The CFO Shortage: Navigating the Demand for Financial Services Talent

4 Min. Read

The shortage of Chief Financial Officers (CFOs) and their finance teams is creating waves across industries as we move through 2024 and into 2025. With market complexity increasing, CFOs are in high demand, yet the supply of qualified candidates is dwindling. This shortage is exacerbated by multiple factors, from demographic changes to shifting business needs, leaving companies scrambling to fill critical roles.

Understanding the CFO Shortage: Key Drivers

The CFO shortage can be traced to several interrelated factors, each amplifying the demand for skilled financial leaders:

1. Retirement of Baby Boomer CFOs

CFO.com highlights that the ongoing retirement of baby boomer CFOs has created a leadership vacuum. Many seasoned financial leaders are exiting the workforce, and with fewer up-and-coming executives prepared to step into their shoes, the pool of experienced candidates is shrinking rapidly. As more CFOs retire, the gap between supply and demand continues to widen.

2. Evolving Responsibilities of the CFO

According to a 2023 McKinsey report, the role of the CFO has evolved dramatically over the past decade. Today's CFOs are expected to be more than just financial gatekeepers—they are now responsible for driving strategy, navigating complex regulatory landscapes, and fostering digital transformation within their organizations. As a result, companies are seeking CFOs with a broader skill set that includes operational leadership, technology adoption, and risk management expertise, making it harder to find well-rounded candidates.

3. Private Equity and M&A Activity

The private equity market has seen an unprecedented surge, further fueling the demand for CFOs. Bain & Company reports that private equity deals hit record highs in 2023, and this trend shows no signs of slowing down. CFOs in these environments are required to manage complex financial transactions, oversee rapid scaling, and navigate high-stakes exits—all specialized skills that are in short supply.

4. Competition for Top Talent

CFOs are among the most highly sought-after executives, and competition to attract top talent has never been fiercer. As highlighted by McKinsey, the average time to fill a CFO position is growing, and companies are increasingly turning to interim solutions or extending the responsibilities of existing executives to cover the gap.

The Team Impact of the Financial Services Talent Shortage

It’s not just CFOs who are in short supply, this talent gap extends to the entire finance function. The shortage of skilled professionals is placing increased pressure on existing teams and slowing down the ability of organizations to meet financial reporting and planning needs.

The shortage can be attributed to:

• Technology and Automation Demands: McKinsey's research on the future of work in finance indicates that automation and AI have fundamentally shifted the skill set required in finance. Professionals who are adept at leveraging data analytics and automation are in high demand, but many organizations are finding it difficult to find talent with these capabilities.
• Increased Burnout: As the responsibilities of finance teams grow, burnout is becoming a serious issue. 

Solutions for Businesses Facing a CFO Shortage

While the CFO talent gap presents challenges, businesses can take proactive steps to mitigate the impact:

1. Leverage Interim CFOs

Interim CFOs provide a flexible, short-term solution for companies in need of immediate financial leadership. A growing number of organizations are turning to interim executives to manage transitions and drive key initiatives without the need for a long-term commitment. According to a recent report from CFO.com, the demand for interim CFOs has increased by 103% year over year, as companies seek temporary expertise while they continue their search for permanent leadership.

2. Internal Development and Upskilling

Developing internal talent pipelines is a strategy that more companies are embracing. By investing in the upskilling of mid-level finance professionals, companies can create a sustainable pipeline for future CFOs. 

3. Strategic Compensation Packages

Offering competitive compensation packages is key to attracting and retaining top talent. However, salary alone is not enough. Bain & Company notes that flexible working arrangements, equity options, and health and wellness programs are critical components of the modern CFO compensation package.

4. Utilize AI and Automation

Embracing new technology can reduce the pressure on finance teams by automating routine tasks and providing more accurate data analysis. Companies that invest in automation and AI are better positioned to attract tech-savvy financial professionals, who are increasingly seeking roles that provide opportunities to work with cutting-edge technology.

What is the Future Outlook for a CFO?

The CFO shortage is expected to persist into 2025, with McKinsey forecasting that the demand for financial leadership will continue to outstrip supply. Companies are likely to increasingly rely on innovative solutions such as fractional CFOs, interim executives, and aggressive talent development strategies to navigate this gap?.

Businesses that proactively invest in technology, upskill their teams, and offer flexible work environments will be better positioned to secure the financial leadership needed to navigate an increasingly complex economic landscape.
By addressing these challenges head-on, organizations can ensure they have the right leaders in place to steer through market uncertainties and foster long-term growth.

We can help you fill your power vacuum and beat the CFO talent shortage. Get in touch to get started, or learn more about our Full Time and Fractional expert Interim Solutions here.