Robert Half, one of the world’s leading Talent Solutions consulting companies came out with a survey summarizing trends in how top FTSE-100 CXO positions are filled, and including how many had finance background. (https://www.slideshare.net/RobertHalfUK/robert-halfs-ftse-100-ceo-tracker)
⦁ 68% of CEOs were appointed via internal promotion (up 46% from pre-Covid level)
⦁ 42% have a background in Finance and Banking, despite the fact that only 19% of the firms surveyed were from the financial sector,
⦁ 47% have some form of a post-graduate degree
It would make sense for someone in a CFO position to take over running a company as the business world recovers from the devastating effects of the global pandemic. In a dynamically changing environment, with governments, federal banks, consumers, businesses coming to terms with the new rules of engagement, it is the CFO who has both a ringside as well as a bird’s eye view of the moving parts. With high inflation gripping Europe, Asia and the US, oil prices fluctuating, geopolitical strains pulling at the seams of stability, large layoffs in major industries like IT and manufacturing, and hesitation among consumers to spend their already crimped income on “nice-to-have” items have put tremendous strains on CXO level executives as they plan for the road ahead.
As if there weren’t enough challenges, planning ahead wisely has become even more tricky as we see the banking system dealt with twin blows of Silicon Valley Bank and First Republic gasping for breath as they drowned in turbulent waters of unfortunate asset-liability mismatch in their balance sheets. Why this happened is due to a quirky occurrence of the Inverted Yield Curve, where the short term rates were higher than long term ones. So, banks holding short term (2 year) Treasuries had to pay more to entice customers to deposit their funds with them. By the same token, corporations borrowing money for short term purpose had to pay more as interest, negatively affecting their cash flows.
This downward sloping yield curve affects many sectors, notably the already “under-the-gun” venture capital, private equity, startup ecosystem, corporate credit, credit card, auto loans, just to name a few. Moreover, banks cannot raise short term rates as they wish – as this will severely affect interest income.
This is just one of the hazards a CFO might face as business weigh Capex, gaining market share and profitability, versus hunkering down and conserving cash, green lighting only those projects which result in rationalization in costs and efficiency.
A CFO has the unenviable position of having to juggle multiple sharp knives in the air – we don’t know which one will miss the mark and cause great harm. That is why CFOs who can navigate through these turbulent waters make their mark not only in their own companies but are also sell like hot cakes among senior talent in industry circles.