Traditionally, leadership positions in finance have demanded both functional expertise and organizational skills to run the function.
But, as finance departments transform to become better business partners and support organizational decisions in a challenging business environment, there is need for a new set of skills, which go beyond the typical hard-working, project management and implementation competencies.
Finance leaders are required to be more collaborative, emotionally mature, and persuasive. They need to focus on developing people in their teams, creating a collective vision, and fostering team spirit.
CEB’s recent research groups finance competencies into five types:
- Doer (strong implementation skills, persistence, project management).
- Learner (openness to new ideas, flexibility, willingness to change).
- Builder (ability to develop and manage talent by using a portfolio of skills).
- Persuader (strong communication, ability to simplify complex ideas).
- Strategist (understanding of business operations and technology).
The research finds that most finance teams exhibit strong doer and learner competencies but lack in the builder, persuader, and strategist competencies. These, together called the pathfinder skill set, are the skills that matter most. They define effective business support and have greater effect on department outcomes.
Why Finance Needs Women…
Women are naturally more inclined to exhibit these desired behaviors. They possess nurturing abilities such as developing others and building and maintaining relationships and thus can better organize the competencies that their finance teams possess.
They display stronger professional and emotional maturity, and collaboration and negotiation skills. Their ability to listen, persuade, motivate, and inspire others makes them a better fit than their male counterparts to head the finance functions. Moreover, they are now scoring better than men when it comes to education and qualifications. More women than men in board level positions come with MBA degrees and international experience.
…But Isn’t Taking Advantage
But most organizations continue to ignore the female talent pool to source future leaders despite a shortage of ideal candidates with these desired skills. Women account for a very small number in executive positions, with less than 12% female CFOs among Fortune-500 companies.
Overall, women hold just 20% of the most senior positions in finance. There are many reasons behind this unequal representation. First of all, traditional gender roles govern how women are perceived. Companies associate strong leadership with male behavior and thus are more likely to plan for male successors despite women performing better (unconscious bias in hiring and promotion decisions is one of the biggest hindrances to building a diverse workforce).
Lack of appropriate coaching and mentoring to address particular needs of women leaders further enhances the gender gap in executive-level positions. Also, women leaders are found to be paid less than their male counterparts. On average, women CFOs earn 16% less than the male CFOs.
What the Best Firms are Doing
The good news is that the most progressive companies are transforming their finance functions to become better business partners, and are following robust talent management approaches as part of the transformation initiatives. In particular they:
- Focus on building pathfinder skills in their teams and branding these as requirements for high-performance.
- Are more creative at sourcing candidates, expanding their talent pool to encourage more women leaders.
- Support the growth of strong women role models, mentors, and coaches to encourage greater participation by women.
As organizations prepare their talent pipeline for future leaders, they should not overlook a source of talent that exhibits the right combination of competencies to lead teams in the modern operating environment.