A Chief Financial Officer (CFO) is typically a white, middle-aged man. In the United States, he most likely graduated from a top raking public university, majoring in accounting, and with an MBA. Chances are that he spent time in one of the largest accounting firms.
This profile makes sense, considering the primary responsibilities of a CFO that fall under financial management. Yet, in recent years, events and trends worldwide have brought this leadership position toward the need for a more comprehensive set of skills. In a way, consequently, the need for (more) diversity in the role has started to enter mainstream discussions.
Current crises, market demands and fast-paced innovation rates influence all aspects of businesses. They require to rethink strategies, leadership methods and choices. From what the numbers for 2022 say, some change is also happening in companies’ higher levels to confront the flow.
According to Crist Kolder Associates Volatility report (from which data the description of the “typical CFO” compiles), last year saw the highest-ever number of women CFOs. Among the 650 companies from Fortune 500 and S&P 500, it increased by 10 points since 2004. So much for the optimistic view of the numbers. The reality is more nuanced, though. And not so bright presently. In particular, considering the time needed for the change and the actual percentage reached, the enthusiasm may falter. Almost two decades ago, there were 6,3% of women CFOs; as of 2022 all-time high, they represent 16%.
The tip of an iceberg
Of course, we are talking of the tip of an iceberg, considering the number of professionals interested and speaking of women in top positions. But those aspects directly affect companies’ workforce and success. Putting it into a future perspective, the rise recorded may be a beginning. Let’s consider how many more women enter, complete and succeed in obtaining higher accounting diplomas and MBA degrees. And how many are already working on the field as members of boards.
More diversity at (big) companies’ top positions directly influence the path toward better gender equality already for how it can confirm businesses engagement in this sense. In terms of hiring and retention of talents, for example, the top levels are, by some, considered another tell-tale of the commitment of a company to DE&I and a better work-life balance. Moreover, as we repeat it over and over, organizations with more diverse teams and more women leaders achieve better performances. They are more likely to produce innovation and deliver faster than homogeneous ones.
With this in mind, especially in these times of rising technology, social and environmental concerns and ongoing economic turmoils, the role of CFO goes beyond numbers and finances. It requires strategic thinking and a sharpened understanding of non-financial factors.
The need for more women at the top
Why do companies need to include more women? And how can they achieve that?
Generally speaking, women tend to have a more holistic approach to decision-making and are more prone to collaborating and opening conversations. If not immediately associated with the responsibilities of the head of finances, those characteristics enter the realm of companies’ financial management, especially thanks to technology. The available tools can perform more quantitative tasks faster and more accurately, leaving more time for planning, reasoning and deciding (i.e., leading) to the human talent.
Looking specifically to women’s contribution, quoting a Morgan Stanley study, companies with a larger proportion of female employee base realize higher returns with lower volatility. Moreover, as authors at BCG Group wrote, female CFOs “tend to have a more cautious approach to communication in earning calls. And emphasize quantitative information.” They also commented: “gender diversity is among the factors that best predict future corporate growth,” concluding that “to capture these benefits, companies need to accelerate their initiatives to advance the role of women in the finance functions. Success requires taking actions across many areas – beginning and ending with leadership.”
* From a more ample perspective, the situation is different, and the number of female CFO is higher. According to Grant Thornton Women in Business 2023, in mid-market businesses of 28 countries, the percentage of women CEO reaches 38%.
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