Recruitment: the chief challenge

For those who make it, the position of CEO presents an unparalleled
opportunity to make one’s mark upon a company – even a whole industry. During
the recession FDs have been instrumental in preserving company performance. From
cost cutting to refinancing and shareholder relations, they have been at the
heart of the action throughout.

As the finance director, it is taken as read that you know a lot about
finance and accountancy, but you need to show that you have the breadth of
skills and experience to run and inspire the whole business, if you want to get
to the very top.

With the appearance of better economic times, company boards are looking for
CEOs who can ensure the company succeeds in good and bad times. In fact, our
research has shown that the same boards that craved financial skills to survive
the recession now prioritise broader management skills for the recovery. It is
these skills that FDs wanting to make the jump to CEO must demonstrate.

Leadership

It is often possible for FDs to be a success in their role without strong
leadership skills, ensuring the decisions made by the board are financially
enabled. FDs leadership skills need to be made razor-sharp to be a successful
CEO.

Successful leadership can have a profound effect on a company. This is far
more than simply managing people: leadership means people are motivated to do
what is required of them because they understand its importance to the company
and others. This can be a challenge when a job is seemingly removed from the
company’s goal or is particularly unrewarding. Ultimately, FDs need to be able
to demonstrate they can lead a whole company – so get out there and get
presenting, don’t sit in an office issuing dictats by email.

Strategic skills

A critical area for FDs to focus on is their strategic skills. Companies
shaken by recent events will need CEOs who simultaneously understand the damage
the recession has done to the company and how to limit this, but also to prepare
for the recovery and think of ways to make the most of it.

The only way to drive a company through such a period of upheaval
successfully is to have long-term goals and a strategy to reach them. Amendments
need to be made as situations change, but keeping your company’s (and
employees’) focus on achieving both the short and long-term goals are essential
for both company and CEO.

It is easy, as an FD, to deliver short-term profit increases by cutting
investments and delaying projects, at the expense of the long term. A potential
CEO should know that an important programme cut is not a saving, it is a
potentially huge opportunity cost incurred.

Innovation and entrepreneurship

Larger companies are typically less entrepreneurial in culture than smaller
ones. Procedures and policies supplant individual creativity. Committees and
‘group-think’ dampen innovation and create barriers to action.

Yet, in modern markets, fresh ideas, together with their effective and rapid
deployment, are vital for survival and growth. The CEO knows a company that
simply squeezes more income out of an aging product range has no future. For the
FD looking to prove his worth, how can innovation in the finance function
foster, rather than stamp on, innovation and growth?

Sales skills

Boards want CEOs who can deliver a strategy that drives sales as the economy
improves and the sales department is vital to the company’s success. Yet this
core function can be hard for FDs, often distant from customers and day-to-day
operations.

It would be inadvisable for FDs to hit the road to overcome this. But
prospective CEOs need to ensure they are close to sales teams and understand
their work in order to be successful in the top job.

Many FDs have become CEOs. Martin Sorrell was a great FD and became a hugely
successful CEO at WPP. Conversely, in the world of politics, a lack of the right
leadership skills has undone Gordon Brown. Once popular as chancellor, he has
floundered as prime minister. The transition to the top job is not easy, but
ambitious FDs have a great starting point with their accounting skills. To get
to the CEO’s chair they can’t rely on these alone: they should make sure their
skill set is as rounded as the job they aspire to.

Who’s making the move successfully?

Alison Cooper, Imperial Tobacco. Having held a number of
positions on Imperial’s Board, including FD, Alison will take over in May this
year.

David Nish, Standard Life. Took up Standard Life’s top job
in January 2010.

Graham Chipchase, Rexam. Previously Rexam’s FD and then
divisional head, he became CEO in January 2010.

Chris Hart is a partner at business performance consultancy McKinney
Rogers

Further reading:

AATV:
Have FDs missed their chance?