Deloitte released its Q2/24 CFO survey. Key findings include:
- Just 26% of CFOs believe that now is a good time to take greater risks.
- CFOs consider neither debt nor equity financing attractive.
- CFOs’ optimism for their companies’ financial prospects came in at -0.5.
- Generative AI (GenAI) ranks as the top internal concern for CFOs, though talent and technology transformation remain major concerns.
- The economy, geopolitics and, notably, cybersecurity top the list of CFOs most worrisome external concerns.
- Operational experience, familiarity with new technologies and network leadership are the three most sought after skillsets in a CFO successor.
- 25% of respondents indicate that their organizations do not have a formal CFO succession plan in place.
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Assessment and Sentiment Toward Economic Conditions
CFOs’ outlook was cautious, as most indicate the economy is their most concerning external risk. This sentiment was perhaps most apparent in CFOs’ risk appetite: only 26% of surveyed CFOs believe that now is a good time to be taking greater risks.
CFOs offer differing opinions in their valuation of U.S. equity markets; 38% consider U.S. equity markets undervalued, while 34% believe them to be overvalued. A large proportion of CFOs say neither debt nor equity financing is desirable. The lack of enthusiasm for debt financing may be due to high borrowing costs and uncertainty about interest rate cuts.
Optimism and Risk
38% of CFOs express optimism for their companies’ financial prospects, while 39% express pessimism. CFOs’ greatest external and internal concerns continue to reflect a challenging business landscape. While talent continues to remain at the forefront of CFOs’ most worrisome internal risks, GenAI adoption was this quarter’s top internal concern. Externally, concerns about the economy, geopolitics and cybersecurity are the top three worries for CFOs.
CFO Succession Planning
Despite the attention paid to succession planning in the C-suite, one in four respondents indicate that their organizations do not have a formal CFO succession plan. This is somewhat surprising given that the survey group consists of businesses with at least a billion dollars in revenue.
When asked what items should be the top priority when developing a framework for CFO succession planning, 27% of CFOs point to the creation of a role profile. Only 12% of surveyed CFOs say their companies had already developed such a framework to find a successor.
The top three actions CFOs plan to take to prepare their successor include: placing them in managerial training programs (43%), working with successors to create a developmental/transition plan (39%) and mentoring or coaching them on how to do the job (39%).
The skillset desired for CFO successors underscores the changing nature of the CFO role, as a plurality of CFOs (37%) view operational experience as one of the three most important factors in identifying potential replacements. That was followed by familiarity with new technologies (30%) and network leadership (30%). More traditional financial skills, like accounting (28%) and FP&A (24%), did not make the top three.
Surveyed finance chiefs believe their ability to explain results to board members in clear simple terms is among the most valued skills by boards when considering a CFO for board membership. The majority of CFOs on corporate boards cite having a larger say in shaping a company’s strategy (22%) as the main reason for their interest — another sign of the evolving role of the CFO.
Key Quotes
“Modern CFOs are required to stretch across multiple priorities that fall well beyond their traditional reporting and analysis scope,” Steve Gallucci, national managing partner, U.S. CFO program at Deloitte and global leader of Deloitte Touche Tohmatsu, said. “As the business world evolves, CFOs must expand their skillsets to include tech fluency akin to that of a digital native and robust familiarity with the trends shaping their businesses industry. More and more, we are seeing organizations look to folks with operational experience to fill vacancies in the chief finance role.”
“Having a greater influence on an organization’s strategy is one of the top cited reasons why CFOs seek out board positions,” Maureen Bujno, managing director of Deloitte & Touche, governance services leader at Deloitte and audit and assurance governance leader for Deloitte’s Center for Board Effectiveness, said. “As the role of the CFO continues to evolve to encompass greater responsibility, finance chiefs can bring a unique perspective to the boardroom that can both improve other directors’ awareness of potential risks and impacts the direction of the organization.”
Findings from Deloitte’s Q2/24 CFO survey are available for download: https://www2.deloitte.com/content/dam/Deloitte/us/Documents/us-2Q24-cfo-signals-full-report-final.pdf.
