It’s not simply truck drivers and nurses. The most acute labor scarcity for a lot of firms right now is the chief monetary officer.
Assignments for CFO appointments throughout Europe, the Middle East and Africa are up virtually a 3rd on this time final 12 months, in keeping with executive-search agency Spencer Stuart. As inflation and better rates of interest sign the finish of simple cash, firms are in search of extra from their finance administrators.
“The Covid pandemic highlighted to many CEOs that their CFOs were technicians, rather than leaders in a crisis,” mentioned Chris Gaunt, who leads Spencer Stuart’s monetary officer follow in Europe.
Now that companies want to improve, there’s been a sequence of job swaps. Eoin Tonge left Marks & Spencer Group Plc to affix Primark proprietor Associated British Foods Plc, and Julie Brown determined to depart Burberry Group Plc for GSK Plc. Asos Plc is trying to find a brand new CFO, whereas Ahold Delhaize has a gap as Natalie Knight pursues a U.S. alternative.
However, good finance administrators are scarce, in keeping with Rebecca Morland, co-head of the international monetary officer follow at search agency Korn Ferry. Given the common age of a CFO amongst firms in the UK’s FTSE-100 inventory index is 52, few have ever handled such ranges of inflation, mixed with prospects of recession.
“The CFO is not just running the finance organization, but they’re almost the deputy CEO, and in a lot of contexts they’re often the chief transformation officer as well,” Morland mentioned. “It’s quite a challenging, demanding time.”
No longer boring number-crunchers, CFOs now occupy the hottest seat in the boardroom. During the pandemic, they needed to elevate billions of {dollars} to close down operations and furlough hundreds of employees. Budgets have been slashed and banks have been requested to increase credit score traces to maintain companies afloat. Now they should cope with financial prospects few imagined earlier than Covid-19.
Keep calm
Nestle SA’s François-Xavier Roger mentioned he doesn’t agree with the fame of CFOs as mere bean counters. His job is to “stay calm” and take a long-term view. A vital a part of the function is guaranteeing liquidity — and imagining each potential consequence.
At the begin of the pandemic, Nestle didn’t want to boost cash, however the finance chief secured credit score traces anyway. “When we entered that crisis, we were not exactly sure of where the world was going,” he mentioned. “As CFO, you need to prepare for the worst-case scenario.”
In the coming months, as companies search new funding, CFOs will more and more discover themselves having to show their mettle. Banks will develop into extra demanding on mortgage situations. Credit’s far more costly. Even the firms that have been lucky to boost cash when charges have been low must grapple with the problem of investing to broaden their companies.
Nik Jhangiani, CFO of Coca-Cola Europacific Partners Plc, made a tricky name in mid-2021. While colleagues have been satisfied rates of interest would drop additional previous rock-bottom lows, he determined to repair 100% of the debt of the bottler of Coca-Cola in markets throughout Europe and Asia.
“I said at some point you’re going to be in a rising-rate environment,” the CFO mentioned. “At that point, the cost of debt was still so low and attractive, why was I trying to crank it to get two or three more basis points, but putting ourselves more at risk?”
Today, the choice seems prudent. With central banks nonetheless elevating rates of interest, any firm unfortunate sufficient to be refinancing in the coming months faces a steep curiosity invoice.
Sensodyne toothpaste-maker Haleon Plc, which separated from GSK in July, raised £9.2 billion ($11.3 billion) of debt in March 2022, at a median maturity of simply over eight years. One-fifth of the debt is uncovered to rates of interest, whereas the relaxation is mounted. Haleon’s subsequent main refinancing shall be in 2025.
Scenario planning
Haleon CFO Tobias Hestler, 50, mentioned a lot of his job is about situation planning.
Hestler mentioned he didn’t suppose anybody might have predicted the turmoil of the UK’s September mini-budget that despatched borrowing prices larger, and is now involved about Covid in China and making ready for when international inflation cools.
“We assume that we’re hitting the peak, and it’s going to come down in the second half of next year, but then how quickly it comes down requires some scenarios,” he mentioned.
Hestler is searching for financial savings in areas like promoting, and mentioned the firm is on monitor to bringing its debt right down to lower than 3 times Ebitda by the finish of 2024.
Spencer Stuart’s Gaunt mentioned boards are now trying to find finance administrators who’re higher suited to crises. They have discovered their current CFOs have been the “easy top-line growth person, rather than the real challenge-of-leadership, rise-to-the-occasion person.”
Esben Christensen, a managing director in turnaround and restructuring at the consultancy AlixPartners, mentioned CFOs would play extra of a number one function as the focus shifts from an organization’s revenue and loss account to money and liquidity. “When we have a restructuring, the person that people really want to talk to is the CFO,” he mentioned.
Changing function
While the function has modified considerably since Lavanya Chandrashekar, CFO of Guinness-brewer Diageo Plc, started her profession, there is one key duty that has remained fixed — a agency grasp of an organization’s funds. “The part that can never go away is controllership,” she mentioned.
The departure of a CFO can typically come when an organization is experiencing monetary turmoil. On January 13, the playing firm 888 Holdings Plc introduced CFO Yariv Dafna would step down after solely two years. Since 888 purchased the worldwide belongings of British bookmaker William Hill for £2.2 billion in September 2021, 888’s shares have fallen about 80%.
“It’s not for the fainthearted,” mentioned Korn Ferry’s Morland.
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