For many years, the CEOs of Fortune 500 companies came from either Sales, Marketing or other product-focused executives’ disciplines. In recent years, this trend has changed. It was found that about 30 percent of Fortune 500 CEOs spent the first few years of their careers developing a strong foundation in finance, while CEOs who started out in sales and marketing roles account for only about 20 percent. This indicates that companies prefer CEOs who can create value for the company and who understand the company’s financial drivers. Typically, companies are looking for CEOs who can develop a strategy and understand the financial ramifications of business decisions. However, only about five percent of these CEOs were promoted directly from the role of CFO – more than half were appointed from the role of COO or President. Which indicates that although financial acumen is very important, above all, companies value a strong operator.
In numerous companies, succession planning and development of a future CEO is non-existent sometimes just because there is no obvious choice for the next leader among the past “usually considered” candidates (VP Sales, Marketing, Product Development, etc.). If companies can identify talented financial experts in their organizations who have the potential to become overall business leaders, they could devise a developmental program to provide these individuals with the operational experiences that would make them better business leaders and have a more direct impact on the growth of their companies.
My hope is that all companies will look beyond the usual candidates for CEO and seriously consider the CFOs. Likewise, I would like to see more individuals whose careers are totally focused on the financial side of businesses, consider shifting their careers to attain the chief operational or chief executive responsibilities in their companies. The individuals who have this desire should communicate this to the senior executives and decision makers of their companies and focus on expanding their skills in operational management, market strategies and external business imaging.
For those CFOs who would like to be COOs or CEOs, I suggest that you consider the following actions:
For those companies where Senior Management has concluded that the CFO is a viable CEO candidate and, they can’t remove the CFO from his/her full-time responsibilities and transferred to a full-time operating position, the following could be considered:
My conclusion is that financial acumen will continue to be important in an increasingly globalized and economically interdependent world. In addition, companies will continue to place a high value on organizational and cultural knowledge so that internal development of the future CEO is preferred. This presents great opportunities for talented CFOs who can enhance their knowledge and skills in the key areas of customer focus and operational management.
Please feel free to contact me if you have any questions, observations or additional comments regarding the above.
Robert A. Rivero, C.P.A.
International Business Advisor & Mentor
(Retired Senior Managing Partner – KPMG U.S & International)