The Chief Financial Officer Perspective

Image of CFO graphicPearson Partners’ Annual CFO Survey Outlines Current State of the Finance Function
Top finance professionals share perspectives on changing roles and essential skill sets.

(DALLAS – January 8, 2013) – Pearson Partners International, a retained executive search and leadership development firm, together with the University of Texas at Dallas Naveen Jindal School of Management and the Institute for Excellence in Corporate Governance, recently surveyed Chief Financial Officers on a variety of topics relating to their key role in the C-suite.

The survey drew responses from more than 150 finance professionals representing a diverse group of North American companies ranging in size from $50 million to Fortune 1000 multinationals.

“The results give us a great glimpse into how CFOs view their role today and points to trends that will impact talent management in the years ahead,” said Keith Pearson, president and vice chairman of Pearson Partners. “The
survey shows the importance of finding and retaining CFOs who can handle an ever-increasing and more complex
set of responsibilities.”

Respondents shared insights on the changing skill sets necessary to succeed and the factors that have caused the
shift. With more than half of the Fortune 1000 respondents represented in the survey being over 50 years old,
succession planning and talent management emerged as a key strategic priority for larger organizations. Pearson
added, “We’re seeing the convergence of an aging demographic in top finance positions with the need for higher
levels of skill in those roles.”

“A majority of our respondents are seeing an increase in shareholder activism and a lack of trust from investors
and boards of directors towards C-suite officers,” notes Constantine Konstans, PhD, founding executive director
of the Institute for Excellence in Corporate Governance. “This coupled with increased regulatory compliance
requirements has made the role of the CFO more critical than ever in ensuring proper governance and guidance for
companies large and small.”

Despite the additional burdens they carry, most respondents noted a high level of job satisfaction, particularly
among Fortune 1000 professionals, who overwhelmingly advised others to follow the CFO career path. The survey
also revealed positive expectations for the economy over the next year, with the majority of respondents reporting
that their company had plans to either maintain current levels of hiring or increase hiring in 2013.

Key findings from the survey include:

  • Fortune 1000 snapshot: The majority of Fortune 1000 CFO respondents have been with their current company
    for more than 10 years. Only 11% are female. Well over half (60%) are over 50. Nearly all Fortune 1000 CFO
    respondents would advise others to follow the CFO career path—an indicator of a high level of job satisfaction.
  • Successful CFOs: The most important factors for a successful CFO are providing accurate financial results,
    managing risk, and working with the CEO’s agenda. Respondents overwhelmingly indicated that the CFO’s most
    important role is company strategy (80%), followed by reliability of the reported numbers (63%), and reliability of
    budgeting and planning (22%). Regulatory compliance, managing financial relationships, and managing cash flow
    were other important roles cited by respondents.
  • Changing environment: More than half of respondents (72%) reported seeing increased shareholder activism
    and lack of trust from investors and boards of directors towards C-suite officers. Smaller companies appear to
    experience more shareholder activism, while risk management requirements are higher with larger companies.
  • Greater responsibilities: Respondents agreed that CFO skill set requirements have increased in the last decade,
    primarily because of increased risk management (94%), increased regulation such as SOX, IFRS, etc. (91%) and
    globalization of the economy (92%).
  • Global issues: Are today’s CFOs adequately prepared in their formal and professional education to manage how
    the global economy will impact their businesses? Half of the survey respondents said yes. Those who disagreed
    or were unsure cited insufficient exposure to factors such as the global/political economy, varied cultural
    experiences, and critical thinking skills.
  • Career path: The majority of Fortune 1000 respondents (75%) believe that a successful CFO of a $100 million
    company would not be as successful at a company of $5 billion or more. The top three reasons were insufficient
    exposure to multiple functions in a large organization, insufficient years/depth of experience and insufficient
    global exposure.
  • Recruitment patterns: A significant portion of the respondents (72%) were recruited from outside their company,
    while only 28% were promoted from within, indicating that companies are seeking CFOs with varied exposures and
    experiences. The survey also indicated that small companies tend to hire more from outside than large companies.
  • Succession planning: A majority (85%) of Fortune 1000 respondents agreed that the CFO is the logical choice for
    the successor to the CEO. One reason they cited is that regulations such as Sarbanes-Oxley and Dodd-Frank have
    brought the roles of the CEO and CFO closer together.
  • Positive outlook: A majority of CFOs have positive expectations for the economy over the next year.
    Approximately 50% of respondents indicated that their company’s hiring plans in the next six months will remain
    the same as last year, while 25% indicated they will hire more employees and 25% indicated they will hire fewer

Full results and an executive summary of the survey are available at: Pearson_Partners_International_CFO-Survey-2012

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