Of course, every organization’s circumstance is unique, and when it comes to solving for CFO needs, there’s no cookie-cutter solution. The “right” strategy depends on the company — whether you need someone with extensive CFO experience, or if there is space to consider someone with less experience and higher career upside (see figure).
Our recent work with leading companies has shown there are a variety of creative strategies to attract top finance talent from the outside while enhancing the quality and performance of the existing finance team.
Below we look at seven of these strategies.
1. Expand the CFO role
One way to attract top existing CFOs is to create a “CFO+”-type role with expanded responsibilities. These often include responsibilities beyond core finance — including strategy, information technology, transformation, supply chain — thereby offering current CFOs the chance to operate on a more expansive leadership canvas that is both fulfilling personally and beneficial to their ultimate career goals.
For example, one leading airline took this path in attracting a new CFO with previous Fortune 500 experience. It offered this leader an expanded CFO role that made the leader an operational business partner with broad purview, including fleet operations and global supply chain. Ultimately, the role was positioned as a natural pathway to CEO.
2. Consider the CFO role as an avenue for CEO succession
Building on the above, some companies are more actively filling the CFO position with an eye toward CEO succession planning. It’s a strategy that enables them to appeal to aspirational CFOs — and even sitting CEOs — who may be attracted to a new and more fulfilling challenge. One of our recent Fortune 50 clients took this path in hiring a smaller public company CEO as its new CFO to strengthen its internal bench of potential CEO successors.
It's worth noting here that more companies are emphasizing the value of operating experience on the career path, with a converse decline in emphasis on technical accounting. In 2023, approximately one-quarter of F500 CFO transitions involved the finance leader shifting to an operating role of some kind.
3. Create novel leadership roles
Even when a standard CFO role may not be on the table, some companies are building their finance succession bench by creating new roles that offer immense value to their leadership teams while also proving attractive to top finance leaders. We have seen roles like this act in a strategic capacity outside of finance. For example, a leading technology organization we worked with recruited a top Fortune 50 CFO into a newly created COO role to drive a change agenda alongside the CFO — but reporting to the CEO.
4. Offer a landing pad for rising talent
Some companies are seeing great value in attracting finance talent that may benefit from more ramp time before assuming the CFO role — to deepen familiarity with the company or industry — but with great value to offer immediately. We saw a leading consumer company and an automaker do this when working to replace CFOs who planned to leave in the next couple of years. They hired a CFO who started as an SVP, with a defined, short-term transition period before taking the top CFO role, facilitating a smooth and successful transition, knowledge transfer and integration. In both cases, the executive was announced externally as the incoming CFO.
5. Entertain step-up candidates
In certain instances, industry expertise and operational business partner experience are highly valued traits, and a strong candidate may be found among finance leaders without sitting CFO experience, such as divisional finance leaders or other finance deputies. Some leading companies value the longer runway for such “step-up” talent and the long-term optionality they provide to the leadership team. Indeed, in 2023 more than a quarter of new Fortune 500 CFOs hired from the outside were first-time sitting CFOs.
6. Deepen the bench
Some companies are creating “feeder roles” that allow them to attract rising finance talent in key deputy positions, enabling them some key rotations to prepare them for the top job. One Fortune 50 technology company did just this as they planned for a CFO retirement within two to three years. With a dearth of viable successors internally, rising finance talent was identified externally to expand the bench of candidates with an eye toward developing a future leader for that succession.
7. Target “capstone” candidates
For some companies, there’s an impressive bench of talent but no clear internal ready-now CFO successor. In these situations, we’ve seen organizations recruit an experienced leader on the tail end of their career, but someone up for one more challenge with a mandate to keep developing the internal talent to be ready for a handoff to a new CFO in three to five years. Representative of this, only 37 percent of CFOs who transitioned out of the position in 2023 actually moved into retirement.
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A comprehensive CFO succession plan requires balancing fresh external perspectives with a deliberate development strategy for internal talent; our second piece will examine the internal side of this issue, and how companies can develop and position their existing people to eventually succeed as CFO.
As is clear in the examples above (and as we’ll show in the next article), a holistic approach that addresses not only immediate organizational needs, but also long-term strategic objectives can help both the company and its leaders better prepare for the job and ensure a legacy of resilience, adaptability and transformative growth.