The Surge in CFO Job Switches and its Impact on Salaries
Introduction: Demand for Seasoned CFOs in a Dynamic Business Environment
Chief financial officers (CFOs) are witnessing an unprecedented frequency of job switches as companies, ranging from IPO-bound startups to established firms venturing into new sectors, seek experienced CFOs to ensure financial stability, navigate stricter accounting and regulatory norms, streamline costs, and raise funds in today’s volatile business landscape.
The Ripple Effect: Soaring Compensation and its Proximity to CEO Pay
This surge in CFO job switches has led to a remarkable increase in their compensation, with some CFOs earning salaries closer to that of CEOs in top conglomerates and new-age companies, according to industry experts, top HR consultants, and company executives.
The Value of a Competent CFO in a Complex Regulatory Environment
Promoters of major Mumbai-based conglomerates endorse the significance of a competent CFO in today’s business landscape, where regulations and rules have become increasingly intricate, and finding experienced and skilled talent has become challenging.
Notable CFO Moves and Industry Trends
Prominent recent examples of CFO moves include Jatin Dalal’s transition from Wipro to Cognizant, Saurabh Taneja’s move from Tata Boeing Aerospace to Mahindra Logistics, and Ajay Goel’s switch from Vedanta to Byju’s. Additional CFOs who have recently resigned include Aakash Moondhra of PayU Global, Kedar Upadhye of Renew Energy, and Kishore Saletore of Bharat Forge.
Managing a Dynamic Regulatory Environment and Investor Relationships
Industry executives emphasize the importance of recruiting competent CFOs who can successfully navigate the dynamic regulatory landscape, drive cost rationalization, maintain a healthy balance sheet, and effectively manage investor relationships. For instance, a CFO with extensive experience in global markets, like Jatin Dalal, can bring added value to a global company like Cognizant by effectively handling stakeholders across various geographies.
Retaining Top Talent: Group Roles and Hefty Compensation Packages
To retain top CFO talent, boards have resorted to offering larger group roles and generous compensation packages.
CFO Salaries: Factors Influencing the Range
Experts suggest that average CFO salaries at large companies could range between ₹4-6 crore and potentially soar to ₹12-16 crore, depending on the scale and complexities of the organization.
Evolving Salary Hierarchy: CFOs and CEOs
Traditionally, CFOs were the second-highest paid executives in most organizations after CEOs. However, recent trends indicate a narrowing gap between CFO and CEO salaries, especially in large organizations and new-age firms, depending on the criticality of the CFO’s role and the responsibilities they handle, explains Anandorup Ghose, a partner at Deloitte India.
CFOs with Multifaceted Expertise in High Demand
According to experts, CFOs of large Indian companies are increasingly sought after for their ability to navigate domestic shareholders, manage regulatory matters, ensure corporate governance, and possess exposure to global investors, accounting norms, and regulatory requirements. This level of expertise is highly desirable for both local firms and those listed abroad.
The Strategic Importance of the CFO Role
Today, many CFO roles are considered to be strategic and hold equal importance to that of a CEO. As companies operate in complex market scenarios, boards must recognize the invaluable contributions made by CFOs. In some instances, CFOs leave their current positions to seek new challenges or gain global exposure. Despite financial compensation being a factor for some, growth and professional development often drive CFOs to explore new opportunities.
Driving Factors Behind the Increase in CFO Churn
The rise in CFO churn can be attributed to the multitude of options available to these executives, especially those experienced in handling complex situations. Factors such as the increasing number of companies going public, higher capital market activities, public companies restructuring debt, and increased competition among companies for top talent have contributed to this demand.
Insights from Leadership Advisory Experts
K Sudarshan, the MD for India and regional chair for Asia at leadership advisory firm EMA Partners, highlights the various elements fueling the demand for CFOs. The drive for IPOs, heightened capital market activity, debt restructuring among public companies, and frequent talent acquisition from competing firms all contribute to the current landscape
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