egon zehnder international -...

Egon Zehnder International

Microsoft CFO conference

Charlottehaven

Copenhagen, March 17th 2009

EgonZehnder

International

EgonZehnder

International

EgonZehnder

International

© 2009 Egon Zehnder International 2

Agenda

Egon Zehnder International’s (EZI) perspective on today’s CFO

Trend: Growing complexity in CFO’s responsibilitiesFrom technical expert to business leadership

Drivers of change

What are we looking for when searching for CFOs?The EZI competency model and search process

Background & experience – Where do the top DK CFOs come from?

Competencies – What does good look like?

The journey to become a successful CFOKey findings from interviews with leading CFOs across the globe

Thoughts – A profile in high demand but in short supply


Trend: Growing complexity in CFO’s responsibilities

20 years ago… Now…


A review of job descriptions over the past centuries reflects the changing criteria

Late 1980s 2009

• “Major emphasis on cash management” • “Ability to be an active thought partner of CEO and be capable of influencing the strategic agenda”

• “Profit-improvement responsibility . . . control of cash, inventories and capital expenditure”

• “Hit targets through drive and ability to change processes to deliver improvements in performance”

• “Introduce professional financial management planning to cover banking relationships and insurance”

• “Ability to delegate appropriately and empower direct reports to perform at a higher level”

• Called Group Financial Controller, GM Finance and Administration

• Called CFO, Finance Director


Drivers of change is largely characterised by external factors

Capabilities of CFOs – Role models have led the way

More sophisticated financial markets

Size, complexity, internationalisation

More focus on governance/risk and compliance

Increase in technological capabilities

External factors


Agenda



Drivers of change







The Executive Search Industry is relatively young and started as an offshoot of management consulting

The Search IndustryA young industry originated in the 1940s’ US

Started as an offshoot of large management consultancies

Highly segmented industry, which differentiates between services, business model and competencies

5-6 global companies in Denmark and Scandinavia: Korn/Ferry, Spencer Stuart, Heidrick & Struggles, Russell Reynolds and Egon Zehnder International

Egon Zehnder InternationalEstablished in Denmark in 1969; largest firm in Scandinavia focused on top and middle segment. 17 consultants

Global organisation around industries: FMCG, Hi-tech, Industry, Life Science, Finance etc.

Services offered include Executive Search, Board Search and Talent Management


The Search Consultant is driven by the will to identify and attract the best possible candidate to a

specific challenge and company. The process is selective, competitive and risk averse!

The Search Process is selective and competitive, and client feedback is immediate


Project stages

Project-definition

Systematic search and sourcingContact and interviews

Definition of target industries/companiesSpecification and proposal

Candidate evaluation and confidential reportsPresentation of candidates, reference check

Shaping of the position profileDefinition of core competencies

Analysis andPlanning

Identification of candidates

Selection of candidates

Consult on candidatecompensation

Finalisation

Post-closingsupport

Follow-up

The Search Process is systematic in order to find the best talent for a specific position


In Executive Search, clients look for people with a clear professional platform and the right fit

A professional platform consists of three elements

Functional skills & critical experience (finance, marketing, sales, turnaround,

growth)

Competencies (strategic orientation,

results orientation, team leadership, collaboration etc.)

Industry experience(knowledge of

supply chain, market, competitors, customers)

Fit to:Culture

OrganisationManagement level

Potential


Top DK CFOs bring solid financial background and have worked in multiple industries

42%

50%

8%

Auditing Finance function

27%

23%

50% >2

0

1-2

Background: Industry experience:

FindingsA high degree of specialisation within the classic finance functionsA large number has changed industry twice or more - used it to build and expand their finance toolbox

Number of industry changes

Other


Technical skills and experience Competency

As the requirements increase, the CFO has to focus much more on building competencies


Competencies - what are they?

A measurable characteristic of a person that is related to success at work. It may be a behavioural skill, a technical skill, knowledge or ability. For example:

Results orientation

Each competency has a set of behavioural indicators. For example:

Works on assigned roles and tasks, works to complete tasks

Introduces a new model that successfully transforms an existing business

We order these behavioural indicators by relative difficulty and sophistication thereby scaling each competency


Results orientation

Market knowledgeStrategic orientationFunctional capability

CollaborationPeople developmentTeam leadershipChange leadershipCustomer focus

Thought leadership

Business leadership

People and organisation

leadership

Competencies can be divided into three groups of leadership characteristics


Transforms Business Model for Enduring High Performance

Redesigns Business Practices to Deliver Breakthrough Results

Improves Business Practices for Higher Performance Levels

Drives to Exceed Goals

Driven by Goals

Would like to Make Things Better

Fulfills Assigned Tasks

For each competency people are measured on a 7-level scale where each level is described by behaviours

This competency sets clear targets for better performers

1

2

3

4

5

6

7

Red Flag Behaviours:

• Doesn't care about getting the job done or doing it well• Actively resists improvement

Low levels:they are dissatisfied with poor performance and drive to set goals

Moderate levels:they go beyond goals set for them and drive towards higher, world-class goals

High levels:they intelligently transform a business for significantly improved results

Example of Results Orientation


EZI research and analysis

EZI has a collective Management Appraisal Database containing around 13,000 assessments carried out globally during the past few years - from senior manager to CEO levels

The assessments have been carried out by EZI consultants in 27 countries across all continents

The database contains more than 1,000 finance people of which 100 are CFOs –enough to give a substantial picture of the “finance” and CFO functions

The assessments are based on nine competencies where the people are categorised into:

• Outstanding• Good• Some reservations• Major reservations


Findings from EZI’s ongoing research on CFOs

All EZI database

18%

50%

26%

6%

Rating

Outstanding

Good

Some reservations

Major reservations

All CFOs

20%

58%

21%

1%

CFOs rate highly against peers overall


CFOs vs. Finance Leaders who report to CFOs

4,3

3,5

4,4

3,43,8

3,4 3,6 3,5 3,5

4,9

4,24,7

4,2 4,3

3,3

4,24,5

3,8

0

1

2

3

4

5

6

Result

orien

tation

Market

know

ledge

Functi

onal

capa

bilitie

s

Strateg

ic ori

entat

ion

Collab

oratio

n

People

deve

lopmen

t

Team le

aders

hip

Chang

e lea

dersh

ip

Custom

er foc

us

Reports to CFOs Reports to CEOs

0,3

Little gap in functional skills supports the trend that the technical skills alone is no longer a differentiating factor


CFOs vs. Finance Leaders who report to CFOs

4,3

3,5

4,4

3,43,8

3,4 3,6 3,5 3,5

4,9

4,24,7

4,2 4,3

3,3

4,24,5

3,8

0

1

2

3

4

5

6

Result

orien

tation

Market

know

ledge

Functi

onal

capa

bilitie

s

Strateg

ic ori

entat

ion

Collab

oratio

n

People

deve

lopmen

t

Team le

aders

hip

Chang

e lea

dersh

ip

Custom

er foc

us

Reports to CFOs Reports to CEOs

Significant development gap relates to Thought Leadership (Market Knowledge and Strategic Orientation), ability to delegate to and empower people, as well as inspire to drive change

0,7

0,8

1,0

0,6


Agenda



Drivers of change







The EZI CFO Panel: in-depth interviews with leading CFOs across 4 continents

“How did you lead your journey to a key CFO position?”

“Did you have a key mentor?”

“How important is talent management within your organisation?”

“What is your vision of a great CFO?”

“What do you see as the future challenges for the CFO?”

“What would be your advice to aspiring CFO candidates?”

“…?”


4 key messages: the CFO value drivers

Aspirations Text

Personality Text

Career steps

Networking

Mentoring


First key: Career steps

Quickly show willingness to expand yourself beyond your natural comfort zone, rather than becoming too specialised

During your journey, do not compromise on your employer

Big challenges right at the beginning of the career

People grow quickly with “stretched goals”

Career steps


Second key: Networking/Mentoring

Not sitting in your ivory tower doing number crunching and following procedures. Connecting with the business (other than finance people)

You need strong mentors, internal or external

Having someone who believes in you and takes the risk to help you growing beyond your comfort zone

NetworkingMentoring


Third key: Personality

Personality and standing count even more than technical knowledge, when companies are looking for their CFO

Strong companies have strong corporate cultures which override cultural differences across the globe

Openness, transparency and a willingness to trust others are a crucial part of that

Personality


Fourth key: Aspirations

Many companies are so dynamic that a CFO job continuously offers new challenges

Do not put limits to your aspiration to have a positive and recognised impact on the business

Aspirations


4 key messages: the CFO value drivers

Aspirations

Outstanding CFO

Personality

Career steps

NetworkingMentoring

Aspirations Text

Personality Text

Career steps

Networking

Mentoring

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