It’s not surprising, then, that according to the annual CEO Tracker published by specialised recruitment firm Robert Half, 43 per cent of all ASX 200-listed CEOs have a background in finance. What is perhaps more surprising, however, is that the survey also reveals the number of CEOs with a background in finance has fallen by 4 per cent since 2018.
With CEO churn in the ASX 200 reaching a three-year high at 22 per cent turnover — reflecting the 43 new CEOs that entered the list this year — the question is, why are more businesses choosing to onboard leaders without crucial financial experience or capabilities?
Declining number of CEOs with a financial background
It’s probably no coincidence that while the number of ASX 200-listed CEOs with a financial background has decreased, the Robert Half CEO Tracker shows the number of CEOs with a background in technology has increased by 3 per cent. CEOs with a technology background still only account for just over one in 10 (11 per cent), but there’s no doubt this small shift is a sign of the increasing impact technology is having on businesses today.
As companies continue to navigate an era of digital transformation, technology is key to improving operational efficiency, reducing risks, providing better customer experiences and remaining competitive. So, it makes sense that CEOs who have developed a deeper understanding of technology through their experiences are starting to catch the eye of companies; after all, it’s likely they will have a vision for how new technologies can be applied in a business and can make more data-driven strategic decisions.
Awareness of technology is increasingly important for companies
Although experience and awareness of technology is becoming increasingly important qualities that companies look for in a CEO, it’s important to remember that success as a CEO doesn’t depend on developing specific tech skills such as cyber security or big data analytics. Instead, the most sought-after leaders are those who are always on the pulse with trends and can steer a company and workforces towards new opportunities; and this often starts with a high level of digital literacy.
Moving into the future, all CEOs will need to show they have the skill set to define and evolve a company’s values, strategy and goals while managing stakeholders and challenging any cultural barriers that might stifle innovation and transformation.
As we embrace increasingly turbulent economic times, the importance and value of strong financial capabilities are unlikely to be lost on companies. But at the same time, financial professionals must evolve their thinking around how to position themselves for the top job in the current environment.
Finance professionals must become strategic business partners
Today, financial acumen in a business environment is about so much more than having an ability to manage the balance sheet. Instead, it’s about having an aptitude for speaking the language of business which resonates with stakeholders, which is why more and more accountants and finance professionals are being viewed as business partners who can offer more strategic insights and advice.
CEOs with a strong knowledge of finance are well placed to help companies more broadly as they navigate the challenges of changing economic times, increasing competition and the impacts of digitisation. For example, financial competency will enable CEOs to thoroughly evaluate the disruptive forces that are likely to impact a business’s bottom line while forecasting a company’s growth potential from pursuing new opportunities.
Similarly, in a fast-paced and increasingly globalised market, finance-savvy CEOs are also well equipped to weigh up the risks and benefits of innovative strategies before investing in new technology, human resources or alternative markets.
Today, there’s no doubt companies are looking for CEOs who have shifted their thinking from implementing long-term strategies with a traditional “set and forget” approach to a mindset that embraces ongoing evaluation, change, calculated experimentation, and learning and development. With this outlook, CEOs will drive companies that move faster on strategic decisions at the same time as having a heightened awareness of the immediate and future health of the business.
Developing an agile skill set
To stand the best chance of leadership success, it’s crucial to hone an agile skill set which exploits financial capabilities and soft skills on the path to leveraging a changing business environment shaped by technology and other external forces.
While financial knowledge and experience can demonstrate an ability to digest complex facts and data, excellent communication and interpersonal skills are required to translate these into compelling and easy-to-understand ideas for stakeholders and the wider workforce. Companies also need proactive leaders with an analytical mind in order to continually identify and resolve issues on the path to improving productivity and performance.
To position themselves for the top job, finance professionals must understand that demonstrating proficiency with numbers is only just the beginning. On the path to C-suite success, it is crucial to gain practical skills and experiences that prove high levels of competency applying financial knowledge to real-life business scenarios, such as bridging the gap between insights and workforces to motivate, engage and secure buy-in.
David Jones, senior managing director, Robert Half Asia Pacific