From CFO to CEO
The CEO role is a very complex one. There are many responsibilities encapsulated within this role requiring a multifaceted person. The key role played is managing and growing business. Additionally, CEOs are expected to deal with more informed and demanding stakeholders, pay particular attention to matters of corporate governance and ensure that the financial management perspective of the business is sound. These issues range from external ones like keeping investors happy, to internal ones like making sure that the business hires and retains the most competent people. In totality, every single aspect of the business has to be managed by the CEO making him/her have a full plate at all times. This job is made far more difficult by other forces like economic crises demanding that the CEO have a strong financial backing. In the US and UK, most CEOs are recruited from individuals with strong financial backgrounds followed by those with operations and marketing backgrounds.
Although the trend illustrates that a sizeable number of CEOs is recruited from the CFO’s position, there are limitations. Most organizations have limits to the functions of the CFO. The main purpose of the finance department is accounting and control meaning that it is mainly charged with managing numbers rather than people or other intangible aspects of the business (Arons, 2013). The trend of promoting CFOs to the CEOs position is largely exhibited in small companies. Large multinationals usually prefer to recruit their CEOs from the COO position.
One advantage of having the CFO as the CEO is that he/she has a grip on the financial realities of the business and the business environment and therefore is trusted by investors and other stakeholders to steer the business to future profitability or to navigate it through a financial crisis (Maciejewski et al., 2009). The range of functions that the CFO has, including; management of cash, raising capital, cost control, treasury knowhow and banking relations, make him/her a major attraction to the CEO position. This positioning as the holder of the financial security key make CFOs a natural fit for the CEO position.
Cal Stuart, who has a CPA designation, was the CFO of Aquion Water Treatment products for more than three years (Meta, n.d.). During this period, he had taken more unusual responsibilities like overseeing engineering and manufacturing, and making the annual strategic plan. When the CEO unexpectedly left in 2010, the board primarily comprised of private equity bankers thought he was the best fit to ascend to the position (Stuart, 2013). Stuart admitted that he was surprised by this move. He struck a compromise with the board that he first becomes the COO, keeping his CFO title, so that both sides can get comfortable with him in his new role. Eventually, he became the full-fledged CEO in April 2011, a role he claims to thoroughly enjoy.
Mike Corkery, formerly the VP of operations finance in Nextel, was promoted from the CFO position at Deltex, “a software and application provider for government contractors and professional services firms” (Stuart, 2013), to the CEO position. He has a CPA designation and asserts that having a good CEO to work with usually helps groom the CFO to eventually assume that mantle. The CEO has to mentor the CFO for this to happen. In his situation, he was mentored by his former CEO, Kevin Parker, who was himself a CFO before and who recommended Corkery for the job after leaving the company.
References
Arons, S., (2013). From CFO to CEO. CFO insight. Retrieved on 20th Nov, 2013 from < http://www.cfo-insight.com/human-capital-career/interviews/from-cfo-to-ceo/>
Maciejewski, A. et al., (2009). From CFO to CEO: New leadership opportunities for senior finance executives. Warsaw: SpencerStuart
| Meta, L., (n.d.). Hire Learning: CFOs are sharpening their soft skills to better handle the world of HR. CPA society. Retrieved on 20th Nov, 2013 from <https://www.icpas.org/hc-insight.aspx?id=7782> |
Stuart, A., (2013). Always Second in Command: Why CFOs Rarely Become CEOs. Profomative. Retrieved on 20th Nov, 2013 from <http://www.proformative.com/articles/always-second-command-why-cfos-rarely-become-ceos>
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