Is your FD a chief exec or chair in waiting?

Thursday, October 28, 2010 | Posted by: Fiona Cullinan
Categories: Thought Leadership | Tags: statistics, report, survey, data, Board, CEO, FD, CFO, Directorbank, talent, finance director, analysis, skills, career, chief exec, chair, expertise, progression, commerical

Is becoming a CEO or chair a natural progression for an FD? Which is a more suitable role? When doesn’t it work? Find out what 350 directors thought about career paths for finance directors in our FD survey, researched in conjunction with Directorbank.

Free download
You can download the full survey results and report What makes an outstanding FD? as a free PDF. Or, to read just the key findings, see our post on Elevate – for business leaders.

So, what next for an outstanding finance director?
A third of the directors surveyed had seen an FD become a good chair while nearly half had seen FDs become good CEOs (see figure below).

On the whole, the interviewed FDs felt that a move to CEO depended on individual circumstances – the particular FD, the job and the timing of the opportunity. Several commented that an FD might be the right CEO in a turnaround but not in a major growth strategy. One simply said that it is right for an FD to become a CEO, “when they want to… CFO’s broad skill sets can set them up to be good CEOs… but they have to want to be one! For some people it works and for others it doesn’t”.

Most of those interviewed had actively considered a chief exec’s role – but many had decided it was not for them for a variety of reasons. Some still hope to make the move.

Universally the FD role was seen as a critical board position and as a partnership with the CEO, rather than it being a ‘lesser role’.

However, a number have gone on to be CEOs and chairs and feel this is a perfectly natural and logical step. Having made the move though, few would go back to being pure FDs. A word of caution was that the transition to CEO rarely works if the FD finds it difficult to ‘let go of the numbers.’

Our respondents say:

“At one stage I was definitely toying with becoming CEO and for six months was acting CEO. On balance I felt the business needed somebody who had more customer contact and knowledge about the technology.”
Eric Hutchinson, CFO, Spirent Communications Plc

“Of course CEOs all wear their underpants on the outside. If you wear your underpants on the inside, you’re never really going to be comfortable wearing them on the outside. I’ve changed the way I wear my underpants over the years – now I’m chair, they’re back inside.”
Steve Marshall, Chair, Balfour Beatty Plc

“Many FDs sit right on the cusp of either being a very commercial FD or a very numerate CEO.”
Swag Mukerji, CFO, SafetyKleen

“If you are in a proper relationship with the CEO it doesn’t matter what your job title is. You’re going to be involved in whole aspects of the business.”
Anon

As always, we welcome your thoughts on this and any other aspects of the What makes an outstanding FD? report. Inherent in any top-performing organisation is an effective top team.  For our approach to reviewing board effectiveness (required under the Combined Code), please visit our Governance Advisory page.

You might also find these posts useful:

* How to assess your risk strategy – a checklist

* Two CEOs, two diaries, two tough business challenges

* Growing clash between front-end spin and back-end data in annual reports, says FRRP