Questions about soft skills and personality traits can be quantified through various means, but to use more sophisticated measures of personality type and communication style would be beyond the scope of this project, more worthy of entire studies of their own. Thus, quantification of all variables could lead to overcomplication of the study, which increases the risk that the number of surveys returned will not be statistically significant.
For this survey, the ideal is a mix of qualitative and quantitative. This will allow us leeway in interpreting responses, which by virtue of the question structure, may involve many similar but slightly different responses. Using qualitative analysis will also help to understand some of the quantitative results. It allows for some perspective and comparison to be achieved.
There are many variables that we will be able to measure quantitatively. We should use both types of research because to do so will give us better results. Those variables that are highly quantitative in nature should be evaluated as quantitative. We hope that the majority of variables can reasonably be translated into quantitative measures, as this will allow for better correlation analysis between them. For this type of research, we feel the quantitative approach is the strongest, but prefer to use qualitative analysis for some variables for the sake of expediency. Further, this approach reflects the hiring process for the CFO position, in which both qualitative and quantitative factors are taken into consideration.
4) This research will consist of two surveys. One will be directed at CFOs, the other directed at headhunters who hire CFOs. That these two groups have approached the issue of becoming a CFO from different perspectives necessitates two different surveys. The surveys will be sent to 1400 CFOs around the country. We hope to either piggyback the surveys with the quarterly survey from Robert Half, or use their mailing list. Their surveys receive strong return rates, which would make them a strong partner. If we go on our own, we will use a database of CFOs and possibly have a smaller sample size.
We will also send surveys to a much smaller group of headhunters. We hope to identify 40-50 of these industry experts and submit their survey to them by mail as well. The information we get from them will contain their biases, but will also be based on information that has already been aggregated by their offices.
5) Part I: Introduction
The role of the Chief Financial Officer, having remained unchanged for decades, has begun to evolve in recent years. The traditional career path to become a CFO went through accounting, treasury or finance. CFOs were often viewed as bean counters, unworthy of consideration as a serious executive.
However, the CFO position has become more prominent in recent years. Accounting scandals have unraveled the value of several corporations, encouraging boards to raise the profile of the position. CFOs have taken on greater leadership roles, and are beginning to supplant COOs with their increasing involvement in strategic issues. More CFOs are being tapped to become CEOs in recent years, something that was once a rare occurrence.
Given this shift, I feel that it is time to re-evaluate the notion of the CFO career path. Chief Financial Officers today need a different set of skills and experiences than they once did, a direct result of the new challenges encompassed within the role. This study is especially relevant for me, as I view the CFO role as something that I aspire to at some point in my future.
There are two intended audiences for this study. The first comprises students and junior accounting staff who are mapping out their career path. This study will be of direct benefit to them, in giving them a sense of the skills, education and experience they should be building. The other audience is comprised of those...
The need for better CFOs is widely understood, as is the fact that the role is in a state of flux. But knowing precisely how the market as a whole views the CFO role will contribute to studies in these broader issues.
Therefore, I intend to answer the following question: "What education, experience, personality traits and skills are needed to become a CFO?" The study will examine the types of education, both academic and professional, is required. The intent is that these will also be correlated with one another, to determine what total education package is demanded by today's CFO marketplace. In addition, the study will examine the different career paths taken by those who have become CFOs today. There is a view that the tradition paths - through accounting or treasury - are no longer the only paths a person can take to the CFO's office. Also, the study will examine the soft skills and personality traits to try to identify trends in those areas. Too much emphasis has been placed in the past on the acquisition of formal education and experience, but today the role seems to demand advanced leadership and communication skills as well. We will examine the prevalence of these demands and try to correlate those with career paths, to help identify how today's CFOs acquired those skills.
Some of the limitations to this study are that it only captures the role of the Chief Financial Officer today. This role is presently in a period of expansion and clarification. This is due to the changing needs of CEOs and boards. The role is also subject to major legal and regulatory changes. The introduction of the Sarbanes-Oxley Act, for example, had a dramatic impact on not only the role of the CFO, but the value of that role within the organization. The role of the CFO is different today than it was ten years ago. It is not unreasonable to expect that the role will be different in ten years' time. So the study is limited in its ability to reflect whatever shifts the role may undergo, thus limiting its value as a career-planning tool.
Another limitation is that the study only reflects North American firms, and therefore generally can be considered to reflect North American business values. Globalization has brought ideas and influences from other cultures to our business world, and our ideas to their world. While the size of the American economy and U.S. listing requirements will inevitably result in a certain amount of hegemony, it should also be understood that the global business arena is comprised of many different corporate cultures. My study does not reflect the values of those cultures, and is not intended to give any sort of universal insight into the CFO position. It merely reflects the business culture in one part of the world, today.
There are several industry-specific terms that will be used in this study. They include:
CEO - Chief Executive Officer, the head of the company. The CEO is hired by the board of directors, and is responsible for hiring the CFO. This understanding of basic organization structure is essential.
CFO - Chief Financial Officer, the executive in charge of finance and accounting issues at most corporations
COO - Chief Operation Officer, an executive in charge of operational issues
CPA - Certified Professional Accountant, a professional accounting designation. In most states, only designated accountants are allowed to audit financial statements
GAAP - Generally Accepted Accounting Principles, a code that outlines the fundamentals of how financial statements should be prepared and reported
Headhunter - an executive recruiter. For the purposes of this paper, most headhunters will specialize in identifying candidates for open CFO positions
Sarbanes-Oxley Act (SOX) - a law passed in 2002 that placed additional reporting and governance requirements on corporations and their executives.
Part II: Literature Review
The starting points for an examination of what it takes to become a CFO are those in the industry - the headhunters who recruit CFOs and Chief Financial Officers themselves. There is considerable literature from these industry sources. Much of the literature focuses on the shift in the CFOs role in recent years, in large part due to increases in regulation.
A recent study by ARC Morgan found that 60% of CFOs of companies registered with the Securities and Exchange Commission either resigned or were terminated when evidence of material weakness in internal controls was found." Companies have reported increasing difficulty in finding good candidates, and many CFOs have fled for private companies.
The result has been that in recent years the technical requirements for Chief Financial Officers have actually increased. At public companies, regulatory scrutiny remains high and thus strong technical skills are still the number one requirement, according to the nation's top CFO recruiters. These technical skills include building and maintaining adequate controls, ensuring compliance, reporting, and the preparation and presentation of materials. Today, this means that in addition to having a strong accounting background, a CFO must have in-depth knowledge of the relevant information…
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