Shareholder Activism Shapes CFO Searches

boss chair

I recently came across an insightful interview with Joel von Ranson, lead of executive recruiter Spencer Stuart’s Financial Officer of North American practices. He notes how shareholder activism is impacting the boardroom, especially when it comes to CFO searches. Shareholder activism, or when a shareholder uses their ownership rights to sway leadership or business, has risen in recent years.

While the rise in demand for ethical business practices is welcome, other forms of shareholder activism do not need to reach the critical mass levels they reach in some instances. With a proactive person at the helm, these large scale issues reduce to issues that get resolved with effective communication. That is where the new bar for CFO searches takes us.

The public business sector is evolving to meet these new pressures and demands. With that means a company’s CFO must be capable to hit the ground running as a successful leader and right-hand-person to the CEO. If an untested CFO is to assume the role, they run a higher risk of allowing these issues to boil over.

Instead, von Ranson and other industry leaders note that public companies are turning to the battle tested CFOs–the ones that can take the heat in the proverbial kitchen. But it’s not just that they can stand the heat. They thrive in it, making proactive decisions that set the company on course for success with a clearly laid out plan to the board. If we were to stick with the metaphor, a viable CFO makes the heat work for them.

von Ranson went on to explain in his interview that, “While shareholder activism certainly puts more pressure on CFOs, it’s also elevating the strategic role of the CFO and is giving the CFO a more prominent voice on the leadership team and in the boardroom.” With that prominent voice a CFO can lead with articulate plans that mirror the company’s strategy and explain value proposition to the board. By having these two skills in place, the CFO isn’t just walking the walk of a CFO, they are literally talking the talk.

Beyond talking, it’s the action that differentiates who is a top flight CFO for this position. In a proactive versus reactive setting, the proactive leader will be able to anticipate the needs and wants of all applicable parties. This comes in two key forms.

In terms of working with the CEO, a proactive CFO makes sure that the numbers are understood inside and out. By having the numbers on their mind, the CFO ensures the CEO that they are able to focus on other key aspects of the business while the figures remain taken care of by another trusted leader in the company.

When working with the board, a proactive CFO is keenly aware of the concerns and questions they will face during periods of scrutiny. A more successful CFO understands their investor audience. Beyond understanding them, they also manage that audience in a fair and respectful manner. The CFO never railroads a question or point, but rather leads it to the key points. It’s never used to pander, but rather to remain a step or two more prepared than everyone else.

If you are an aspiring CFO looking to break into the public sector, you may face a tougher road than what was once laid before you. Conversely, if you are a seasoned leader in the public sector, von Ranson suggests that you use all these points to enhance your own standing. Your experience is always welcomed during a job search. But when the landscape is shifting towards proven leaders, no time is better to accentuate every credential you have.