Filling New Roles With New Kinds of Leaders

Financial services firms are changing the mix of capabilities on their leadership teams, says Heidrick & Struggles in a report. As such, these organizations must ask more questions about what new roles are needed as well as how those positions should work in relation to the rest of the executive team in terms of structure and capabilities.

August 9, 2023 – Financial services, like most industries, has been in a period of significant innovation post-COVID-19 affecting business operations. Many firms are now seeing growth opportunities in markets that have been reshaped in large part by the increased pace of the shift to digital as well as changing consumer preferences, according to a report from Heidrick & StrugglesEllen Maag, Katherine Pluck, and Todd Taylor. For many firms, this has meant adding new leadership roles. Over the past two years, says the search firm, the share of roles financial services firms were seeking to fill that were new rose from 41 percent to 59 percent.

Sometimes these roles were for leaders of new businesses, says Heidrick & Struggles. Other times they were roles in existing businesses that emphasize a newly important mix of skills, such as combining sales, marketing, and product expertise into a chief commercial officer role. “Either way, financial firms and companies across industries are also putting increased emphasis on finding and developing leaders who not only focus on results but are agile, empathetic, inclusive, and able to solve problems in new ways,” the report said. “In other words, they are often filling new roles with new kinds of leaders.”

All this means that most financial services firms—through planning or by default—are changing the mix of capabilities on their leadership teams, according the Heidrick report. Heidrick says that most firms would benefit from asking more questions, not only about which new roles are needed and why, but also how those new roles should work in relation to the rest of the executive team in terms of structure and capabilities. “Leaders who get this right will not only see immediate benefit but positively reshape their pipeline planning for the longer term,” the report said.

New Leadership Roles: Defining and Hiring

“The context of a new leadership role is straightforward when the leader will be leading a new business,” the Heidrick report said. “These leaders typically need hard skills such as experience in fast-growth businesses and digital expertise—and we have seen that those are firms’ highest priority in filling these roles. Where we see less focus is on ensuring the new leader has both the capabilities to build a new business and to build support for that business in the rest of the organization.”

Related: Financial Services is Booming, CFO Role Continues to Evolve

Digital skills are often at the core of new leadership roles. In addition to digital expertise, Heidrick & Struggles research has identified four leadership capabilities that are most common among leaders seen as having impact today and potential for tomorrow (through the lens of the firm’s model for organizational acceleration, META—or mobilize, execute, and transform with agility).

The four capabilities Heidrick identified are: leading through influence, driving execution, creating possibilities from new thinking, and having an ownership mindset. “When taken together, these allow leaders to build strong, trusting, and inclusive relationships across their firms, which helps their new ideas get heard and supports resilience on their teams,” the firm said. “For leaders of new businesses, financial services organizations would do well to focus particularly on people who can drive execution with an ownership mindset and have the influencing skills that are required to build support for their business in the rest of the organization.”

A Shift in Strategic Focus

When a new role is created in an existing business to meet new needs or support a shift in strategic focus, the context can be more complicated, says Heidrick & Struggles. “These roles include, for example, chief commercial officers who bring together sales, marketing, and product functions to ensure a sharper focus on customer needs; chief analytics officers who bring together previously disparate sources of internal data to create better insights; and, of course, leaders with digital expertise, particularly, in financial services, for supporting omnichannel customer service,” the report said. “In all of these cases, all or parts of existing teams and functions will have new reporting lines and new responsibilities. This will often mean a strategic shift from focusing on execution to focusing on transformation. Making it work requires leaders who can manage change and create support for the new ways of working. Yet here, too, we often see firms pay more attention to the hard skills of executing than to the softer leadership capabilities of transformation.”

How the CFO Position Continues to Evolve
The last few years have challenged the chief financial officer role as navigating often unpredictable economic and geopolitical scenarios while striving to meet the expectations of the CEO, the board, and shareholders amplified its complexity, making this position increasingly multifunctional and strategic. A new report from Egon Zehnder’s Ângela Pêgas and Bruno Carrasco says that as new competencies have been added to the CFO playbook, the expectations placed upon these executives have also evolved, leaving many clients with this question: Is it sufficient to focus only on the technical skills of candidates when choosing a new CFO?

In addition to creating possibilities from new thinking, Heidrick notes that other important aspects of transformative leadership are leading change and collaborating across boundaries, which are particularly important for leaders in this kind of situation.

Including the Team

Even when firms consider the full mix of skills and capabilities needed for a new leadership role, they often don’t consider how that new leader will affect the rest of the executive team in terms of culture and other team members’ capabilities, says the report. For example, if a new leader is particularly, and appropriately, focused on inspiring transformation, others in the function may need to increase their focus on execution and working with agility in a new context. “Getting this right will often require starting by having each team member complete an assessment of their own capabilities,” Heidrick said. “Leaders can then aggregate that into a team view that identifies synergies and gaps in the team’s collective leadership capabilities. This data can then be used to align new roles and responsibilities or inform the senior leader of future talent needs to develop or acquire in the medium term.”

Heidrick notes that firms should also carefully consider new reporting lines in order to ensure the new leadership team is effective from the start. “When firms think about and approach the composition of their leadership teams this way, they are necessarily looking deeper into their leadership pipeline through the lens of strategy and current leadership, thinking hard about both hard skills and softer leadership capabilities,” the search firm said. “This ensures that they are building better pipelines for leadership development.”

Related: As CFOs Gain in Stature, Succession Plans to Replace Them Falter

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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