The CFO Role (and Paycheck) Doesn’t Look Like It Used To

The pay gap between CEOs and their C-suite counterparts is narrowing. In 2022, the average base salary increase for CEOs was 4.4 percent. Meanwhile, CFOs received a median pay raise of 5.5 percent, more than a full percentage point higher.

As responsibilities have grown throughout the C-suite, the career trajectory for finance leaders has evolved to match. Today, many senior finance employees look beyond their current organization for growth opportunities, and some successfully level-up to CEO positions. These factors, along with increased retention efforts across industries, have all contributed to the rise in CFO pay.

More than any other C-suite leaders, CFOs are taking responsibilities off CEOs’ plates and demonstrating their strategic value in steering companies through challenging macroeconomic landscapes. As a result, the traditional boundaries between the CEO and CFO roles are blurring — leading organizations to rethink the ideal CFO profile (and paycheck).

From Back-Office Accountants to Strategic Leaders

While CFOs and CEOs have historically had close relationships born from constant collaboration over financial projections and business strategy, there was a clear divide in their responsibilities, areas of expertise, and visibility across the company. As company lifers, CFOs tended to have low turnover, and their involvement in business areas outside of financial planning was rare.

But in a 2020 survey of CEOs, 82 percent predicted that the role of the CFO would increase in importance. They turned out to be right.

Increasingly, both organizational stakeholders and employees see CFOs as true senior executives with the necessary experience and skills to step in to run the company. If CEOs are captains of the ship, then CFOs have become trusty first mates who can flex between back-room decision-making and strategic leadership responsibilities that impact company culture. Long gone are the days of CFOs entering the C-suite after climbing the ranks of the bean counters. Now, CFOs must be financial sharks and innovators with strong people skills. Organizations are re-evaluating what’s asked of CFOs—and how this role is incentivized and rewarded.

This shift comes at a time when CEOs’ responsibilities are multiplying. CEOs have long managed traditional priorities like corporate governance, risk management, and strategic goal-setting, but many organizations now need them to also manage initiatives such as digital transformation; data analytics; and environmental, social, and corporate governance (ESG) or diversity, equity, and inclusion (DEI) accountability. That workload is too much for one leader to manage alone, and CFOs are stepping up to the plate to provide support.

Successful CFOs Bring Deep Resumes and Excellent Soft Skills

With the broadening resume expected of CFOs, the talent pipeline for this role is less linear than it used to be. Organizational stakeholders must probe beyond traditional accomplishments related to cost savings and profitability to identify leaders capable of piloting the company alongside the CEO.

In today’s market, the right person for the CFO job typically excels in:

• Management ability.  The past decade or so has seen the C-suite expand to include new titles encompassing technology, data, human resources, compliance, and more. Chief information and technology officers often report to CFOs because technology has become a top expense for most organizations. As a result, CFOs must develop a level of technical knowledge in addition to traditional financial skillsets—as well as the ability to manage and coach executives with a wide range of responsibilities outside of finance.

• Communication skills.  Corporate finance departments are much less siloed than they used to be. Developing financial targets and business objectives requires a clear understanding of the organization’s technology and infrastructure needs, sales strategy, and talent requirements, as well as tomorrow’s next challenges. To stay informed and work effectively, CFOs must build rich connections with executives across the organization. Additionally, CFOs now interface with board members and shareholders nearly as much as CEOs do, so they must be adept at nurturing these relationships, communicating with this audience, and reporting on progress.

• Cultural fit.  The CEO is still the public face of the organization. But internally, CFOs and other C-suite leaders have become much more visible, and therefore more responsible for living up to corporate values. With a greater share of finance executives changing jobs, and more companies searching externally for CFO candidates, it’s imperative for both hiring teams and job seekers to do their due diligence to ensure they find the right match—not just for the role, but for the organization at large.

The expanding scope of the CFO’s responsibilities—from overseeing finance operations to driving digital transformation to navigating global markets and employee challenges—reflects the growing recognition of the role’s integral contributions to overall corporate success and growth.

With the CFO position evolving from a purely back-office function to a visible leadership role, success requires a broader skillset—one more often found in the office of the CEO. That’s a welcome evolution for CEOs, companies, and shareholders, who all benefit from a more integrated and synergistic executive team.

See also:

• Treasury and Finance Pros’ Salaries Are Rising in a Tight Job Market
• Growing Women Leaders in Treasury and Finance
• The Rise of Treasury
• Treasury’s Move to the Strategic
• Evolution of Treasury

Jeanne Branthover is managing partner in the Global Financial Services/Fintech Practice at DHR Global.

From: BenefitsPRO