The Headhunter’s View

What You Need to Know to Become a Top-Tier CFO

CFO Innovation | October 7, 2015

The CFO Innovation article, "The Headhunter’s View: What You Need to Know to Become a Top-Tier CFO," features an in-depth interview with Russell Reynolds Associates' Caroline Raggett about how to be a successful candidate for CFO roles. The following is an excerpt of the article.

In nearly two decades as an executive search consultant, Caroline Raggett of executive search firm Russell Reynolds has seen expectations around CFOs change in Asia.  

“For the last 15 years, there’s been a lot of investment by mostly multinational companies to grow domestic talent,” she observes. “I would say for the last five to eight years, that talent has really started to be a strong part of the CFO regional talent pool.”

The latest change stems from the economic slowdown in China, which has made companies look beyond the mainland to other markets in the region. Raggett’s clients now tend to ask for more than just China experience, although they continue to look for attributes such as curiosity, being comfortable with ambiguity and being a talent magnet.

Raggett spoke to CFO Innovation’s Cesar Bacani about what multinational and large Asian companies are looking for in top-tier CFOs, advice on how finance professionals can best prepare themselves for the top job, and other issues. Below are edited excerpts

What are the trends you are seeing with regard to top-level CFO recruitment?

For the last 15 years, there’s been a lot of investment by mostly multinational companies to grow domestic talent. I would say for the last five to eight years, that talent has really started to be a strong part of the CFO regional talent pool. More recently, privately owned enterprises [mostly in China] have been poaching that talent and making it their own.

As businesses have gravitated towards Shanghai as a regional headquarters at least in North Asia, a lot of time and effort has been sucked up by taking advantage of the huge opportunities in China.

So you start seeing two distinct types of CFO that’s regional and Asian: the type that is based in China and always has been, and the type that has been based elsewhere, probably Singapore or Hong Kong.

What’s the difference between regional CFOs in China and those based in Singapore and Hong Kong?  

Those in China tend to be much more execution-focused, with a very heavy focus on growth. They are likely to be much closer to supply chain, production, distribution, exports, and of course, to a big consumption market.

If you’re sitting in China, and everything around you is grow, grow, grow, harvesting that opportunity in terms of delivering business results becomes a huge priority. It’s difficult, and potentially less interesting or impactful, to investigate beyond that to what other, potentially smaller opportunities or problems elsewhere in the region might be.

The difficulty now is obviously China growth is slowing down, which is normal and to be expected as the economy matures, even if it would have been nicer if it had happened in a gentler way. It means that now is the time to seek out and act on those opportunities elsewhere in the region.

So we are increasingly asked for somebody who has ‘more than just China’ experience.

It’s not just technical skills. It’s attributes like curiosity, being an independent thinker, being comfortable with ambiguity, able to handle complexity in several different dimensions, a forward thinker, somebody who is very strong in developing others - a talent magnet, if you want to call it that.

So this is a change? 

Asia is becoming much more complex as a business environment because shareholders will continue to seek high growth returns that have been traditionally buoyed by China alone. In turn, this means multinationals will hunt out those opportunities beyond China, while continuing to maintain a competitive position in China.

So these buzz words are coming out a lot. And, of course, influencing skills, business partnership, all the usual ones we heard over the last 10 years as well. 

The expectation is that the CFO will be able to look across the Asia region, particularly for multinational corporations, and say: Here is my investment pot of $100, how much am I going to put into China, how much do I put into Indonesia, how much do I put into India, Philippines, Vietnam?

What are the risks I’m incurring in making those decisions? How do I balance changing labor costs, currency fluctuations, geopolitical risks? Should we be changing our overall physical manufacturing or distribution footprint in the region?

So rather than putting $80 into China, because I know it’s going to generate the bulk of my returns without question, now there are multiple decision points. It becomes much more complex.

Are you finding enough of this type of finance talent?

We do know these candidates, and we discover new people every day who fit this brief.

The good news is that these people tend to develop others like themselves. So for every CFO that gets it right, there could be three or four in their team who have the potential. This pool of people should grow as a part of the total pool.

But today they are not the majority of people, I would say. Maybe the top 10% of people, and that’s a very intuitive number. I’m not sure it’s the right number, but it feels about right.

And then there’s maybe a further 50% or 60% of people who are great executors, who have worked in high growth businesses and have done a really good job of what was required under those circumstances.

The 50%-60% do a great job. They are very comfortable to sit around the table with the supply chain, the HR director, the sales director, and have a meaningful discussion at a commercial level.

The top 10% are able to foresee and create a plan to deal with disruption or discontinuity, take more strategic decisions. They are able to go that one level up in terms of overall decision-making and business leadership.

As an executive recruiter, how do you know that the CFO that you’re talking to is in the top 10%?

We look at previous experience as point of entry into a discussion. So if I have a client for a certain scale and certain industry with a certain strategic issue, I’m going to look for people who have had experience of that type of environment or who have experience that is fungible to that client.

I expect to see facts and figures in a CV written by a finance leader. Over 80% of the CFOs we have placed recently have experience outside finance, so that is also a good indicator of a broad thinker.

However, this is only a point of entry. The interview, as well as referencing, will determine the top 10%, in our experience. We pay a lot of attention to competencies, the ‘how’ in executives doing things, what their innate and learned skills are.

What can the CFO expect during the interview? 

My best advice would be to expect a discussion that goes beyond the bare facts of a career. A good interviewer will be digging deeply into the competencies that her client requires in an individual to be successful, but will also be exploring an individual’s potential and agility to be deployed or promoted into other roles at that client company in the future.

Take, for example, something like ambiguity. I’d be asking a series of questions: Tell me about the time when you had to make a decision but you didn’t necessarily have all the information. How did you feel about that? How did the decision turn out? Who did you have to influence to support your plan? With the benefit of hindsight, what would you have done to improve the outcome?

I like to hear about their influencing skills and their ability to bring people around their point of view. I can see also how comfortable or uncomfortable they are with a certain amount of ambiguity, whether they’d be happy to get themselves back into a similar situation again.

A lot of the interviewing is about experiences and what you learned from it and what the business outcome has been. It’s not just about the facts and figures of a CV.

You’d be looking for people who are articulate? Finance people are seen as comfortable with numbers, but perhaps not as good as telling the story of those numbers. 

I like to think that’s a cliché of the past, but there’s definitely room within the CFO’s team for people who are incredibly close to the numbers at a technical level, and who may be less extrovert and more introvert.

But if you think about the modern CFO, their role often includes IT, often includes other functions like legal, procurement or facilities. They will be out and about with the CEO or President, talking to business leaders. They can’t be a purely numbers person.

The last 15 or 20 years has seen the rise of the CFO who’s articulate, engaging, socially charming. It is about the numbers and having logic, a rationale that’s evidence-based, but you have to sell that vision as well, particularly when you’re talking with the business leaders and other key functions such as marketing and HR.

As you look at the top-level CFOs that you have placed in the past five years or so, would you say that the majority or all of them are people who speak English and with overseas experience, not just home-grown experience?  

If you are to look either into listed businesses or regional CFO roles here in Asia, most are fluent in English as their second language, if not their first language, especially if they have worked for a multinational corporation.

There’s an emerging number of mainland Chinese companies that are looking to expand overseas and may even in some way, shape or form, want to understand how multinational corporations operate. So having some English is very advantageous, if not required.

To read the full article, click here.

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The Headhunter’s View