Companies offer top dollar to quality CFOs

MUMBAI: With a changed regulatory environment and intense competition, companies are in hot pursuit for quality CFOs. Executive search firms said there is an urgency to fill such posts which may have fallen vacant. The resultant spike in demand has pushed up CFO salaries incrementally over the past few years.

Usually, a CFO's salary is about 30% of the CEO's compensation. But it has risen incrementally to 33% in 2011 and 34% 2012, according to Moorthy K Uppaluri, CEO, Randstad India.

Earlier, corporates were run on a steady state basis with some growth planned every year in their regular business. Increasingly, however, corporates are looking to grow exponentially and at times in new unrelated areas, triggering the need to look for alternative sources of funding.

"In addition to banks and the traditional share markets, corporates have the option of raising funds from a whole new set of organizations like PE firms, angel investors, overseas lending organizations and share markets. These require a CFO of exceptional quality — both intellectual as well as in communication and advocacy skills — which is difficult to find," said Rajiv Burman, managing partner, Lighthouse Partners.

The role of the CFO has, thus, undergone an overwhelming transformation. It's not merely a functional role of managing books, cash flows and funding. Today, the CFO has become the co-driver of the business along with the CEO.

"Companies are replacing CFOs who are of the old school of thought and mainly of maintenance nature. In a hyper-competitive environment, companies want the CFO to be proactive and not reactive, help on strategy and expansion in business. He is the chief lieutenant today and a key ally. Previously, this space was occupied by sales and marketing heads," said Ronesh Puri, MD, Executive Access India.

But naturally, if a CFO quits, companies don't want to leave the post vacant for long. Uppaluri said, "In case a company is caught in a situation where it is required to fill a vacancy on an urgent basis, we have in the past placed CFOs within a matter of a couple of days."

At times, there are emergencies because an M&A might be in the works or there may be requirement to raise funds immediately. Puri said, "Earlier, we would present candidates to companies after two months of getting a search. This has come down to about a month."

On demand outstripping the supply of CFOs, Arvind Agrawal, president - HR and corporate development, RPG Enterprises, said the reason for this is the lack of high-caliber talent. "There are many qualified candidates but the good ones will always be in greater demand. Also, many candidates display strength in either functional or leadership skills. But a good CFO needs to have a combination of both," said Agrawal.

Globally, CFOs are rising to CEO positions. A popular example is Indra Nooyi of PepsiCo. At RPG, many of its business heads — at KEC and RPG Cables, to name a few — have been former CFOs. This has made India's finance leaders most optimistic about growth in employment compared to any other country covered. According to a survey of global finance leaders by American Express in partnership with CFO Research, 78% of finance leaders surveyed from India expect to see strong growth in employment opportunities as compared to 50% of the senior finance professionals from China and 61% from US who responded.