CFOs Say They Want Operational Experience and Familiarity With New Tech When Identifying Successors; GenAI Tops List of Internal Concerns: Deloitte CFO Signals™ Survey 2Q 2024

NEW YORK, June 12, 2024 /PRNewswire/ —

Key takeaways

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.
Twenty-five percent of respondents indicate that their organizations do not have a formal CFO succession plan in place.

Why it matters to CFOs
Each quarter, CFO Signals™ tracks the thinking and actions of some of the leading CFOs representing North America’s largest and most influential companies. Since 2010, the survey has provided key insights into the business environment, company priorities and expectations, finance priorities, and CFOs’ priorities. Participating CFOs represent diversified, large companies, with 80% of respondents reporting annual revenue in excess of $1 billion. Approximately one-fifth (20%) are from companies with greater than $10 billion in annual revenue. (See "Methodology" below for information about the change in survey methodology initiated this quarter.)

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 US 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.

Own company optimism and risk
Thirty-eight percent 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, 1 in 4 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/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. 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."
— Steve Gallucci, national managing partner, US CFO Program, Deloitte LLP, and global leader, Deloitte Touche Tohmatsu Limited

"Having a greater influence on an organization’s strategy is one of the top cited reasons why CFOs seek out board positions. 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."
— Maureen Bujno, managing director, Deloitte & Touche LLP, and Deloitte governance services leader and Audit & Assurance Governance Leader for Deloitte’s Center for Board Effectiveness

Download the findings from the Q2 2024 CFO Signals survey here.

Methodology
Every quarter, Deloitte’s CFO Signals closely follows the thinking and priorities of leading CFOs who represent some of North America’s largest and most impactful organizations. This report summarizes CFOs’ opinions across four key areas: business environment, company expectations and priorities, financial priorities, and personal priorities.

To better gauge the sentiment of CFOs, we updated our CFO Signals survey methodology for the 2Q survey to include a larger number of participants. Any change in survey methodology, however, can impact survey results. This means that data from this quarter may not be fully comparable to historical data. As such, we have focused on results that offer useful information without the need for comparison to previous results. Going forward, we endeavor to adjust our methodology to align the groups selected by firmographic characteristics to more closely match the percentages in our previous surveys.

The CFO Signals survey for the second quarter of 2024 was conducted between April 29 to May 11, 2024. A total of 200 CFOs participated in this quarter’s survey. This survey seeks responses from CFOs across the United States, Canada and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. Participation is open to all industries except public sector entities.

For more information about Deloitte CFO Signals or to inquire about participating in the survey, please contact [email protected].

About Deloitte

Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500® and more than 8,500 U.S.-based private companies. At Deloitte, we strive to live our purpose of making an impact that matters by creating trust and confidence in a more equitable society. We leverage our unique blend of business acumen, command of technology, and strategic technology alliances to advise our clients across industries as they build their future. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Bringing more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s approximately 457,000 people worldwide connect for impact at www.deloitte.com.

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