How and why has the CFO become a contender for the top job?

LEADERSHIP,” writes the historian James MacGregor Burns, “is one of the most observed and least understood phenomena on earth.” Indeed, there are untold volumes on leadership. Why, then, bother to write still another book about it? Because, although ours is a business dominated society, we have so little detailed discussion of business leadership. There are business chronicles, stories of great corporations and their achievements, some exposés, and other vehicles of self-justification. There are descriptions of ends attained, of outcomes. There are news reports of spectacular executive success. But nowhere is there specific documentation of the characteristic behavior of business leaders. Nor is it easy to define what a business leader is. The business world is an arena for achievers. Some are great financial manipulators. Some are spectacular marketeers. Some are technical innovators. Some build and rebuild communities. Are they leaders? They are executives, perhaps, but not always leaders.
The minds of CEO’s are, in aggregate, a tremendous center of power in society. Upon these minds – how they tick, how they prioritize, how they view the vectors of change depends on the transmission of know-how, technology, capital, and jobs. In addition, as globalization increases, the socioeconomic impact of their thoughts becomes all the greater.
Gone is the day of the stern looking, tight lipped, antisocial dark suit who sits positioned in the large corner office secured by twelve foot walnut doors with gold handles. Today’s workers demand involvement and interaction from upper management, no longer do the baby boomers see fit to have P and L figures discussed between upper management only. In order to be a successful CEO in today’s society you must be able to demonstrate an understanding of the dynamics of value enhancement, to be aware of opportunities and to exploit them. The future and success of the company depends on how you view the company and how your employees view you. A CEO’s understanding can have no limits, adapting to change is just a small step in dealing with the organizations future. When we discuss change we have to keep in mind that, the largest of corporations feel the pressures of change on a global level, competing with our global trading partners such as Japan, China, and Europe. In order to be global a corporation must be able to compete on a worldwide basis and to do this manager’s must be able to think globally.
Today’s CEO is required to come out of his designation ambit. Sociologists argue that when large organizations falter and fail it is because of bureaucratic rigidity, which Marxist economists contend is the result of capitalistic oligarchic power. Such structural explanations attribute failure to the way the business is organized or the economy is managed. But we know from military experience that while one battalion might have high morale, few casualties, and great combat success, a comparable battalion might have quite the opposite. The same is true of comparable manufacturing plants in the same corporation. Other factors being relatively equal, the most significant difference between one organization and another is neither sociological nor economic. Rather, it lies in a leadership style that gives direction, evolves structure, and allocates power. That leadership style is most relevant to much of contemporary management when it can be viewed in the context of a highly structured organization with established traditions and a long history of how things are done. Since entrepreneurs have their own unique psychology, we should be in interested in those who assumed leadership of ongoing businesses.
To some extent it can be described that the finance departments are the best place to train future CEOs, but, in my opinion, there are other areas where a CEO could better grow such as HR and the like. As a matter of fact, for a crucial person of any organization or company it is necessary for a CEO to be acquainted with all departments of the organization. Merely restricting CEO into finance departments would not help him or her know all remaining departments of the organization properly. That’s why, in its training session, a CEO is supposed to pass his time in all departments of the organization or company be it finance, HR, public relations, customer service, sales, marketing and all that.
Dynamic bean counting
To understand why CFOs are more frequently getting the top job it is important to know what the contemporary holder of the post does with his time. “The Monty Python image of an accountant sitting in a corner counting beans has disappeared,” says Ian Graves, district director of continental Europe, at recruitment agency Robert Half International. Bluntly put, CFOs are now a much more exciting breed.
In the 1990s, the CFO role became more dynamic and strategic, moving from being merely a functional head to also being a corporate leader. “The best CFOs acted like mini-CEOs,” explains Neal Kissel, partner at management consultants Marakon Associates.
Nowadays when someone reaches the position of CFO he has two qualities: first is a comprehensive knowledge of finance and internal controls; second an understanding of the operational and commercial aspects of business. Both are attributes demanded of CEOs.
News stories about CFOs are rarely positive. One only has to look at the departures of Alison Reed at Marks & Spencer, Howard Dobbs at Boots and Christopher Rogers at Woolworth’s in March to grasp the type of articles that journalists like to write about finance executives. But March also brought a number of ‘good news’ stories about CFOs – where they stepped up to the top job. Although these pieces might have generated smaller headlines, they tell us more about the role and skills of contemporary CFOs than any ‘City pushes out…’ article does.
In the past month, James Bell, CFO of Boeing, was appointed as interim CEO after the departure of Harry Stonecipher, Jose Luis Duran was promoted from CFO to CEO of French retail giant Carrefour, Bertrand de La Noue became CEO of Total Holdings (see box), James Ziener stepped up as CEO of Harley Davidson, Harry You took over as CEO of consulting and integrations firm BearingPoint (leaving the CFO role at Oracle) and Trevor O’Hoy became CEO of Foster’s.
Although recruitment consultants say it is too early to call it a trend, over the past 18 months an increasing number of company boards have decided that in order to best serve shareholders it is prudent to promote the CFO to CEO. CFOs themselves remain reticent about any personal ambitions beyond the CFO role – at least in public. But given this recent string of high profile promotions there is an increasing recognition that they have what it takes to take over the CEO role. How and why has the CFO become a contender for the top job?

"Get 15% discount on your first 3 orders with us"
Use the following coupon

Order Now

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now