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?