Skip to main content
the new finance

John Koopman in Toronto is a consultant at global executive search and consulting firm Spencer Stuart, where he leads the Chicago-based company’s industrial and financial officer practices in Canada.

An exploration of the changing role of finance executives.

John Koopman in Toronto is a consultant at global executive search and consulting firm Spencer Stuart, where he leads the Chicago-based company's industrial and financial officer practices in Canada. He has placed more than 150 chief financial officers, and has completed about 300 executive and board of director searches. We asked him how the CFO's role is changing, and what they need to do to stay on top.

What changes have you seen in the CFO role in the past decade?

In my early career, CFOs typically aspired to be at publicly traded companies. There was the prestige, the public eye, and these tended to be larger companies. It was considered the top of the game, the big leagues.

After the Enron and Worldcom scandals, there was a legislative reaction – Sarbanes Oxley in the United States, and Bill 198 here. That's when it all really started to change, in the early 2000s.

Those bills put more demands on the public company CFO. The reporting requirements became so much more stringent. They also had to start worrying about personal liability.

How did CFOs react?

They got fed up with ticking boxes, dotting i's and crossing t's, and spending a good chunk of their lives on control compliance and backward looking issues. Today, the real business-oriented CFOs say, 'Let me work at a private company where I've got more freedom.'

So public company CFOs are more restricted?

Sometimes in the public sphere they're frustrated, because they're making decisions that they know are wrong long-term, but they have to make them.

There's a tremendous emphasis on the short term. If you reported earnings this quarter, for example, and you're a little behind, there's often pressure to do something that's not in the interests of the company long-term, but will help you make the quarter.

It makes a lie of what we used to learn at business school: that public capital markets are perfectly efficient. They're not; they respond to things that aren't real sometimes.

What influence does this have on a company's decision to go public?

Being public is increasingly expensive. You need to beef up your control compliance environment, you need to beef up your reporting. For companies, certainly mid-size companies, being public will add a million dollars a year in costs.

It's increasingly difficult for smaller organizations to get access to public capital markets. We've made that control compliance environment so tight and so rigid, and the reporting requirements so expensive that they can't get access to public capital in an economically efficient manner.

That's not what the policy makers intended when they started tightening up the control compliance requirements of public companies, but that is the end effect.

The public/private divide really touches everything a CFO does.

It also gets to what I'll call the regrettable credentialization of Canadian business. It's very difficult now to become the CFO of a publicly traded company if you're not a chartered accountant in Canada.

There's a belief that if you're a chartered accountant you must be on top of current accounting trends.

Is there any truth to that?

A little bit. The reality is there are a ton of people out there who do not have a CA that have all the skills they need to be an effective chief financial officer. I can give you a dozen names of some great CFOs who do not have CAs, but there are fewer and fewer of them.

Are CFOs embracing a more strategic role than they have in the past?

Yes. Nearly all of them, especially the good ones, want to be the business partner to the president. They don't want to be the bean counter; they're all trying to get away from that.

They want to be the business partner that brings financial insight – doing analyses that can help drive decision making, and move the business forward.

Do they have bigger responsibilities, or just different ones?

It's bigger. The compliance control side is bigger.

In a complicated, fast moving world if you want to be the CEO's partner today, then you have to move at a pace you didn't have to 25 years ago.

Are today's CFOs up for these challenges?

The calibre of the average CFO keeps getting better and better. The kids coming up through the business schools are getting sharper and sharper. And my experience is they're all good people struggling to do the right thing.

This interview has been edited and condensed.

Interact with The Globe