The importance of the CFO position has increased in recent years, according to The Washington Post.
The rise in the position has not only called for more candidates, but it has also caused an increase in compensation. The Wall Street Journal reported raises for CFOs outpaced those of their bosses, growing 13.9 percent in 2014 compared with 6.9 percent for CEOs.
Here are three reasons for the rise in corporate CFO positions.
1. CEOs and CFOs have to sign off on financial statements. The Sarbanes-Oxley Act, which was signed in 2002, initiated the regulation. After it was signed, the significance of CFOs increased and board directors were more pressured to get involved with CFO selection.
2. The prevalence of COOs has dwindled. The decrease is partially due to pressure on CEOs to get involved with operating details, as well as declining interest in publicly broadcasting the company's heir apparent.
3. Other investors help with corporate finances. In addition to activist investors and private equity players assisting with companies' finances, there's an increased demand for companies to manage risk and data security. CFOs' skill of using data analytics to make business decisions is very valuable.
The growing need for CFOs is leading companies to seek CFOs with diverse backgrounds, according to Jeremy Hanson from the executive search firm Heidrick & Struggles. Diverse skill sets then help CFOs rise through the ranks to become COOs, company presidents or CEOs.