Traditionally, leadership positions in finance have demanded functional expertise and execution skills to run the function. As finance departments transform to become better business partners and support organizational decisions in the challenging business environment, there is need for a new set of skills, which go beyond the typical hard-working, project management and execution competencies. Finance leaders are required to be more collaborative, emotionally mature and persuasive. They need to focus on developing people in their teams, create a collective vision and foster team spirit.
CEB’s recent research groups finance competencies into five types: Doer (strong execution skills, persistence, project management), Learner (openness to new ideas, flexibility, willingness to change), Builder (ability to develop and manage talent by utilizing a portfolio of skills), Persuader (strong communication, ability to simplify complex ideas), and 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, learner and strategist competencies. These, together called the Pathfinder Skill Set, are the skills that matter most — that define effective business support and have greater impact on department outcome.
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 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 only 12 per cent female CFOs among Fortune-500 companies. Overall, they just hold 20 per cent 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. 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 per cent less than the male CFOs.
Progressive companies are transforming their finance functions to become true business partners. They are following robust talent management approaches as part of the transformation initiatives:
- They are focusing on building Pathfinder skills in their teams and branding these as requirements for high-performance
- They are getting more creative at sourcing candidates, expanding their talent pool to encourage more women leaders, as they bring in these desired skills
- They are supporting the growth of strong women role models, mentors and coaches for greater participation by women.
As organizations prepare their talent pipeline for future leaders, they should definitely not overlook this talent pool that exhibits just the right combination of competencies to successfully lead teams.