Moving from Chief Financial Officer to Chief Executive Officer - Growing Your Leadership Skills
At a recent breakfast seminar for senior finance leaders, Full Potential GroupTM Managing Partners, Carole Gaskell and John Blakey, chaired a discussion around the career move from Chief Financial Officer (CFO) to Chief Executive Officer (CEO) and what leadership skills are required to facilitate this.
Traditionally, we also often view CEOs with a financial background as financial value drivers, using their technical and analytical skills to drive shareholder value, rather than being great leaders demonstrating strategic vision and leadership skills; Mike Davis, Chief Executive at Xstrata being an obvious example. Occasionally, however, there are exceptions to this rule – a well-known example being Martin Sorrell, Group CEO of WPP and a respected corporate entrepreneur, who was previously Group Financial Director at Saatchi and Saatchi. Nevertheless such CEOs are comparatively rare and finance leaders with CEO ambitions need to be very honest about their own skill sets and those effective CEOs needs to display.
“When you move from being a CFO to being a CEO, you have to change the way you think, act and communicate. A CEO must think at a higher level of abstraction – more inductively and less deductively. A CEO must be more willing and able to act on key decisions with fewer facts, relying more on grounded assumptions. And a CEO must be able to communicate effectively to a broader constituency – in particular, he must be far more politically attuned” John Dasburg, CEO of Burger King, previously CFO of Marriott International
The recession has offered many CFOs the opportunity to assume a higher profile position on the leadership team, spending more time with the CEO whose focus has been increasingly drawn to financial necessities such as working capital, cash management and financial liquidity. This broader exposure has equipped many CFOs with a more holistic view of business operations but the fundamental question for any CFO remains the need to honestly consider ‘do they really want to be a CEO’ and are they ready to face up to the considerable challenges this very different role will bring?
2. The Changing Roles of the CEO and CFO
The volatile economic environment over recent years has placed new demands on all business leaders and impacted on the pre-requisite skill sets required to effectively embrace high-profile strategic positions. An additional complexity for any CFO aspiring towards the leadership role is the changing nature of the CEO position itself and the increasingly broad business remit all CEOs face in the current volatile economic climate. According to the Chartered Institute of Management Accountants, today’s CEOs need to address:
On a more personal level, CFOs need to recognise that a modern day CEO needs to have the following qualities to be successful in their position:
“The chief executive who was primarily the cold analyst gazing at the numbers around the boardroom table – that model is going to be more difficult to make work” Archie Norman, formerly Group Finance Director of Kingfisher and ex-CEO of ASDA plc, currently Chairman of ITV plc
The CFO role has also grown and broadened in recent years, bringing with it the need to communicate across a wider range of more diverse stakeholders, whether it is working with the banks, managing investor relations, presenting to the Board or having more direct involvement in internal employee communications. The CFO role has become an increasingly visible one, assuming a more central strategic position on the leadership team, and involving greater interaction with employees at all levels. The CFO’s remit has also broadened beyond the traditional financial functions, frequently extending to holding responsibility for such areas as pricing models, supply chain efficiency, IT procurement and support etc. A company will require different types of CEOs as it moves through the various business evolution lifecycle stages – whether growing, maturing or contracting – and often different types of CEOs will be employed to carry out the varying strategies. The life expectancy of the average CEO is now somewhere between 30 and 40 months which underlines the need for a more ‘collective’ leadership approach based on the Board operating as a team with overlapping remits, so enabling the continuity of business momentum in the face of leadership changes.
“Command and control is dead. Management in the classical sense is dead. That will be very scary to boards.”
Several attendees expressed the view that the CFO and CEO roles have become intertwined, the global financial crisis forcing CEOs to focus more on a CFO’s financial responsibilities – the situation often being that the CFO solves the problem with the CEO acting as spokesman. The view around the table was that the business environment has become so complex that a CEO can no longer solely manage all the demands being placed upon him, with a CFO frequently needing to step in as a supporting operational business partner. An effective leadership team often requires a flexible, collective leadership approach – where senior management cells with the necessary skill sets would be set up to address organisational needs at specific times. The rapid pace at which business and technology environments are changing, and the need for the whole Board to step-up into more strategic roles, with greater decision-making responsibilities, is becoming a corporate reality. In parallel, Board members need to lead and develop their own team members to support this change, challenging them also to operate more independently beyond their functional roles. For a CFO moving beyond their traditional financial areas of operation, this brings with it a need to ‘sell’ and communicate this broader role to colleagues and employees, re-positioning established preconceptions of the role of the CFO in the business. The view was also expressed that the recent financial crisis has created a more risk-adverse business environment, with many CEOs wanting a CFO to provide a more calculated perspective on high-level strategic decisions. One attendee introduced the ‘yin yang’ concept to describe the CEO:CFO relationship – representing two complementary but diametrically opposite forces working together to achieve the best possible result. On one side, the CEO will bring vision, strategy and inspiration while on the other; the CFO offers cost control and risk minimisation, frequently putting the necessary checks in place to ensure decisions are properly assessed. A CFO stepping-up to a CEO role will need to let go of their “controlling” nature and give the entrepreneurs in the organisation the opportunity to grow the business and exploit commercial opportunities. Attendees expressed the view that a CEO position is not a “job for life” and it is imperative that any prospective CEO finds the right organisation, at the right stage in the business growth cycle, to meet their personal skill sets. CEOs with a financial background operate well within a mature business looking to control costs e.g. Ian Livingstone at BT, whereas growing businesses will look for greater commercial acumen and entrepreneurial skills. Attendees also felt certain business sectors would be more pre-disposed to employ a CFO as a CEO. These typically included the financial sector or companies considered by investors to be ‘value stocks’ i.e. an ‘undervalued’ company that tends to trade at a lower price relative to its fundamentals (dividends, earnings, sales, etc.) and thus requiring a financially astute CEO to efficiently manage the financial markets. The view was also expressed that there are two types of CEOs – those holding an ‘operationally focused role’ and those purely acting as a leadership figurehead, with smaller businesses generally needing the former and larger businesses the latter. An ambitious CFO should also consciously seek out a CEO who is willing to mentor and work with them as part of a succession plan programme. Some CEOs may be protective of their position and maybe less willing to assist a CFO in making this transition or supporting them in developing the necessary skill sets. However, several participants did share encouraging stories of working with mature, confident CEOs who proactively mentored their development and choosing which CEO to work for emerged as an important factor when assessing new opportunities for the next step in their careers. An alternative route would be to seek out non-executive roles on PLC Boards to gain the necessary breadth of leadership experience and to develop the self-confidence required to move up the leadership ladder. Some attendees promoted the value of a sideways move to take a Chief Operational Officer or general management role in the organisation, such an appointment allowing a CFO to become actively involved in business strategic planning and broaden their operational management, sales and marketing skill sets.
4. Personally ‘Bridging the Gap’ in the transition to a CEO Position
In reviewing what leadership tools and techniques a prospective CEO might use in creating this transformation, Carole shared the integrated brain approach and its value for CFOs when looking to develop catalytic leadership skills. This involves the use of a ‘multi-brain’ perspective and assessing intelligence on three levels: the thinking brain, the heart brain and the infinite brain, a simple tool which enables individuals to integrate thoughts, feelings and intuition for improved results. Catalytic leaders actively utilise all three brains, blending their approach and simultaneously integrating what is needed in the moment for the situation at hand.
Leading from the Thinking Brain
Leading from the Heart Brain
Leading from the Infinite Brain
Integrating the Multi-Brain for Catalytic Leadership Any ambitious CFO might well ask themselves ‘why would they give the job to the grey man anyway?' The statistics prove that it is the 'grey man' who often does get the job. Our discussions revealed that the bigger questions are does the 'grey man' want the job and will he or she be successful in it? Ultimately our challenge to all CFOs is to be brutally honest about their own strengths and whether they genuinely want to climb the leadership ladder to become a CEO. To close, John left the group with this story from the CEO of Spinvox:
“A CEO had his executives round for a BBQ,”' said Cherry. “He had a huge mansion, a garage full of cars, and a swimming pool. The swimming pool was full of crocodiles and sharks, though. The CEO said ‘If any of you guys jumps in and swims across to the other side, I’ll give you whatever you want.’ No one said anything, so they turned to go back to the house. Then, there was a splash and suddenly the CFO was in the pool, thrashing towards the other side and fighting off sharks. He made it and jumped out, with a crocodile snapping at his heels.
Appendix i. Robert Half FTSE 100 CEO Tracker here ii. Tappin and Cave ‘The Secrets of CEOs’ here iii. Chartered Institute of Management Accountants - Do finance directors still make good CEOs? here iv. Full Potential Group™ www.fullpotentialgroup.com
|
Organisations we have
partnered with:
"This is one of the most powerful training courses I have ever been on - thank you! It's been a great experience, and a great investment in me. I will continue to use and build these new skills"
Heinz
