Racially Diverse CFOs Are in High Demand, but Challenges Persist

The calls for social justice following the murder of George Floyd by a police officer last May have spurred some of the biggest businesses in America to accelerate efforts to hire more diversely, including for the finance function, executives and recruiters say.

Many companies and boards now insist on being presented with a diverse slate of candidates when filling C-suite positions and are tweaking how they assess candidates. They also are taking steps to better retain and promote diverse internal talent. Additionally, the geographic scope of executive searches has widened, as work-from-home options have proliferated during the pandemic.

“I have been getting a lot of calls,” said Kofi Bruce, the chief financial officer of General Mills Inc., the Minneapolis-based food manufacturer. Mr. Bruce, who is Black, joined General Mills in 2009 as treasurer and was promoted to the CFO role in February 2020. The interest from other companies for him to join boards or management teams “is a sign of people trying to build representation,” Mr. Bruce said, pointing to the wider debate about ethnic diversity in American companies.

Recruiters also have noticed a change. “The Floyd killing put a spotlight on companies’ efforts to recruit more diversely and accelerated a trend that began before,” said Peter Crist, chairman of Crist Kolder Associates, an executive search firm. “Every project we now do starts with a conversation about women and minorities,” Mr. Crist said.

Last year, 9.8% of CFO positions in the S&P 500 and Fortune 500 were held by racially diverse executives, up from 8.8% the year before and 3.5% in 2010, according to the Crist Kolder Volatility Report tracking executive moves. In 2020, there were 40 Asians, 14 Latinos and 12 African-Americans out of 675 sitting CFOs, the report said.

Still, racially diverse executives face an uphill battle. The average tenure of CFOs at firms in the S&P 500 and Fortune 500 is about five years, limiting the number of these positions that become available every year. Changing companies’ longstanding views and recruitment policies is also tough, and biases are hard to combat. “We all try to hire people that we can relate to,” said Pascal Desroches, AT&T Inc.’s finance chief, who is Black, referring to unconscious biases that result in people often recruiting candidates that are similar to themselves.

A lack of representation can cause diverse candidates to not pursue a role. “One reason why I didn’t join the corporate world earlier in my career was because I didn’t see any Filipinos represented,” said Louie Reformina, who became CFO of cannabis firm Turning Point Brands Inc. this month.

Many boards prefer candidates who have served as public company CFOs before, which restricts the pool of candidates. “It is really hard for chief executives and boards to hire someone without the proven experience for such a prominent role,” said Rhoda Longhenry, co-head of the chief financial officers practice at search firm True, adding that some companies search for “that purple unicorn.”

Ms. Longhenry said she often asks clients to open their search criteria to include vice presidents of finance, vice presidents of financial planning and analysis and divisional CFOs instead of limiting it to just candidates who are in the CFO seat today.

Some companies are trying to hire more ethnically diverse talent across entire hierarchies, including in entry-level positions. GoDaddy Inc., the hosting firm, sponsors events such as AfroTech and organizations like Techqueria that target Black and Latino professionals, while payments network Visa Inc. recently launched a scholarship program for Black students offering them full-time jobs upon graduation. GoDaddy recently hired Mark McCaffrey, who describes himself as Latinx, as CFO.

Internship programs also can help attract different talent. Mandy Fields, the Black CFO of cosmetics company e.l.f. Beauty Inc., said she benefited from interning in the earlier stages of her career and plans to offer internships in her finance function once she returns to working in her office. “You have to create that path,” she said.

Finding mentors and sponsors is another crucial piece, said Jamere Jackson, the former CFO of Hertz Global Holdings Inc. who now runs the finances of AutoZone Inc., the auto parts retailer.

Mr. Jackson, who is Black, said he found a champion in former General Electric Co. CFO Keith Sherin during his decade working at the industrial conglomerate, including as CFO of business units in aviation as well as oil and gas.

“The point that was the most important was to have a senior executive who saw my potential and allowed me to put my hat in the ring,” Mr. Jackson said.

Still, finance chiefs said it would take time for companies to increase the share of diverse executives in their leadership teams, giving the low starting point. “It is still early innings and if we are not careful, we lose the momentum and we will have the same conversation in five or 10 years from now,” Mr. Jackson said.

“I think we are on a journey here,” said AT&T’s Mr. Desroches. “This is something that takes time.”

Write to Nina Trentmann at [email protected]