VideoIndeed, the number of finance executives ascending to the chief executive post has increased but slowly over the years. According to data compiled by Crist Kolder, 15% of Fortune 500 and S&P 500 companies had CEOs with CFO backgrounds, up from 7% in 1999. While that represents a twofold increase, the overall number is smaller than one might expect given the finance chief's growing stature. And CFOs who move directly into the CEO chair remain rare, making up just 8% of new CEOs at large companies in 2009.
Eldridge, in fact, wonders whether companies' renewed focus on growth will prompt boards to look at marketing or sales executives instead of finance experts. "Companies are turning all their attention to growing the business. Does the CFO bring that to the table?" he says. "My hunch is that boards might look to get that skill set from another position."
Kolder also acknowledges that the pace of CFO-to-CEO transformations remains slow. "We are seeing continued acceptance of this transition, but it is rare for it to happen as an external hire," he says. It's much more likely for a board to promote a valued CFO when he or she is a known quantity.
Not for Everyone
One reason for the relatively small number of former finance chiefs in the CEO seat is that many don't want the job. Many CFOs are more than happy serving as a valuable and trusted deputy to the CEO and prefer being the company's second-most-visible executive. And the CFO's job, especially at large public companies, is certainly broad and varied enough to keep an executive engaged and challenged throughout his or her career.
There are also elements of the CEO role that some finance chiefs might be glad to forgo — for instance, constantly being in the public eye. Heffernan says he spends 25% of his time meeting with analysts and the media and speaking at investor conferences, and another 20% to 25% meeting with employees around the country. "Public speaking is essentially half the job. You need to not only be comfortable with it, you need to want to do it," he says, noting that many CFOs he knows do not enjoy presenting to large groups.
The role can force CFOs out of their comfort zones in other ways as well. In communicating so frequently about the company, adds NexCen's Hall, "you almost take on a bit of a marketing or sales role, and that is a skill set not all CFOs necessarily have or are comfortable developing."
There's also a hefty psychological weight that comes with the top job. "CFOs have divisions or departments that they lead and inspire, but when you're in the corner office, the buck stops with you," Hall says. "It's a greater responsibility and burden than I felt as CFO, and I take it very personally."
Now or Never?
For CFOs who have the skills and believe they are up for the challenge, the chances of becoming chief executives are better now than ever before. "CFOs have been at the point of the spear during all of the recent events in the markets," says Kolder. "There are certainly boards that would not previously have had finance executives on their radar that are now saying the CFO is definitely in the mix as far as succession planning."
Whether or not a CFO decides to reach for that final rung of the corporate ladder, the hard-won experience of the past two years should serve him or her well. Says Hack of Heidrick & Struggles: "Given the constant emphasis on finance, it's certainly a very good thing to have in your background."
Kate O'Sullivan is senior editor for strategy at CFO.
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