Introduction to CFO Roles and Responsibilities
Chief Financial Officers are executives with responsibility over all financial aspects of a business. CFOs work with CEOs and other executives to determine the strategy of a business, and then ensure operations drive progress towards the business's goals.
Factors Influencing CFO Salaries
CFO Salaries are driven by the same factors that influence other professional salaries:
business size
general economic conditions
industry-specific conditions
regional economic conditions
availability or shortage of candidates
business attractiveness to candidates
Australia is a big country that from time to time sees state migration patterns change. For example during and after Covid many professionals relocated from Victoria and NSW to Queensland. These types of large shifts can quickly change supply and demand levels for CFOs in specific regions.
Likewise when large booms or busts impact specific industries the supply and demand balance can cause salaries to go up or down.
Additional factors that have emerged in recent years include:
Pay transparency - the abolition of pay transparency in Australia has prompted some employers to audit salaries to ensure salaries are fair. Expectation is that the WGEA Gender Pay Gap Report will further improve any discrepancy between male and female salaries at all levels of organisations.
Preparedness to negotiate on salaries - general Labour shortages in the 2020s have made professionals more likely to negotiate on salary.
Luckily for CFOs, they are generally always in the top 5 jobs that businesses need to fill.
How much does a CFO earn? Average CFO Salaries
The size of a business gives more insight into CFO salaries than most other factors, because people in executive roles are more likely to move cities for their job. Location has the second largest impact on CFO salaries. Third largest impact is the Commercial / Not For Profit split, where NFPs have lower executive salaries including CFOs.
Here's a quick indication of typical 2024 Commercial CFO salaries based on business size:
Turnover up to $50m: $270k (range $230k - $350k)
Turnover $50m - $500m: $450k (range $350k - $600k)
Turnover greater than $500m: $600k+
Important point to note - these figures are base salary only, and do not include Superannuation, company car, health insurance or other Fringe Benefits, or Short/Long Term Incentives.
Large recruitment companies such as Hays and Michael Page prepare annual reports on salaries that include CFOs.
There are certainly outliers though - publicly listed companies can have CFO salaries well in excess of the $600k mentioned above. 2022's highest earning CFO was Alex Harvey from Macquarie who pocketed a cool $10.5m in salary alone.
Experience and Education
CFO roles do not have standard requirements for experience and education, however there are two common paths that most CFOs take to gain their position.
Big 4 Auditing experience, which gives an in-depth understanding of reporting requirements as well as strategic issues that businesses deal with. It doesn't give a deep understanding of all the operational aspects of businesses but does give good experience at managing teams to solve problems.
Corporate experience, learning the ropes from within. This gives a strong depth of operational experience but in a smaller number of businesses than an auditor would encounter.
Neither path is superior. For first-time CFOs the key is to find a business and CEO that is compatible with the way you work. Coaching and mentoring is very useful for those making the big step to their first CFO role, either through the business itself and/or via your professional association.
Comparing CFO Salaries: Startups vs Established Companies
As a general rule CFO salaries at Startup companies are likely to be much lower than at established companies, because they generally have less money to spend. This is common for most/all startup staff though, so compensation packages often include a share-based component to compensate.
Future Trends in CFO Compensation
General economic trends drive CFO compensation the same as everybody else.
Existing trends are expected to continue to push higher than historic trend salary increases:
candidate scarcity
turnover
inflationary pressures
If you're a CFO or aspiring CFO, your best bet to maximise your pay packet is:
build a solid bank of experience
get really involved in the strategic direction of the business - many CFOs end up being promoted to CEO eventually as they function as the CEO right-hand
get a coach or mentor to help sharpen your salary negotiating plan
have a salary package target in mind (that is in line with industry and company expectations)