C-suite positions have come a long way from the old days of working up the corporate ladder, and the male dominated positions that made up most of the 20th century. A 2021 report based on Fortune 500 and S&P 500 companies, shows that there are fast moving trend changes and a new reality for C-suite executives, and CFOs in particular.
Here are some of the biggest changes that stand out in the report:
• The percentage of Female CEOs and CFOs is at its highest level ever
• The number of African American / Black CFOs has nearly doubled in the last year
• Companies have been hiring fewer external candidates for CEO and CFO roles since the pandemic
• For the first time ever, more CFOs attended International universities than any U.S. university conference
• After an all-time low in 2018, the COO position has started to bounce back in recent years
• Since 2017, the importance of MBAs continues to surpass CPAs amongst CFOs
• The age at hire for CEOs and CFOs has gradually increased since 2005
• Promotion from CFO to CEO is at its highest level since 2012
What we can Learn From These Trends
Amongst all of the recent trends, one stands out the most: diversity. Female C-suite executive numbers stand at an all time high, and the number of female CFOs in the consumer sector has increased by 500% in the past 10 years! There have been big changes amongst minorities as well, as the number of African American CFOs has nearly doubled in the past year alone.
These aren’t temporary trends, and they are here to stay. In addition, for the first time ever, more CFOs attended international universities than any U.S. university conference. This adds to the trend of diversity, as the stigma of an elite American education no longer seems to be a critical factor in the hiring process.
Internationally educated leaders along with the huge increase in female and minority executives, adds a layer of diversity that only improves the organization. In addition, it adds competition and growth to the sheer number of options available for executives.
Another interesting trend is the growing connection between CFO and CEO. Direct promotions from CFO to CEO is at a 10 year high amongst Fortune 500 companies. This means that almost 8% of current CEOs came directly from a CFO chair.
Even more surprisingly is the fact that nearly 25% of financial sector CEOs were previously in a CFO role. While this makes sense in finance, (as a CFO holds a broader view of the finances and numbers), this percentage is still surprisingly high as it means that one quarter of all CFOs of the top financial companies in the world have enough leadership skills to take over the helm.
The increased trust and evolving role of the CFO is apparent in this study. Long gone are the days of CFOs focusing solely on financials and their direct departments. Companies across the board are embracing the advanced and integrated role of being in charge of finances while being a leader and visionary at the same time.
What further backs up this theory is that more and more CFOs are coming into the position with MBAs over CPAs. In 2021, more than 50% of Fortune 500 CFOs held an MBA, compared to 33.6% with a CPA. The more dynamic and leadership oriented business degree seems to be held in higher esteem in comparison to the more rigid, finance oriented CPA of past CFOs.
Other Noticeable Trends
In addition to the changing dynamics of the C-suite positions, the industries themselves are forcing many changes as well. The industrial, consumer, and energy sectors accounted for close to half of all CEO turnovers amongst Fortune 500 companies. These sectors are at the forefront of fast paced changes due to numerous global market factors, and adopting new leadership is oftentimes needed to create true change.
Some big name CEOs that changed hands in 2021 include Twitter, Mastercard, Intel, and CVS Health.
The financial and service sector alone accounted for more than one-third of all CFO changes. This too is due to the incredibly fast changing finance related characteristics in these sectors, which were accelerated due to the pandemic.
Some noticeable CFO changes from 2021 include HP, Starbucks, JP Morgan Chase, and AT&T.
Continuing this trend, the service sector alone was responsible for nearly 20% of all COO turnover. The way that service companies operate has changed dramatically, hence the change in leadership as well.
Names that stand out among COO changes in 2021 include Walmart, General Motors, and Morgan Stanley.
Despite the abundance of changes in different leadership positions and across many different sectors, external CEO and CFO hirings have dipped significantly since the start of the pandemic. While it’s yet to be seen if this trend will continue, it appears to be that company culture is playing more of a role in the executive hiring process and influencing internal hirings and promotions. Company loyalty and rewarding employees could be a welcome trend that is here to stay.
This research highlights many trends amongst C-suite positions. Much of this is being influenced by the changing company culture which comes with loads of positive changes. For one, we are seeing record hirings of minorities and females in these positions, which increases competition and diversity. In addition, many organizations are looking to hire and promote in-house, which is a welcome change, as it also shows that company culture seems to be more important than ever.
Another important factor that is derived from this study is that CFOs are taking on more of a dynamic role, as evidenced by the fact that a record number were promoted to CEO. Part of this change is finding more time to analyze the data and be a leader instead of having CFOs and finance teams conduct manual data inputs as they used to in the past. Whether the business is a Fortune 500 company or a small organization, the role of the CFO is more important than ever.