November 13, 2023 – ON Partners’ internal data shows the CFO role has seen the most significant increase year over year in diversity hiring compared to other C-level roles. Additionally, the data shows that not only is the position proving challenging to recruit for while the role continues to be in high demand, but total compensation for CFO positions over the past two years has increased. “There is a high level of interest in diverse CFOs and a high demand to fill CFO positions overall,” said Baillie Parker, partner at ON Partners. He notes that 56 percent of CFOs placed by ON were diverse executives.
“Companies are very interested in attaining experienced sitting CFOs with the knowledge base to perform the assigned tasks,” Mr. Parker said. “This may mean finding someone who has led a buy-and-build strategy or a CFO who has taken a company public. Only so many CFOs have this specific gained expertise, which creates a supply and demand issue within the current talent pool.”
In private equity owned businesses specifically, staffing challenges have been an ongoing topic of discussion and cause for concern. Historically, performing in a CFO role has been one of the most complex responsibilities, and according to a 2023 Censuswide survey, about 60 percent of the participating CFOs said they have been in their current roles for less than a decade. “Now, with the shortage of CFO talent who understand how to work in industry sectors such as private capital, investors are also adamant that executive leaders filling these roles will be able to meet their set goals in a timely manner,” the ON Partners report said.
“Typically, PE-backed companies have a three-to-five-year hold, and the CFO exits after the liquidity event,” Mr. Parker said. “Often, candidates involved in a turnaround don’t want to be pigeon-holed into becoming a turnaround candidate. It’s challenging work, so they may prefer to look at growth opportunities over another temporary situation.”
When addressing the matter of relocation for executive positions overall, ON Partners found that a total of 17 percent of leaders rejected opportunities solely due to relocation restraints. The search firm explains that this factor has also played a part in further narrowing recruiting choices, as some candidates are reluctant to relocate and travel.
Whether a candidate is interested in working remotely or solidifying long-term career growth within a CFO role, the position has undoubtedly evolved, and compensation has proven to be rewarding as well. ON Partners data shows that CFO candidates’ current average wage rose 23 percent in the last two years.
“Companies are realizing how critical a CFO is to the future state of the business,” said Joe Olson, Partner at ON Partners. “There’s no stage where finance is not mission critical, and when a CEO or investor sees the impact that a strong CFO can have on all critical value factors, the cash compensation is very easy to justify. Furthermore, the role is evolving. CFOs are now viewed as strategic partners to the CEO and not solely an accountant. This too is reflected in the compensation, as the competitiveness for these candidates with the experience is increasing the total compensation package, and clients are very aware of it.”
Financial Services is Booming, CFO Role Continues to Evolve
The global financial crisis has brought increasing scrutiny from regulators and investors across the world. Combined with digital disruption, new technologies, and a high profile conduct agenda, financial institutions face a number of challenges to continued growth, according to Odgers Berndtson. The firm notes that today’s boards and executives need to foster a culture of transparency and reduced risk, while leveraging new technologies to improve operational efficiency and cut costs.
Within North America, the finance industry has the opportunity to achieve incredible growth over the coming years. “But firms must prioritize cultural change and look towards new alternative revenues streams to secure their success,” Odgers Berndtson said. “Low interest rates, low yield, and political instability in many parts of the world have led to pressure on financial firms to change.” This has left the market highly competitive for top talent across the financial services sector.
According to an S&P Global Market Intelligence report, CFOs now only spend 10 to 15 percent of their time on financial oversight.
Serving Clients Since 2006
With a primary focus on technology, consumer, industrial, and the life science sectors, ON Partners recruits C-level and board talent for public and private companies, as well as venture capital and private equity firms. Founded in 2006, the firm’s consultants work from offices in Atlanta; Boston; Chicago; Cleveland; Dallas; Menlo Park, CA; Minneapolis. MN; San Francisco; and New York. ON Partners was named one of the fastest growing search firms this year by Hunt Scanlon Media. The firm is now ranked as one of the 20 largest search firms in the nation.
Mr. Parker focuses on board, C-level, and VP-level placements for leading private equity and venture backed companies. His search experience spans over a decade and across a range of functions and disciplines for both private and multi-billion-dollar public companies. He has completed more than 300 searches for C-level, board, and high-level executive leaders.
Mr. Olsen has over 10 years of executive search experience. The functions he serves include CFO, CIO, and their direct reports. Among his recent assignments, Mr. Olsen placed the CFO for Advance Auto Parts and chief accounting officer for Nvidia. He focuses on the consumer products and services, retail, and technology sectors.
Related: ON Partners Recruits CFO for Bushel
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media