Racially Diverse CFOs Are in High Demand, but Challenges Persist

In addition to the higher than average salary and excellent benefits that come with working for a Fortune 500 company, racial diversity in the C-Suite has been linked to better financial performance. According to the Charlotte Business Journal, “In the nation’s 10 largest companies (by market capitalization), the average ROI (Return on Investment) was $11.1 billion as of 2014. The average pay for chief financial officers of these companies was $3.5 million, with the highest paid at $10.7 million. The 10 companies themselves had an average return of $75.1 billion. The median ROI for those companies was $5.9 billion, with the highest paid CFOs making $16.7 million.

Just as the workforce is becoming more racially diverse, so too are the roles of financial executives—completely ignoring the fact that executives don’t actually have a job. This is the topic of a new report by the Wall Street Journal , which scoured the country’s largest firms for the most racially diverse workplace in each of their industries. The findings were varied—there were no minority CFOs at the top 200 firms measured, but in four of the 10 industries examined there were more CFOs in a diverse workplace than at the average company.

Since the election of Donald J. Trump as the 45th President, there has been a lot of attention on whether and how a person’s race or gender may impact their ability to successfully compete for CFO positions. Many of the CFO candidates that have been highlighted as being qualified for these jobs have been white, male, and straight, a group which may well be more common in the CFO pool today than candidates from other minority groups (for example, blacks, women, or LGBTQ candidates).. Read more about what is a cfo and let us know what you think.

black, Asian and Hispanic executives are being sought for positions in the financial sector as companies seek more diversity in their leadership teams against the backdrop of increased public attention to racial inequality in the United States.

According to recruiters and financial experts, minorities who already hold leadership positions will have more opportunities, but it can still be difficult for those without leadership experience to gain a foothold in a company.

Calls for social justice following the killing of George Floyd by a police officer in May have prompted some of the largest U.S. companies to accelerate their efforts to hire more diverse workers, including in financial positions, executives and recruiters say.

Many companies and boards are now emphasizing the need for a diverse pool of candidates for executive positions and are changing the way they evaluate candidates. They are also taking steps to better retain and develop diverse internal talent. In addition, the geographical search for managers has expanded as opportunities to work from home have increased during the pandemic.

Kofi Bruce, CFO of General Mills.

Photo:

General Mills

I get a lot of calls, says

Kofi Bruce,

finance director

General Mills Inc,

a Minneapolis-based food producer. Bruce, who is black, started at General Mills in 2009 as treasurer and was promoted to CFO in February 2020. The interest of other companies in including her on their boards or management teams is a sign of a push for representation, Bruce said, referring to the broader debate over racial and ethnic diversity in corporate America.

Recruiters have also noticed a change. Floyd’s murder drew attention to companies’ efforts to recruit a more diverse workforce and accelerated a trend that had already begun, he said.

Peter Crist,

President of Crist Kolder Associates, an executive search firm. Every project we undertake starts with a conversation about women and minorities, Bennett said. Crist.

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Last year, 9.8 percent of CFO positions in the S&P 500 and Fortune 500 were held by executives with ethnic diversity, up from 8.8 percent the year before and 3.5 percent in 2010, according to the Crist Kolder Volatility Report, which tracks executive movements. Of the 675 CFOs who will be in office in 2020, 40 are Asian, 14 are Hispanic and 12 are African-American, according to the report.

Yet racially diverse leaders face challenges. The average tenure of CFOs at S&P 500 and Fortune 500 companies is about five years, which limits the number of such positions that become available each year. It is also difficult to change entrenched attitudes and recruitment policies of companies, and prejudice is difficult to combat. We all try to hire people with whom we can identify, she says.

Pascal Desroches,

AT&T Inc.

The CFO, who has dark skin, cited unconscious biases that lead people to hire candidates who look like them.

Lack of representation may result in candidates from different countries not being considered for a particular position. One of the reasons I didn’t go into business early in my career is that I didn’t see Filipinos represented there, he said.

Louis Reformina,

became the CFO of a cannabis company

Turning Point Brands Inc.

this month.

Many boards prefer candidates who have previously served as CFO of a publicly traded company, so the number of candidates is limited. It is very difficult for executives and boards to hire someone without experience for such an important position, he said.

Rod Longhenry,

co-head of the CFO department at recruiting firm True, adding that some companies are looking for this purple unicorn.

According to Longhenry, she often asks her clients to expand their search criteria to include vice presidents of finance, vice presidents of financial planning and analysis, and department CFOs, rather than limiting themselves to candidates who currently hold the CFO position.

Mandy Fields is the CFO of e.l.f. Beauty Inc.

Photo:

Nicholas Kern

Some companies are making efforts to recruit a more racially and ethnically diverse workforce across the hierarchy, including for entry-level positions.

GoDaddy Inc,

the host company, sponsors events like AfroTech and organizations like Techqueria that target black and Latino professionals, and the payment network

Visa Inc.

recently launched a scholarship program for black students that offers them full-time employment after graduation. GoDaddy recently announced

Mark McCaffrey,

who identifies as Hispanic, for the CFO position.

Internship programs can also help attract diverse talent.

Mandy Fields,

the black CFO of a cosmetics company E.L.F. Beauty Inc, said the internship has benefited her early in her career, and that she plans to offer an internship in her finance function when she returns to the office. You have to take this route, she said.

Finding mentors and sponsors is another important aspect, according to

Jameer Jackson,

CFO of an auto parts business

AutoZone Inc.

and former CFO

Hertz Global Holdings Inc.

Sir, I want to thank you for your support. Jackson, who is black, said he had a protector in the former president of the European Union.

General Electric Co.

HEAD OF THE FINANCIAL DEPARTMENT

Keith Sherin.

during his ten years with an industrial conglomerate, including as CFO of business units in the aerospace and oil and gas sectors.

More importantly, an executive recognized my potential and let me step into the ring, Jackson said.

However, financial executives indicated that due to the low starting point, it will take time for companies to increase the proportion of diverse executives in their management teams. This is just the beginning, and if we’re not careful, we’ll lose momentum and have the same discussion again in five or 10 years, Jackson said.

I think we’re on a journey, AT&T’s Desrosch said. It’s something that takes time.

The murder of George Floyd on the 25th. In May, there were protests against police brutality and systematic racism. Darren Everson of the WSJ spoke with black professionals about their experiences and the changes they would like to see. Illustration photo: Adele Morgan (6/10/20)

Write to Nina Trentmann at [email protected]

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