McKinsey’s CFO has never taken an accounting class.
“I think I drive my accounting team crazy because I ask them all the logical questions and they have to put it back in GAAP-speak,” Eric Kutcher, senior partner and CFO of McKinsey, told CFO Brew.
An engineer by training, Kutcher worked at Intel before joining McKinsey. He learned finance on the job by taking on roles such as compensation policy committee member, where he helped oversee compensation, the firm’s largest expense.
“That was probably my first real understanding of the details of our economics because our compensation plan gets into a lot from our balance sheet and a lot of taxes,” he said. “I loved it. I truly loved it. And then from there, I ended up getting exposure through our board where I ended up being on our finance committee and, as I often say, for my sins, they made me the CFO.”
Though Kutcher may be a bit of an outlier, his journey to CFO illustrates how much the role has changed in recent years. Many companies now don’t require their CFOs to have accounting backgrounds, and they’re increasingly looking for finance chiefs who have experience outside the finance function.
“The role of the CFO has really changed in the last couple of years,” Jeanne Branthover, managing partner and global practice leader of financial services and fintech at executive search firm DHR Global, told CFO Brew. “The CFO is no longer considered just the finance guy or gal.”
Accounting experience is less vital: In years past, Branthover said, clients would insist that CFOs have a public background and hold CPA licenses or CFA certifications. Now, she said, the role is “much more business-focused than accounting-focused.”
Statistics bear this out. In 2022, 34.9% of CFOs at large public companies were CPAs, according to the CristKolder Volatility Report, while 51.5% had MBAs. Statistics from Korn Ferry data cited in the Wall Street Journal show the percentage of large-company CFOs with CPA licenses fell to 36% in 2019 from 46% in 2014.
CFO still play final decision-maker roles within finance and must be knowledgeable enough to perform that function. But as their roles have expanded, they have come to rely more on specialists within the finance function to handle the details of finance. Chief accounting officers and controllers have adopted some of the functions the CFO once held.
“We’re seeing companies actually hire more CAOs, much more experienced controllers, so that the accounting areas are much more robust,” Branthover said.
Building a strong finance function can free CFOs up to focus more on strategy and other priorities. Kutcher said the great CFOs he’s known have prioritized staffing their finance functions with talented people. “That finance function adds an enormous amount of value in ways that most people don’t get,” he said. “If I think about my tax team, I mean, I owe them so much in terms of the brilliance of what they’re doing.” As a CFO, he said, “you’ve got to build an enormous set of capabilities that only you can build.”
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Get outside the finance box: Having experience outside the finance function can benefit CFOs in unexpected ways. Kutcher said that his engineering background gives him a unique perspective on the challenges he faces as a CFO. “The thing that engineering taught me was how to break down a problem,” he said. “Engineers have a desire to understand how things work. They tinker. I kind of tinker until I understand. I keep asking questions…And what ends up happening as a result is I really do understand the system dynamic [that underlies a problem.]”
CFOs with novel experience can spark change and help companies move in different, more positive directions, said Branthover. “It pushes the company to not just ‘do it the way we’ve always done it,’” she said.
Kutcher recommends that CFOs—or people who aspire to CFO roles—seek out experiences beyond finance.
He acknowledges that this may be uncomfortable, and that it will take a certain amount of humility. “You’ve got to be willing to say ‘I might not be all that good’” in a given area outside finance, he said. Say to yourself, “‘I’m going to learn a lot that’s going to make me more empathetic to what my peers are doing when we have the conversations we’re going to have if I am the CFO,’” he suggested.
In particular, Kutcher advises getting out and speaking with people to understand what they’re dealing with. There have been times in his career, he said, when traveling to a location and working with clients in-person showed him that he’d misjudged a situation.
It’s easy to look at an underperforming location’s data and say “‘This is what they ought to go do,’” he said. But “when I show up on the ground, and I see and hear what they’re up [against],” he said, he often realizes there are aspects to the problem he wasn’t aware of.
“It’s helpful to have lived in someone else’s shoes,” Kutcher added, “because if all you ever do is look at it through the numbers, you’re really an analyst.”
Don’t fear the curveballs: Unexpected experiences, Kutcher said, can make you a stronger and more well-rounded finance professional. A career path is “never a straight line,” he pointed out, but “the curveballs that are thrown at you are all the things that make it exciting and are probably the things that made you who you are.”
“I’d encourage the folks that want to be CFO to try the things that are uncomfortable because they will make you better,” he said.