FInance Academy Booklet LN 11-16.indd

108 Pages·2016·16 MB·English

Editor’s note
Role of the CFO :
The role of the finance executive is evolving and expanding at a rapid
Selected readings for
pace. Today, CEOs turn to their finance teams for everything from setting
productivity standards to driving board effectiveness to acting as de facto
VCs for growth initiatives. Additionally, CFOs are increasingly called upon
finance leaders
to help shape and implement their companies’ strategies, and to play
stronger roles in corporate portfolio management and capital allocation.
Financial reporting, audit and compliance, treasury and capital structure?
Yes, those are all part of job, too.
In short, those who want to become finance leaders need to prepare for a
difficult and evolving role. Their skills need to span core finance functions
and thought leadership, but they must also act as counsel and catalyst,
bringing fresh eyes to company strategic questions and fearless questions
to entrenched beliefs. Meanwhile, most organizations are struggling to
2016 match the capabilities of their existing finance teams with the skills their
Ankur Agrawal
businesses need to create value. As a result, they’re increasingly seeking
Principal,
executives with deep experience outside the traditional finance and
New York office
accounting careers.
Over past several years we have worked closely with several finance
teams to prepare them for their expanding role and needed capabilities
in effectively driving value creation at companies. In this booklet, we have
compiled a series of articles excerpted from our McKinsey on Finance
journals and McKinsey Quarterly to share some of our insights on five
Ishaan Seth
important themes related to the finance function today. They include
Senior partner,
the principles of value creation – an area in which financial executives
New York office;
have extensive influence – and lessons for performance transformations
Global Leader
(including tips from a veteran turnaround artist). The articles also cover
Finance Service Line
ways to eliminate biases from decisions about resource allocation, and to
lead high-performance finance teams.
Critically, we examine what it means to be a CFO today, based on an
analysis of the experiences, credentials and backgrounds of CFOs of
the Top 100 global companies. This research can be a useful tool for
Robert Uhlaner benchmarking your own experience and identifying both your strengths
Senior partner, and gaps.
San Francisco office;
Global Knowledge Leader Any executive aspiring to the CFO role will need to develop a perspective
Corporate Finance Practice on these critical elements of the finance function role. We hope you will
find these articles useful.
1 Role of the CFO: Selected readings for fi nance leaders
Editors’ note
The role of the finance executive is evolving and expanding at a rapid
pace. Today, CEOs turn to their finance teams for everything from setting
productivity standards to driving board effectiveness to acting as de facto
VCs for growth initiatives. Additionally, CFOs are increasingly called upon
to help shape and implement their companies’ strategies, and to play
stronger roles in corporate portfolio management and capital allocation.
Financial reporting, audit and compliance, treasury and capital structure?
Yes, those are all part of job, too.
In short, those who want to become finance leaders need to prepare for a
difficult and evolving role. Their skills need to span core finance functions
and thought leadership, but they must also act as counsel and catalyst,
bringing fresh eyes to company strategic questions and fearless questions
to entrenched beliefs. Meanwhile, most organizations are struggling to
match the capabilities of their existing finance teams with the skills their
businesses need to create value. As a result, they’re increasingly seeking
executives with deep experience outside the traditional finance and
Ankur Agrawal
accounting careers. Finance leaders with knowledge of data science,
Partner
M&A strategy, disruptive business models, cyber issues and cloud
New York office
services will be in particular demand.
Over the past several years we have worked closely with several finance
teams to prepare them for their expanding role and needed capabilities
in effectively driving value creation at companies. In this booklet, we have
compiled a series of articles excerpted from our McKinsey on Finance
and McKinsey Quarterly journals to share some of our insights on several
Ishaan Seth
important themes related to the finance function today. They include the
Senior Partner
principles of value creation – an area in which financial executives have
New York office
extensive influence – and ways to eliminate biases from decisions about
Global Leader
resource allocation. The articles also cover the re-emergence of Zero-
Finance Service Line
based budgeting, and how to lead high-performance finance teams.
Critically, we examine what it means to be a CFO today, based on an
analysis of the experiences, credentials and backgrounds of CFOs of
the Top 100 global companies. This research can be a useful tool for
benchmarking your own experience and identifying both your strengths
Robert Uhlaner and gaps.
Senior Partner
San Francisco office Any executive aspiring to the CFO role will need to develop a perspective
Global Knowledge Leader on these critical elements of the finance function role. We hope you will
Corporate Finance Practice find these articles useful.
1 Role of the CFO: Selected readings for fi nance leaders
Contents
22
What does it mean to be CFO?
03
04 Which profile best suits your company
10 Rethinking people development in finance
14 Profiling the modern CFO: A panel discussion
20 The Strategist CFO: A conversation with ADP’s Jan Siegmund
25 Building a better partnership between finance and strategy
Today’s CFO: Which profile
best suits your company?
McKinsey on Finance
Profiles of today’s CFO show how the role is evolving and raise important questions
for boards about talent and leadership development. Principles of value creation
Ankur Agrawal, Most readers a2re well9 aware that the role of the board—through the audit committee—shape a
John Goldie, and CFO generally has broadened over the past decade. manageable profile for the position? It’s an
Bill Huyett Beyond the core responsibilities of financial important question, both for companies hiring a
reporting, audit and compliance, planning, treasury, new CFO and for existing CFOs who see their roles 30 How to choose between growth and ROIC
and capital structure, many CFOs are playing expanding without a broad perspective.
a stronger role in corporate portfolio management
and capital allocation. Others have become To get a more detailed picture of how the role 34 Are you still the best owner of your assets?
prominent as the voice of the company in investor continues to evolve, we analyzed the experience,
relations and in communications to the board, credentials, and backgrounds of CFOs of the
as leaders in performance management, and as top 100 global companies by market capitalization.1
etox pthoer treersst ooff fithnea nocrPCaegneo-adrrensp xSpiopzetrrcaeaatttrtieiievoe geFnnsyin. c oaennd c ep e rsonnel HIMt ocaawrnk teboteOcr faieomu ufnmnrprutdr s pranotreamveavneteei inidsneegttws srea.a x,l atsI ewerr:n cge2idhsi 0ecsei,0l h epeb0adul anvpt, n etoiwhnrntesi ergndue g isetad hfir21eee0n nw 0irtat7oiyi fisvl8 eteeo d,t ios nf cuomrgeuaegrseee d tsit itsts shvt ateilnhuireca. ttc ur-
Wrgoolhoeed tr oaeot d efoaveres ra yintt dhe niundng?NAr. eIuuHttamu’sosmb oweunrn n 22ca0p5ab0,rn7loe td thuoec etCxivEpeOe tc oat nastd Cr etFhtOceh t othWWAa bte nhhte h iei tenhn eet nret dopcntrh v uroobeiofr ner Strefiw&hfieael Pnnek wd 5 satoui0 ttnCop-0hcc? fF oa TeCmt Oy chof cbom’uesoon p n oregIamncorxloitt lnpceeimgaore ndntenrh hraeiesaeet fi;mltinp oenh acni:ren ieka svde le i’to ss’nbtsr o C ry rfiehs Fc tneaeOhnsra ste e 1npt s2ubscrr rweome hfooaeairltds w msitniihitogh h noitt fasc odlt mhefcoeeli c nneeux st., Applying lessons learned from restructuring
Cbuhsriinse Cssoeus gwhalisn t hexe pkleayin tso h eonwsu srpiningn iitns glo onfgf -stoermme gorfo twhet hc.ompany’s largest9
How to choose between growth and ROIC 19
40 Ipnrvuedsetnotrlsy ,r eewveanr dif h tihgaht- pmeerafonrsm loinwge rc oremtuprannsi eosr t shlaotw sehri fgtr tohweitrh s.trategic focus
41 Maintaining a long term view in turnarounds
46 Leading companies out of crisis: Ten tips from a veteran turnaround artist
© Dennis O’Clair/Corbis 52 Can we talk? Five tips for communicating in turnarounds
MARCH 2012
Maintaining a long-term view
during turnarounds
Dynamic resource allocation and eliminating
Changing course demands an intense focus on short-term performance, but
success needn’t come at the expense of long-term value.
KRDeyoavunign D YCaa5akvroimelaso,d ayn, d7 Pdmeaetreekrt,i snawgnsdit acthhneed d pd oaensct ih s1ii1so hndoseu.s rkHs li ahs matrdpu .b cIekte iwnn gafu sc logl meotfpt ianngy acwo wesltles at owk coeoucmoldnp obemete wy w,e thlhceoen mr teehd—eu eacctnoidon nho mein’dy ob ppeie cprkaoetsdiint uigop n . e d bias in decision-making
had been struggling with the high diesel prices But as he stared at the numbers, he now wondered
and soft economy of the early 2000s, but he had if it would still be the right move. The switch
been fighting back by cutting costs across to natural gas would require a host of difficult
strategy practice sthuer eb ohaowrd .l oHneg whea scno’ut lfda ifleinngd yite ot,f fb. ut he wasn’t eovrgena nifi zsaotmioen oafl tahnedm o wpeorualtdi ofrneael uchpa mnguecsh—-n eeded
cash. He put down his pen and closed the file.
How to put your Hthee ospeceonnedd tainm aep tphraot vwael erke qauneds tr eoand h iits adgeaskin f.o r Wmohraet fhuen rdeaamllye nnteaeldlye dtu, rhne rtheianlgizse adr, owuansd a. way to 58 How to put your money where your strategy is
It was a multimillion-dollar purchase order for
retrofitting his entire fleet to natural gas. Any leader who’s been through a turnaround
Several months earlier, the decision had seemed knows that driving one requires an intense
money where yountoa btuJeMr raoa olna goga-nbse rnf aoliraon ae f rBf,:r ahaacistrn itosrdnuh co kfC, st hJcaeo ourcolosds trle ouifnpn d oehiens i eWnl. eIen bbmfoacukse oonb vdieoluivse sreinnsge n. eBauri-ltdeirnmg vreasluuelt-sc.r Seaotmioen m oves 69 Overcoming a bias against risk
How centered 74 Zero-based budgeting: Five myths and realities
strategy is
leaders achieve 78 The return of zero-base budgeting
extraordinary
Stephen Hall, Dan Lovallo, and Reinier Musters
results
Centered Leadership
Most companies allocate the same resources
to the same bu8sin2ess units year after
year. That makes it difficult to realize strategic
83 How centered leaders achieve extraordinary results
goals and undermines performance.
Here’s how to overcome inertia.
ddfPooiilflclfloeatwruresirn ncetgo b nttuhwssiesoi nts eaegnmsltsoleeyb s b.ea rCvoleArtwork by Gwenda Kaczor oarcmdyo 1pyi6mneavanperya,s tmAnm iaaeeklnlsiotMn,c cK pgianes aetays otemnc tFsihen aancr ceEolna Nluxp pm.ce beieCchrt 5ru2aoa,at Ailumntvt,ue migtnnps 2ae 0cga1sl4ae n nabny turt hB,atr ain avcneglow daent a tro yiefns s ueaarllcyh Expanding the CFO lens
evaluates the performance of business unitsw, oarckq aundir iens l iafen bdy addiovpetisntgs a
assets, and adjusts resource allocati9ons4 basedle aodner eshaicph m dodiveli sthioatn ’s relative
market opportunities. Over time, which comrpeavonlvye sw airlolu bned fwinodrinthg tmheoirr e?
strengths and connecting 95 Are you getting all you can from your board of directors?
with others.
If you guessed company B, you’re right. In fact, our research suggests
102 M&A as competitive advantage
that after 15 years, it will be worth an average of 40 percent more than
company A. We als8o888 7f8o_91u.indnd d78, though, that the vast majority of companies 9/15/10 5:33 PM
resemble company A. Therein lies a major disconnect between the 2 Role of the CFO: Selected readings for finance leaders
aspirations of many corpoArartee s tyroatueg igstes ttoti bnogld lay ljel tytisooun ucnaatntr afcrtoivme
businesses or double downy oonu erx cbitoinag rndew o ofp pdoirrteuncittioesr, sa?nd the
reality of how they invest capital, talent, and other scarce resources.
Veteran director David Beatty finds many boards wanting—and considers how
to improve them.
For the past two years, we’ve been systematically looking at corporate
resource allocation patterJTnoimna sKtho,al lnet rBhaileey ianrd reBrelopaarredstse niotfoe ddi tnrheec tssohrhasr hehaivopeld ae lrwst ainoy sp, u inbp laicllely c turrlatdfuerode s,r mwacaocuolrndd binecg n teoo aD,cat ivvaiids tnB oepadpttoyr, tCutonhnitwieaesy. TC hhaati’rs of the
implications for strategy. We found tcthhoemirap aasntsiee tssw—, avnahldid caoituilnnges efil inniagnn tchiaeel CrEersOut lotnsi, asptrroa ttreecgetyi nig gCBnloaarsrkds oEanff Cetcetn ivtmreen feosros Batus tshitnee Ussn Eivtehriscist ya nofd T oronto’s
and on finding, then nurturing, the next generation Rotman School of Management. Apparently,
of leaders. It’s a tough and demanding respon- they’re doing “badly enough that there’s been huge
sibility, requiring individual directors to learn as growth in activist firms,” says Beatty, who
much as they can about a company and its interprets that growth “as a direct comment on
operations so that their insights and advice can boards of directors and their past performance.”
stand up alongside those of executives. That,
at least, is the ideal. He ought to know. In addition to his academic
position, Beatty has served on more than
One litmus test of whether or not the ideal is 35 boards in five different jurisdictions and has
coming anywhere close to being the reality these been board chair at eight publicly traded
days is the growth and involvement of activist companies. He currently serves on three boards—
investors. If boards were doing their jobs, there one as chair—and is the leader of the Directors
What does it mean to be CFO?
04 Which profile best suits your company
10 Rethinking people development in finance
14 Profiling the modern CFO: A panel discussion
20 The Strategist CFO: A conversation with ADP’s Jan Siegmund
25 Building a better partnership between finance and strategy
3 Role of the CFO: Selected readings for finance leaders
22
Today’s CFO: Which profile
best suits your company?
Profiles of today’s CFO show how the role is evolving and raise important questions
for boards about talent and leadership development.
Ankur Agrawal, Most readers are well aware that the role of the board—through the audit committee—shape a
John Goldie, and CFO generally has broadened over the past decade. manageable profile for the position? It’s an
Bill Huyett
Beyond the core responsibilities of financial important question, both for companies hiring a
reporting, audit and compliance, planning, treasury, new CFO and for existing CFOs who see their roles
and capital structure, many CFOs are playing expanding without a broad perspective.
a stronger role in corporate portfolio management
and capital allocation. Others have become To get a more detailed picture of how the role
prominent as the voice of the company in investor continues to evolve, we analyzed the experience,
relations and in communications to the board, credentials, and backgrounds of CFOs of the
as leaders in performance management, and as top 100 global companies by market capitalization.1
exporters of finance-experienced personnel Our review, while not definitive, suggests that
to the rest of the organization. companies are shaping the role to meet their cur-
rent needs. Indeed, we identified four distinct
Where does it end? It’s unproductive to stretch the profiles of the role defined by the breadth of the
role too far and unreasonable to expect a CFO to be current CFO’s experience in finance or in
good at everything. How can the CEO and the nonfinance functions; his or her professional focus,
4 Role of the CFO: Selected readings for finance leaders
23
whether it’s an internal focus on operations or to have intricate working knowledge of the
an external focus on strategy; and the sources of company and are often experts in relevant finance
the CFO’s expertise, whether from years of and accounting issues, such as financial regula-
experience at the current company or another one, tion, international accounting, or capital structure.
for example, or whether it includes a traditional Many have advanced accounting degrees or
accounting degree or some other. experience at an auditing firm.
The four profiles include what we would This type of CFO is particularly well suited to
characterize as the finance expert (or numbers highly decentralized companies with stand-
guru), the generalist, the performance leader, alone businesses or early-stage ones scaling up and
and the growth champion. And while there is no professionalizing the finance function. Their
single CFO profile that will fit the needs of strong finance-function knowledge across a broad
every company—each must target candidates with spectrum of activities is critical to effective
competencies that best fit their strategy, the compliance and standardization of processes. The
composition of the rest of the company’s top team, finance-expert profile may also be best for any
and current finance-function capabilities— company whose top team otherwise lacks strong
these profiles do offer a glimpse into how the role finance leadership—or whose finance depart-
is evolving and where peers are looking for ment is inefficient or in disarray.
talented and innovative CFOs. They also raise
important questions for board audit committees The generalist. Companies in highly capital-
thinking about CFO development or the intensive industries, such as basic materials, oil
profile of the person they’d like to hire, as well and gas, and telecommunications, put a high
as for executives seeking to shape their current premium on operational capabilities. So they
role or considering new ones. naturally look for executives with broad
experience—including CFOs who have spent time
Four profiles of today’s CFO outside the finance organization—in opera-
Management roles vary by organization, depending tions, strategy, marketing, or general management.
on a company’s history, the characteristics of Indeed, among the 51 CFOs in our sample
its industry, and the demands of investors. And who were hired since 2009, 31 of them have such
although fitting CFOs into a clear-cut typology experience, up from 17 of those hired prior to
may seem artificial, we found it useful to 2009. Among all the CFOs in our sample, 62 have
understand how companies are filling the role MBAs or other advanced degrees, compared
to get a clearer picture of how it’s changing. with only 28 with advanced accounting degrees—
Based on our research, we categorize CFOs into reflecting a premium for management
four general profiles. and communication skills over deep tech-
nical expertise.
The finance expert. Typically internal hires, these
CFOs have years of experience rotating through CFOs that fit this description tend to engage
multiple roles within the finance function— heavily in business operations and strategy and
controlling, treasury, audit, financial planning and often bring strong industry and competitive
analysis, or business unit finance. They tend insights. They’re often found in companies in
5 Role of the CFO: Selected readings for finance leaders
24 McKinsey on Finance Number 45, Winter 2013
mature sectors, such as financial institutions, businesses, companies with aggressive growth
where operational similarities across business units or cost targets that must be met in the near
provide a good platform to rotate managers term, or companies with scarce resources that
among businesses and eventually into functional must be carefully allocated.
leadership roles; most are internally hired
and already fill an executive function, often being The growth champion. Externally hired pro-
groomed for a CEO role. These rotations give fessionals are the least common type of CFOs, but
managers insights about different businesses that they have risen to account for nearly 25 percent
they need to support tightly run operations, of new CFO hires. They are most common in indus-
allocate resources, and influence peers—which, tries with frequent disruptions that require
regardless of industry or strategy, make them dramatic changes in resource allocation—and in
ideal for companies where personal influence is companies that plan to grow considerably
needed to get things done. or reshape their portfolio of businesses through
aggressive M&A or divestiture programs.
The performance leader. CFOs with strong track Such moves make external hires especially valued
records in transformations both within the finance for their significant experience in M&A, as
function and throughout the organization are well as for their external networks, independent
what we’ve dubbed performance leaders. They tend thinking, and strategic insight, often gleaned
to focus on cost management, promote the use through working as a CFO or serving for years in
of metrics and scorecards, and work to standardize professional-services firms. Many growth
data and systems. They are often hired externally, champions are among the nearly a third of new
and many have previous experience as CFOs. Most CFOs who have spent a sizable portion of
have worked internationally—explaining in part their career in investment banking, consulting, or
why, among the 51 CFOs in our sample hired in the private equity, up from a fifth with a similar
past three years, 30 have significant experience background prior to 2009.
in multiple geographies, up from 21 of those with
longer tenures. Aligning the role with the company
These profiles are obviously not prescriptive;
Companies employing these types of CFOs are it would be simplistic to suggest definitive rules
often highly diversified companies requiring prescribing a specific CFO profile for general
rigorous analytics to compare performance across categories of company. That said, with the profile
In addition to industry context, companies must
consider how certain CFO characteristics might best
support their own strategic plans.
6 Role of the CFO: Selected readings for finance leaders
Today’s CFO: Which profile best suits your company? 25
characteristics in hand, companies can more are much more likely to select CFOs from
explicitly weigh them against the skills and outside the company or the sector. For example,
capabilities they expect to require from the CFO of the 14 PMP CFOs, 8 were hired externally,
as they shape, refine, and implement their 6 had consulting or investment-banking back-
strategy for the future. Whether this means grounds, and 9 had general-management
selecting a new CFO or rebalancing the role of an backgrounds. Over half of CFOs in both the PMP
existing one, they’ll need a candid assessment and technology industries have experience
of their current corporate strategy, the skills and outside their sector.
temperament of the CEO, the composition of
the senior-management team, the current capa- In addition to industry context, companies
bilities of the finance function, and organizational must consider how certain CFO characteristics
and reporting structures. We propose four might best support their own strategic
questions (by order of importance) that CFOs plans. Leadership teams of companies following
should answer when planning their own inorganic (M&A) growth strategies require
career-development plans—or that CEOs and a higher degree of market insight and strategic
boards should answer when beginning the orientation. Senior executives of companies
search for a new CFO. following organic growth strategies, meanwhile,
exhibit a high competency in people and
1. W hat are your corporate strategy and organizational leadership. So regardless of
aspirations—especially considering the nature industry characteristics—and as long as
of your industry? candidates meet the threshold of finance expertise
and performance-management skills—a com-
While there are certain trends in the hiring of new pany embarking on an ambitious M&A program,
CFOs generally, CFO profiles often reflect the for example, would want to give a strong
structure, conduct, and performance of a compa- preference to those with significant transaction
ny’s industry. Stable sectors with large global experience and industry insight, more akin to
footprints and extensive supply chains—such as oil a growth champion. A company lagging in profit-
and gas and consumer packaged goods—are ability or undergoing significant industry
more insular in their CFO selections. Only 4 of 28 consolidation may require a CFO more similar to
CFOs in our sample in these industries were the performance leader—strong in performance
hired externally, and only 2 had significant experi- management and cost containment.
ence outside the sector. However, international
experience is very important, with 9 of 13 CFOs in 2. W hat is the composition of your top-
oil and gas and 10 of 15 in consumer packaged management team?
goods having worked in multiple geographies. At
the other end of the spectrum are industries The selection of a CFO cannot be made in isolation;
with rapidly changing technology and significant companies must consider the strengths of the
R&D, such as pharmaceuticals and medical rest of the top team, paying specific attention to its
products (PMP) and technology. Companies in blind spots and missing capabilities. Recent
these industries tend to have CFOs with more research has found that the top teams of high-
experience in strategy and transactions, and they performing companies score higher on all
7 Role of the CFO: Selected readings for finance leaders
26 McKinsey on Finance Number 45, Winter 2013
measures of leadership competencies—including 3. W hat is the current level of capability in your
thought leadership, people and organizational finance function?
leadership, and business leadership—than those of
low-performing companies.2 Finding the right As long as a CFO’s profile fits with a company’s
set of leaders is clearly an important determinant strategy and complements the top team, further
of corporate performance.3 This means that considerations are more tactical. The current
the specific profile of your CFO may need to be level of capability of the finance function is the
different from that for other companies— most important of these, since the CFO’s
even those in the same industry or those that primary responsibility is to ensure the execution of
have similar strategic goals—in order to core functions of the finance group, especially
create a robust top team. strong compliance and controls, accurate data, and
systems integration. If a company struggles with
Companies with a disproportionate share of efficiently performing the basic finance functions
leaders with a few areas of deep expertise— (relative to peers), then it may be necessary
so-called spiky leaders—tend to outperform those to promote candidates for CFO with considerable
whose leaders have a broad range of more experience in a variety of finance roles and a
general skills. This requires members of the top- track record of performance improvement.
management team to build on one another’s
strengths and compensate for one another’s short- However, if strong capabilities are already present
falls. A company with a visionary CEO may in the finance organization, a company may
require a CFO with a firm grasp of the economics consider candidates with other competencies, such
of the business and enough influence capital as broader management experience or strategic
inside the organization to provide a counterbalance insight. Companies that do so typically pair such
against potentially risky moves. Or a company a CFO with a senior finance executive who
that recently hired a CEO from outside the organi- manages accounting and other traditional
zation may require a CFO with deep company finance roles.
expertise and a firm grasp of the numbers, such
as a person who fits the finance-expert or 4. W hat is the organizational and reporting
generalist profile. structure of your company? Which areas report
to the CFO?
The downside of mistakes in selecting the
top team, and the CFO in particular, is significant. It is also important to consider the company’s
Myopic top teams can undertake risky or reporting structure—that is, does it have
costly acquisitions, fall behind on innovations in solid or dotted-line reporting to the CFO—and the
the market, or fail to retain key talent. High- breadth of formal CFO responsibilities.
performing CFOs must have the integrity and For example, a CFO in a global company with a
conviction to challenge the CEO and other complex matrix structure and only dotted-
members of the top team on key strategic and line reporting must be able to exert a considerable
financial decisions and hence steer the amount of personal influence to be successful.
company to a higher performance trajectory. In this situation, it may help to hire a CFO
8 Role of the CFO: Selected readings for finance leaders
Today’s CFO: Which profile best suits your company? 27
internally—regardless of which general profile he 1 From the top 146 largest companies by market capitalization, we
excluded Asian companies and 14 others with insufficient
or she fits—who has the networks and institutional
public data, for a total sample size of 100 companies. We then
knowledge necessary to drive change. It is also compared CFOs hired prior to 2009 with those hired after.
Note that the pre-2009 sample includes only CFOs who are still
important to define the areas of responsibility that
in that role.
may lie beyond traditional finance areas, such 2 See Return on Leadership—Competencies that Generate
Growth, Egon Zehnder International and McKinsey & Company,
as IT, procurement, and transformation, which
February 2011.
demand day-to-day hands-on management 3 See Katharina Herrmann, Asmus Komm, and Sven Smit, “Do
you have the right leaders for your growth strategies?,”
and people skills typically seen in the generalist mckinseyquarterly.com, July 2011.
CFO profile.
The right fit between a company and its CFO
involves a complex set of trade-offs reflecting its
strategy, the skills and abilities of top man-
agement and the finance function, and a given
individual’s ability to drive change. Under-
standing how the role is evolving can prompt useful
conversations that shape the CFO’s role at your
company in the future.
Ankur Agrawal ([email protected]) is an associate principal in McKinsey’s New York office, where
John Goldie ([email protected]) is a consultant; Bill Huyett ([email protected]) is a partner
in the Boston office. Copyright © 2013 McKinsey & Company. All rights reserved.
9 Role of the CFO: Selected readings for finance leaders