Written by: Raj Bhatti – Partner, Edmonton
This blog will explore the emerging importance of fractional Chief Financial Officer’s (“CFO”) amidst the shifting landscape, shedding light on strategies to navigate these dynamics effectively.
In today’s dynamic business landscape, the role of the CFO has evolved significantly, transcending its traditional boundaries. As businesses navigate through complex challenges and opportunities, CFOs are no longer solely financial leaders and technical experts, but key business and operations leaders involved in far more complex and cross-functional projects, including business transformation and digital initiatives. Prioritizing investments in the CFO role has become imperative to avoid temporary fixes. However, this isn’t always a bad thing…
As an entrepreneur and/or business owner, wearing multiple hats is often the norm. However, there comes a point where juggling finance, operations, and strategy can become overwhelming, hindering both business growth and personal well-being. This is where the role of a fractional CFO becomes invaluable.
Hiring a fractional CFO allows business owners to tap into specialized financial expertise without the commitment of a full-time hire. This not only allows for the injection of financial insights into operations but also unlocks precious time for owners to focus on what they do best – driving innovation, nurturing client relationships, and expanding their business footprint. Further, by partnering with a fractional CFO to handle peak workloads, bringing on fractional consultants continues to be a priority for clients to meet the demand for agility, agency, and equity. Some advantages of this approach include:
According to a study done by Ernst and Young, analyzing a thousand executives who held the CFO role in a Fortune 250 company over the last 20 years, data shows that the velocity of CFO rotations continues to increase. Almost two-thirds (~64%) of Fortune 250 CFOs who were appointed to the role between 2016 and 2020 had exited by year five compared to only 47% of CFOs who were appointed between 2001 and 2015 with the same tenure. The long-held custom of financial leaders being in their role for more than five years is tumbling, as almost half of CFOs now depart within the first four years.
As attrition rises, succession planning is becoming more important than ever, yet many organizations face these CFO transitions unprepared. Many organizations actually appoint an interim CFO during a transition to bridge the gap until a full-time successor is found. In fact, the number of interim CFO hirings per year has almost doubled in the last decade in Fortune 250 CFO transitions, with less than a third of those interim CFOs moving into a permanent designation in the company. An interim CFO differs from a fractional CFO, as an interim CFO is typically brought in on a short-term basis to fill a specific gap in leadership or to manage a particular financial challenge.
On the other hand, a fractional CFO operates more as an ongoing strategic partner for a company, providing part-time financial leadership and expertise, and they are usually engaged on a recurring basis to support the financial management of the business. And this is where the Fractional CFO comes in handy! The fractional CFO introduces a fresh perspective to strategic and financial decision-making. It is a strategic investment that enables business owners to focus on the things that matter most – family, innovation, and strategic advancement.
At Humanis, our expertise extends beyond executive recruitment; we specialize in fractional executive leadership placements across diverse sectors, consistently delivering exceptional results. We serve as the conduit between talent and organizational success, seamlessly bridging the gap with every placement.
To learn more about how you can start your Fractional CFO journey, connect with our Edmonton partner, Raj Bhatti (raj@humanisadvisory.com), and take the first step to success!
