Academy companies—defined as organizations with extraordinary reputations for developing top talent—have evolved significantly over the past 10 years when it comes to finance talent. To better understand these shifts in top finance talent development, Russell Reynolds Associates analyzed the experiences and backgrounds of S&P 2000 CFOs from 2012 to 2022 (N = 4000).
Via our analysis, we found that:
Over the past ten years, the CFO role and remit have broadened,1 requiring CFOs to have both business acumen and an operational orientation. This has been a dramatic shift from CFO’s historical training in accounting, controls, and audit.
Figure 1. S&P 500 role prior to first CFO role by tenure
Source: RRA analysis of CFOs at S&P 500 companies as of 02/01/2023, N = 500 | *Finance Operations includes VP/SVP/EVP Finance, Deputy/Divisional CFO, and FP&A roles
The operationally savvy CFO rises through finance operations, FP&A or divisional CFO track and is an expert at partnering with the business. The strategic CFO brings a big picture, investor/stakeholder value mindset, having risen through the banking, consulting, and/or corporate development track. This leading CFO archetype has implications for financial officer designation requirements (MBA, CPA) and the relevance of traditional academy finance companies.
While the Big Four remain the top academy organizations for S&P 2000 CFOs, there has been a steady decline in the number of CFOs who start their careers there (see Appendix Table 1). Similarly, there has been a notable decline of less tenured CFOs who hold CPAs (Figure 2).
Figure 2. % of S&P 2000 CFOs with CPA designation
Source: RRA analysis of CFOs at S&P 2000 companies in 2012 and 2022, N = 4000
Instead, we see a rise in financial services experience, specifically at investment banks, likely due to continued pressure to focus on strategic initiatives and M&A growth. Within the top 25 academy companies, from 2012 to 2022, we see a 17 percentage point increase in financial services companies (Figure 3). The likes of Goldman Sachs (6x), Morgan Stanley (2x), and Credit Suisse (6x) see some of the larger jumps in the number of CFOs with company experience (see Appendix Table 1). Concurrently, we see an increase in investment banking experience amongst Generation X and millennial CFOs (Figure 4).
Figure 3. Top 25 S&P 2000 CFO academy companies by industry
Source: RRA analysis of CFOs at S&P 2000 companies in 2012 and 2022, N = 4000 | BP&S is Business and Professional Services.
Figure 4. % of 2022 S&P 2000 CFOs with investment banking experience by generation
Source: RRA analysis of CFOs at S&P 2000 companies in 2012 and 2022, N = 4000
The number of CFOs with MBAs increased slightly from 42% in 2012 to 48% in 2022. However, when we look at CFOs by generational divides in 2022, we see a decrease in the MBA's popularity for younger generations (e.g., millennials) (Figure 5). This suggests that we will continue to see a decrease in MBAs as more millennials come into the top seat.
Figure 5. % of 2022 S&P 2000 CFOs with MBA by generation
Source: RRA analysis of CFOs at S&P 2000 companies in 2012 and 2022, N = 4000
The top five MBA programs stayed consistent from 2012 to 2022 (see Appendix Table 2) however, there was a significant jump in attendance at Wall Street pipeline schools, such as Wharton, Columbia, and NYU Stern, which aligns with the increase in investment banking experience amongst CFOs. Historically, many who possessed MBAs would pursue finance roles post-graduation, but as the economy evolved, MBAs have shifted to pursuing roles in technology and other high-growth fields. Many employers no longer require MBAs for promotion to senior roles, which may also be a contributing factor to the decline of MBAs among the youngest generation of finance executives.
Historically, certain large corporations were hotbeds for training top finance talent via rotational programs across a variety of business sectors and finance roles. As the result of some of these companies driving more centralized finance structures in functions such as accounting, tax and treasury, finance talent has become more specialized. With increased specialization and less vertically run companies, there are fewer academy finance opportunities to rotate from the business to corporate resulting in less CFO representation from these companies in the long term. On the other hand, companies like General Electric — which maintained its academy structure for another decade — have better CFO representation in 2022 (see Appendix Table 1).
While experience at these companies is highly regarded, we expect a continued decline in CFOs with conglomerate academy training, as the average CFO with this type of experience has over 30 years of experience. As Generation X and baby boomer CFOs age out of the role, investment banking experience, management consulting, and scrappier start-up experience will become more common among future generations.
The composition of academy finance companies continues to be shaped by external market factors. Once the gold standard amongst public company CFOs, public accounting experience is being outpaced by investment banking experience. As organizations moved towards capital allocation and growth, CFOs with investment banking experience brought the strategic experience necessary to partner with CEOs through this phase. The shift towards strategic CFOs, means more CFOs have become potential CEO successors than in the past.2
With the rapid expansion of technology companies (e.g. Netflix, Amazon) over the past ten years, we anticipate the makeup of academy finance companies to evolve away from those with consumer and industrial backgrounds towards leaders from tech as their finance talent becomes CFO-ready.
As we look to the future, we already seeing a shift the profile of the successful CFO. Currently, we are observing less demand for investment banker-CFOs as companies focus on profitable growth given the decline in M&A transactions and IPOs particularly post the collapse of Silicon Valley Bank.3 While investment banking backgrounds were the preferred profile of 2022, the next few years could define the preferred CFO profile and academy training grounds of tomorrow.
As the board, CEO, and CFO work together to define the ideal CFO and finance team profiles, they must also keep future market challenges and opportunities in mind. The CFO of the future will look markedly different from CFOs past, and this profile will continue to evolve.
1. Wall Street Journal, ‘Companies Broaden CFOs’ Responsibilities to Retain Them In Strong Job Market’, 2022
2. Is the CFO the Right Next CEO? | Russell Reynolds Associates
3. SVB Collapse Spurs Finance Executives to Re-Evaluate Cash Strategies - WSJ