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Fortune
Sheryl Estrada

More Fortune 1000 firms want to hire CFOs from their own industry—a switch from past years. Here's why

(Credit: Getty Images)

Good morning. A trend is brewing this year where large companies are making a pivot away from hiring cross-industry CFOs, according to an analysis.

New data from executive search firm Heidrick & Struggles reveals signs of a decline in a focus on cross-industry CFO hires. So far in 2024, about 61% of firms in the Fortune 1000 hired cross-industry CFOs. In 2023, 91% of firms hired a CFO from a different industry, according to the analysis. I sat down with Alyse Bodine, Heidrick & Struggles’ global managing partner of the Financial Officers Practice, to find out more.

Oftentimes, the skill sets of finance chiefs can be fungible across industry sectors, Bodine said. Over the past few years, many organizations have looked for a nuanced perspective or are reevaluating their business model, so they had a desire to bring on a CFO from outside the sector. However, one reason this practice is starting to decline is market uncertainty this year, and factors like the upcoming U.S. presidential election, and elections worldwide. The board wants a CFO who can make an immediate impact, Bodine said. 

Some of the firm’s large clients are even considering CFOs who’ve worked in the same sector at smaller-scale companies, she said. The ability for the CFO to come up to speed and make an impact would arguably happen in a shorter time period compared to someone coming outside the industry, Bodine said.

“Anecdotally, even clients that we're working with in the private equity sector, or even those at smaller entities that we don't track, are following a similar trend,” Bodine said. 

There are also many instances where an organization runs an external search, but discovers there’s an internal candidate who is “absolutely the right one to step up into that lead role,” she said. Heidrick & Struggles has “engaged deeply” with its clients on this front around succession planning, Bodine said. The firm is seeing a number of internal promotions occur. It could even be an employee who had experience in a different sector but joined the company as a junior employee, then learned the industry ropes over the years, she said.

Regarding signs of a decline in cross-industry hiring, “outstanding CFOs” who have demonstrated an ability to work across industries and do so successfully, are seemingly an exception, as companies want to hire them, Bodine said. Overall, when organizations do wish to hire talent working outside of the sector, they look at industries that have similar qualities and characteristics, she said. This could be an exec who is well-versed in heavy R&D or regulatory focus, for example. 

One instance that comes to mind for me this year is tech giant Alphabet Inc.’s hiring as its new CFO Anat Ashkenazi, a longtime finance chief at the pharmaceutical company Eli Lilly and Co.

Does Bodine expect the slowdown in cross-industry CFO hires to continue? “I do think that similar industry hiring this year is probably something that we're going to continue to see,” she said.

Sheryl Estrada
sheryl.estrada@fortune.com

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