A study by the recruiting firm Korn Ferry showed that companies that appointed a woman to the top finance role saw a 6% increase in profitability – and 8% higher stock returns – during their first 24 months in office.
Over the 17-year period for the study, firms with female CFOs generated $1.8 trillion more in gross profit than their sector average .
However, there are still few women CFOs and we are still far from parity for these positions, even though this function is crucial and constitutes a formidable springboard to aim higher.
We will analyze in this article how and why, in my view, we should approach the proportion of men and women in the CFO function.
For women and businesses to move closer to parity, three elements are necessary and should be combined:
- Talented & ambitious women
- Men aware of the subject
Talented and ambitious women already exist. Look at Christine Lagarde, President of the European Central bank who was the first woman to become finance minister of a G8 economy and is the first woman to head both the ECB and the IMF. And if we look towards the private sphere, very often, who controls the family purse? The women! This is already a first good reason to hire a female CFO.
One of the things to do is to (TRULY) educate men about the subject. General Managers must take this need for parity into account. Men who are “aware” of the subject are needed. I have noticed that fathers with daughters in working age often start then realizing the importance of gender equality, and become great advocates.
Regarding the quotas, in a labor market context characterized by a “war for talents”, it is logical not to deprive yourself of half the population, knowing that higher education in finance has delivered for decades an equal number of graduates. So, why is this still a topic? Quite simply because financial departments are not immune to imperfect feminization at all levels. Finally, quotas are essential, “otherwise in 160 years we will still be at the same point“, as Christine LAGARDE predicted a few years ago. This notion of positive discrimination towards women through the establishment of quotas, which does not necessarily please women more than to men, but is increasingly accepted because society considers it a necessary evil.
Thanks to quotas, women in finance will have opportunities in the next 5 to 10 years to move up the corporate ladder.
Figures and trends
Women make up a little more than half the world’s population, representing only 40 percent of the global labor force (World Bank 2011). In the United States, women now earn 51% of bachelor’s degrees in accounting, according to the National Center for Education Statistics and yet, there are much fewer women CFOs than men.
Indeed, less than 14 % of CFOs in the dataset are women, although the researchers find that the proportion has increased from 9% in 2009 to 10,6% in 2019. So yes , indeed it is improving but at a snail speed.
And in addition to this disappointing results, women occupy more CFO positions in smaller size companies.
- 3% Women CFOs at firms with annual revenue greater than $100Bil, while 62% Women CFOs at firms with annual revenue less than $9Bil.
Although some barriers are coming down, there are still big obstacles facing women in finance, according to Tiffany Brown Managing Director at Accenture. In interviews conducted as part of International Woman’s Day celebrations, they noted steady and encouraging signs of progress. They also identified structural challenges women in finance still face and provided advice for women, and for broader finance organizations, to continue increasing female representation in finance leadership.
Why the lack of female CFOs?
So, why are women under-represented in senior finance positions, and in the CFO role in particular?
“Women feel they have to do much more to be considered for promotion,” said Tiffany Brown. “They think they need to accomplish five key objectives before they put themselves up for the next job, when a lot of men are happy to put themselves forward after accomplishing three. So, don’t be afraid, and just be yourself.”
The low numbers pose serious questions that researchers have so far been unable to answer. “We must ask ourselves whether the small proportion of female CFOs is the result of inherent bias that is difficult to overcome, or due to self-selection of females who choose to avoid such careers in spite of the potential advantages they bring to these careers and to the firms who employ them” says Julia van den Bosch Wazen, Consultant, CFO Practice at Odgers Berndtson.
Women in key financial management positions tend to have a set of common challenges, the first one being the work-life balance, which is overcome by having the right support with a committed sponsor at work and finally having a role models.
1 – Work life balance – COVID has forced the majority of businesses to work from home and has highlighted for many employers the dual nature of a working woman’s career. That said, before the pandemic, many CFO women told me that their lives were a constant balancing act that disappoint more – their partners, their children or their friends.
- One tangible way to address these issues is to offer more flexible work schedules and teleworking. The more women has access to flexible schedules and telework options the more likely to keep working and been promoted.
- The second way is : time frame. Evaluating candidates /women based on a holistic view of people’s careers over their lifetime of work. This would provide companies with a broader set of more experienced people to draw upon
2 – Sponsors are often men in leadership positions.
Indeed, self-advocacy is only part of landing promotions. “Sponsorship is a key element of career advancement” said Katherine Mohrig from Accenture. And women have a more difficult time finding sponsors, especially in male-dominated fields. That’s why it’s so important for finance leaders to intentionally take on this role for women in finance. And at every level, it makes a difference to have someone who is giving you the right opportunities, helping you build the right relationships.
- So, leaders – look for high potential women to sponsor
- Women in finance, seek out strong leaders and ask them to be your sponsor.
3 – Role models matter, particularly for women.
Research shows that role models have an amplified benefit for women due to the gender biases, institutional barriers and negative stereotypes women have long had to contend with across a wide swathe of professional domains.
Role models have three core benefits for women:
- Represent and expand what is possible
- Inspire women to be more ambitious and aim higher
- Demonstrate the mindsets and behaviors of how to rise
So, yes, Female role models inspire girls to think bigger, unfortunately there is a lack of role models for potential women CFOs.
Why women make good CFOs ?
So, yes, as mentioned in my introduction, Companies with female CFOs and/or CEOs prove more profitable than those led by men. And according to McKinsey’s latest Diversity Wins report, companies with more than 30% of women executives are more likely to outperform companies where this percentage ranged from 10-30%.
Hence, at this stage, one might say that there is no need for further discussion. However, there are other great benefits to promoting women CFOs.
As Julia van den Bosch Wazen (Consultant, Odgers Berndtson’s CFO Practic) pointed out, “The more diverse your management team, the more engaged your workforce, and the better your customers are looked after. You are better informed of the world, you tend not to miss trends, making your balance sheet strong and your organisation run more efficiently.”
A CFO is much more than a numbers person. It is necessary that she in applying these new rules, it was found that companies often look for women to “check several boxes”, not only for sectoral expertise, but also for specific skills that are missing , such as international experience, digital skills, synchronicity and financial vision.
After analyzing more than 96,000 earnings calls hosted by 2,800 companies in the US between 2009 and 2019, researchers find that female CFOs appear to be greatly appreciated. In a paper titled Benefits of Having a Female CFO, the team finds that female CFOs give “direct, concise and conservative presentations” and enjoy “stronger associations with future firm performance.”
There are many benefits of having a female CFO… here are, at least, 4 advantages that women CFO brings to the table :
1 . The Competitive Edge of Soft Skills, including ability to communicate by emphasizing pedagogy in explaining the company’s challenges in order to mobilize employees on priority objectives
2. Better Problem-Solving, unwavering commitment to “working together” to build collective added value
3. Building transparency, ethics, building relationships based on trust
4. Challenge the status quo and to innovate in order to adapt the company’s processes, systems and organizations to the continuous flow of technological, economic and societal.
From professionalism to collaboration, to a supportive management style, to a cooperative problem-solving approach, women possess skills that make them invaluable assets.
5 things female CFO bring to the table
My experience, as female CFO, confirms that the financial arena is an area that requires a concerted effort to strengthen the pipeline of upcoming female financial leaders.
It will not happen by osmosis. There has to be a strategic agenda to make sure upcoming talent is ready and able to take on the new challenges of this field.
If 50% of the work has to be done on the eco-system (legislative framework, change of mentality, etc.), the 50% left has to be done with the women themselves.
Here are 5 things women should bring, as newly Promoted female CFO:
- Capitalize on their your hard skills (Performance), as newly promoted CFO, their performance has been recognized
- Strengthen your soft skills (behavior skills)
- Say loud and clear what you do and be proud of your achievements (Image)
- Take part in business meetings in order to seek out and bring transversality into the organization
- Go and meet the teams, peers, board members,… Network
In the end the path from CFO to CEO is clearly mapped out. As the pace of hiring women CFOs increases, the pace at which women CFOs are promoted into CEO roles remains too slow.
Still barriers persist for gender parity, the outlook for women in finance is promising and improving. The world of finance work changes, driving an increased need for diverse talents and leadership.
Women’s empowerment is a cause I care about deeply.
So, if you want to have more practical advice, ask questions or simply connect, please don’t hesitate to book an appointment. As an experienced female CFO, I will give you my support in order to make your first weeks and months on the right track, sharing my methodology and expertise to help you to take ownership of your new role in a calm, and serein manner, but with efficiency.