Stepping into the spotlight: The progression of the treasury function
The corporate treasury function serves as the custodian of financial and liquidity risk management. It’s a cross-business function that influences operations and adds value across the organization. Mature treasury functions look for opportunities to move the business forward.
Before the pandemic struck, treasury was often viewed as a support function and frequently combined with tax, accounting or other functions. Few organizations fully understood, much less exploited, treasury’s value to the business.
But in early 2020, a rapid shift occurred. As Colleen Ostrowski, SVP and Treasurer at Visa put it, “Two things elevated the spotlight on global treasurers when COVID hit [different than the 2008 financial crisis]: the focus and uncertainty around liquidity made the job more important, and boards really leaned in to ask questions of treasurers inside their companies and across their network.”
Now, CFOs and boards have begun to realize the value of a professional treasurer — and the financial risks of not having a strategic treasury function. James Kalinovich, SVP and Treasurer at freight and transportation leader Wabtec Corporation, explained it like this: “A proven treasurer may have a higher acquisition cost but has the opportunity to save you many millions, whether that be in upside opportunity or downside protection.”
When the pandemic was at its peak, companies were facing unknowns that treasurers had to address quickly. At first, treasurers had to ensure their organizations had adequate liquidity. Their immediate steps were to lock in low interest rates, understand the impact of the exchange rate, generate cash, stabilize ratings and manage liabilities. Once the initial panic subsided, treasurers turned to planning acquisitions, arranging buybacks and positioning portfolios to maximize cash yields.
It’s become clear that the treasury function won’t retreat with it into the shadows. Treasury management is likely to continue to serve as a critical resource — particularly as organizations are planning and engaging in more initial public offering (IPO) and special purpose acquisition company (SPAC) transactions. And, as new companies spawn, they’ll have to build their own treasury function.
Given this forecasted rise in demand, organizations — both established and emerging — need to start identifying candidates now to grow the treasury function talent pipeline — and make sure that talent is flexible enough to adapt to new expectations as demands shift.
We recently interviewed a set of treasury leaders from large global organizations, including Barclays, Bio-Rad, Visa and Wabtec, to get their thoughts on why the function has changed and how organizations are developing the next generation of treasury leaders.
We also asked these leaders for their insights into the demand for top treasury talent. Here’s what we learned.
The near-constant evolution of treasury roles makes them challenging from a recruiting and hiring perspective. Unlike other finance functions, such as accounting and tax, for treasury, there are few clear-cut academic or career pathways. Many people arrive at a treasury role by chance and then develop the skills and experience they need.
One driver of transformation in treasury is technology. As a result, treasurers need to be able to recognize and harness the opportunities of emerging technology, including cryptocurrencies and blockchain. Everyone we interviewed also predicted that the function will continue to become more data-focused.
One thing is clear: breadth of experience trumps depth, given the need for treasury to work across the business. Our interviewees agreed that ideal candidates have likely worked in a variety of fields, including accounting, banking, finance, capital markets, foreign exchange and risk. They probably have an MBA, but what matters most is comprehensive work experience that affords candidates a complete understanding of the business environment.
This means you should consider candidates who have worked extensively for several companies operating in large, complex global markets — and have had an opportunity to test their mettle in swiftly changing environments.
Given the need to communicate with a variety of stakeholders across the business, our interviewees pointed out key personality traits that strong treasury leaders tend to have. These include communication, empathy and relationship-building skills. Top candidates will have a record of influencing others at the highest levels and leading transformation efforts. Andy Kim, Treasurer at Bio-Rad, advised, “You absolutely can succeed in Treasury as long as you’re curious and ready to learn. You need to be adaptable and prepared to challenge the status quo.”
As the treasury field continues to develop rapidly, the demand for talent will quickly outpace the supply. Kathryn McLeland, Group Treasurer at Barclays, remarked, “We’ve seen a real increase in the market for experienced treasury talent in the last few months. There’s also more demand for technical treasury capabilities at the junior level. The war for talent is on for sure.”
Like McLeland, we don’t foresee a slowdown in the demand for talent anytime soon. In part, that’s because there’s a growing number of emerging businesses that are ready to hire their first treasurer. Treasury functions can add great value for these companies, whether they’re growing because of private equity investment, SPACs going public, spinoffs, mergers or acquisitions.
Without a treasury function, businesses realize they risk leaving a considerable amount of money on the table. Take, for example, Wabtec, which acquired GE Transportation in 2019. In just the first year, the new treasury leader and team delivered enormous savings, creating a $15 billion market cap company.
In addition to demand rising from growth, there’s also a lot of churn in treasury roles right now. Although treasurers typically have a five-year tenure in the role, 27% of treasurers in publicly traded companies with $500 million to $5 billion in revenue have left in the last two years. The number of treasury leaders who have changed roles in 2021 already is double the number who changed roles during 2020.
The rising profile and influence of the treasury function, and the consequently high demand for top treasury talent, means it’s more difficult than ever to recruit for treasury roles. As more organizations recognize the need to upgrade their treasury capabilities, talent will become even more scarce.
The Korn Ferry Financial Officer center of expertise can help you recruit high-caliber treasury talent. Our strategic search services and competency-based assessments have helped publicly traded Fortune 500s as well as emerging growth companies identify and recruit candidates who are the perfect fit for their organization and culture.