Post on 02-Jun-2020
Egon Zehnder International
Microsoft CFO conference
Charlottehaven
Copenhagen, March 17th 2009
EgonZehnder
International
EgonZehnder
International
EgonZehnder
International
© 2009 Egon Zehnder International 2
Agenda
Egon Zehnder International’s (EZI) perspective on today’s CFO
Trend: Growing complexity in CFO’s responsibilitiesFrom technical expert to business leadership
Drivers of change
What are we looking for when searching for CFOs?The EZI competency model and search process
Background & experience – Where do the top DK CFOs come from?
Competencies – What does good look like?
The journey to become a successful CFOKey findings from interviews with leading CFOs across the globe
Thoughts – A profile in high demand but in short supply
© 2009 Egon Zehnder International 3
Trend: Growing complexity in CFO’s responsibilities
20 years ago… Now…
© 2009 Egon Zehnder International 4
A review of job descriptions over the past centuries reflects the changing criteria
Late 1980s 2009
• “Major emphasis on cash management” • “Ability to be an active thought partner of CEO and be capable of influencing the strategic agenda”
• “Profit-improvement responsibility . . . control of cash, inventories and capital expenditure”
• “Hit targets through drive and ability to change processes to deliver improvements in performance”
• “Introduce professional financial management planning to cover banking relationships and insurance”
• “Ability to delegate appropriately and empower direct reports to perform at a higher level”
• Called Group Financial Controller, GM Finance and Administration
• Called CFO, Finance Director
© 2009 Egon Zehnder International 5
Drivers of change is largely characterised by external factors
Capabilities of CFOs – Role models have led the way
More sophisticated financial markets
Size, complexity, internationalisation
More focus on governance/risk and compliance
Increase in technological capabilities
External factors
© 2009 Egon Zehnder International 6
Agenda
Egon Zehnder International’s (EZI) perspective on today’s CFO
Trend: Growing complexity in CFO’s responsibilitiesFrom technical expert to business leadership
Drivers of change
What are we looking for when searching for CFOs?The EZI competency model and search process
Background & experience – Where do the top DK CFOs come from?
Competencies – What does good look like?
The journey to become a successful CFOKey findings from interviews with leading CFOs across the globe
Thoughts – A profile in high demand but in short supply
© 2009 Egon Zehnder International 7
The Executive Search Industry is relatively young and started as an offshoot of management consulting
The Search IndustryA young industry originated in the 1940s’ US
Started as an offshoot of large management consultancies
Highly segmented industry, which differentiates between services, business model and competencies
5-6 global companies in Denmark and Scandinavia: Korn/Ferry, Spencer Stuart, Heidrick & Struggles, Russell Reynolds and Egon Zehnder International
Egon Zehnder InternationalEstablished in Denmark in 1969; largest firm in Scandinavia focused on top and middle segment. 17 consultants
Global organisation around industries: FMCG, Hi-tech, Industry, Life Science, Finance etc.
Services offered include Executive Search, Board Search and Talent Management
© 2009 Egon Zehnder International 8
The Search Consultant is driven by the will to identify and attract the best possible candidate to a
specific challenge and company. The process is selective, competitive and risk averse!
The Search Process is selective and competitive, and client feedback is immediate
© 2009 Egon Zehnder International 9
Project stages
Project-definition
Systematic search and sourcingContact and interviews
Definition of target industries/companiesSpecification and proposal
Candidate evaluation and confidential reportsPresentation of candidates, reference check
Shaping of the position profileDefinition of core competencies
Analysis andPlanning
Identification of candidates
Selection of candidates
Consult on candidatecompensation
Finalisation
Post-closingsupport
Follow-up
The Search Process is systematic in order to find the best talent for a specific position
© 2009 Egon Zehnder International 10
In Executive Search, clients look for people with a clear professional platform and the right fit
A professional platform consists of three elements
Functional skills & critical experience (finance, marketing, sales, turnaround,
growth)
Competencies (strategic orientation,
results orientation, team leadership, collaboration etc.)
Industry experience(knowledge of
supply chain, market, competitors, customers)
Fit to:Culture
OrganisationManagement level
Potential
© 2009 Egon Zehnder International 11
Top DK CFOs bring solid financial background and have worked in multiple industries
42%
50%
8%
Auditing Finance function
27%
23%
50% >2
0
1-2
Background: Industry experience:
FindingsA high degree of specialisation within the classic finance functionsA large number has changed industry twice or more - used it to build and expand their finance toolbox
Number of industry changes
Other
© 2009 Egon Zehnder International 12
Technical skills and experience Competency
As the requirements increase, the CFO has to focus much more on building competencies
© 2009 Egon Zehnder International 13
Competencies - what are they?
A measurable characteristic of a person that is related to success at work. It may be a behavioural skill, a technical skill, knowledge or ability. For example:
Results orientation
Each competency has a set of behavioural indicators. For example:
Works on assigned roles and tasks, works to complete tasks
Introduces a new model that successfully transforms an existing business
We order these behavioural indicators by relative difficulty and sophistication thereby scaling each competency
© 2009 Egon Zehnder International 14
Results orientation
Market knowledgeStrategic orientationFunctional capability
CollaborationPeople developmentTeam leadershipChange leadershipCustomer focus
Thought leadership
Business leadership
People and organisation
leadership
Competencies can be divided into three groups of leadership characteristics
© 2009 Egon Zehnder International 15
Transforms Business Model for Enduring High Performance
Redesigns Business Practices to Deliver Breakthrough Results
Improves Business Practices for Higher Performance Levels
Drives to Exceed Goals
Driven by Goals
Would like to Make Things Better
Fulfills Assigned Tasks
For each competency people are measured on a 7-level scale where each level is described by behaviours
This competency sets clear targets for better performers
1
2
3
4
5
6
7
Red Flag Behaviours:
• Doesn't care about getting the job done or doing it well• Actively resists improvement
Low levels:they are dissatisfied with poor performance and drive to set goals
Moderate levels:they go beyond goals set for them and drive towards higher, world-class goals
High levels:they intelligently transform a business for significantly improved results
Example of Results Orientation
© 2009 Egon Zehnder International 16
EZI research and analysis
EZI has a collective Management Appraisal Database containing around 13,000 assessments carried out globally during the past few years - from senior manager to CEO levels
The assessments have been carried out by EZI consultants in 27 countries across all continents
The database contains more than 1,000 finance people of which 100 are CFOs –enough to give a substantial picture of the “finance” and CFO functions
The assessments are based on nine competencies where the people are categorised into:
• Outstanding• Good• Some reservations• Major reservations
© 2009 Egon Zehnder International 17
Findings from EZI’s ongoing research on CFOs
All EZI database
18%
50%
26%
6%
Rating
Outstanding
Good
Some reservations
Major reservations
All CFOs
20%
58%
21%
1%
CFOs rate highly against peers overall
© 2009 Egon Zehnder International 18
CFOs vs. Finance Leaders who report to CFOs
4,3
3,5
4,4
3,43,8
3,4 3,6 3,5 3,5
4,9
4,24,7
4,2 4,3
3,3
4,24,5
3,8
0
1
2
3
4
5
6
Result
orien
tation
Market
know
ledge
Functi
onal
capa
bilitie
s
Strateg
ic ori
entat
ion
Collab
oratio
n
People
deve
lopmen
t
Team le
aders
hip
Chang
e lea
dersh
ip
Custom
er foc
us
Reports to CFOs Reports to CEOs
0,3
Little gap in functional skills supports the trend that the technical skills alone is no longer a differentiating factor
© 2009 Egon Zehnder International 19
CFOs vs. Finance Leaders who report to CFOs
4,3
3,5
4,4
3,43,8
3,4 3,6 3,5 3,5
4,9
4,24,7
4,2 4,3
3,3
4,24,5
3,8
0
1
2
3
4
5
6
Result
orien
tation
Market
know
ledge
Functi
onal
capa
bilitie
s
Strateg
ic ori
entat
ion
Collab
oratio
n
People
deve
lopmen
t
Team le
aders
hip
Chang
e lea
dersh
ip
Custom
er foc
us
Reports to CFOs Reports to CEOs
Significant development gap relates to Thought Leadership (Market Knowledge and Strategic Orientation), ability to delegate to and empower people, as well as inspire to drive change
0,7
0,8
1,0
0,6
© 2009 Egon Zehnder International 20
Agenda
Egon Zehnder International’s (EZI) perspective on today’s CFO
Trend: Growing complexity in CFO’s responsibilitiesFrom technical expert to business leadership
Drivers of change
What are we looking for when searching for CFOs?The EZI competency model and search process
Background & experience – Where do the top DK CFOs come from?
Competencies – What does good look like?
The journey to become a successful CFOKey findings from interviews with leading CFOs across the globe
Thoughts – A profile in high demand but in short supply
© 2009 Egon Zehnder International 21
The EZI CFO Panel: in-depth interviews with leading CFOs across 4 continents
“How did you lead your journey to a key CFO position?”
“Did you have a key mentor?”
“How important is talent management within your organisation?”
“What is your vision of a great CFO?”
“What do you see as the future challenges for the CFO?”
“What would be your advice to aspiring CFO candidates?”
“…?”
© 2009 Egon Zehnder International 22
4 key messages: the CFO value drivers
Aspirations Text
Personality Text
Career steps
Networking
Mentoring
© 2009 Egon Zehnder International 23
First key: Career steps
Quickly show willingness to expand yourself beyond your natural comfort zone, rather than becoming too specialised
During your journey, do not compromise on your employer
Big challenges right at the beginning of the career
People grow quickly with “stretched goals”
Career steps
© 2009 Egon Zehnder International 24
Second key: Networking/Mentoring
Not sitting in your ivory tower doing number crunching and following procedures. Connecting with the business (other than finance people)
You need strong mentors, internal or external
Having someone who believes in you and takes the risk to help you growing beyond your comfort zone
NetworkingMentoring
© 2009 Egon Zehnder International 25
Third key: Personality
Personality and standing count even more than technical knowledge, when companies are looking for their CFO
Strong companies have strong corporate cultures which override cultural differences across the globe
Openness, transparency and a willingness to trust others are a crucial part of that
Personality
© 2009 Egon Zehnder International 26
Fourth key: Aspirations
Many companies are so dynamic that a CFO job continuously offers new challenges
Do not put limits to your aspiration to have a positive and recognised impact on the business
Aspirations
© 2009 Egon Zehnder International 27
4 key messages: the CFO value drivers
Aspirations
Outstanding CFO
Personality
Career steps
NetworkingMentoring
Aspirations Text
Personality Text
Career steps
Networking
Mentoring