditional full-time employment model at C-level and encourages us to consider that the C-suite model might be due a rethink.
Something I advocate debating.
The clear message for now though, is that both options above for SMEs and mid-to-large corporates mean we optimise the use of our CFOs if we share them – perfect for when there’s a shortage! And everyone wins.
Are there downsides to sharing?
There are, of course, some who think there are downsides to sharing:
“Will my CFO be available when I need them urgently?"
"Will they fit in with my organisation and feel like they are part of my team?”
the list goes on...
I acknowledge these fears. Not done properly, engaging with a fractional CFO might not work out, just like any other new hire, funnily enough.
Through my research, I’ve found that the key to access success is making sure there’s something called Psychological Ownership in the relationship between the business and the part-time CFO – that’s the Killer App for having enduring relationships.
That way, businesses gain the exact mix of skills they need, when they need them, which means it is affordable, and the CFOs get to earn the money they need, doing the work they love, with the people they like, on their terms.
Suffice to say the access economy for the C-suite is an emerging phenomenon and I believe it is here to stay.
To sum it up, you pay your money and take your choice!