Reflections
Letter from the President and CEO
The Leap from CFO to CEO
FROM:
SEP-OCT 2006 ISSUE
The CFO position has increasingly become an important stepping stone to the top job in an organization. One obvious reason for this trend is the need for bulletproof financial reporting, which has placed financial management expertise at a premium in both the boardroom and head office.
I became a member of the CFO-to-CEO club when I worked with Avon Canada, and as I compared my own experience to those of my co-panelists at the Financial Executives International (FEI) 2006 North American Conference last June, it reaffirmed two conclusions for me: that CFOs can make effective CEOs, and that the transition, though logical, is not necessarily as automatic as one might expect.
The top financial person in the organization is a central hub. That virtually every decision has a financial impact and that all financials flow through the CFO office means he or she has exposure to all aspects of the business. There is undoubtedly a strategic element to the work, but financial stewardship is not necessarily the same as corporate leadership. And make no mistake: the transition from CFO to CEO is entirely about leadership.
CEOs create a tone and context for the organization. They build and nurture senior management, they set strategic objectives, and then they get out of the way. As a former CFO, the CEO is in a strong position to understand the financial impact of his or her decisions, but must resist the urge to micromanage the finance function once the transition to CEO has been made.
By virtue of their mandate, CFOs are inclined towards conservative decision-making and thus may need to develop a higher tolerance for risk if they are to achieve a vision as CEO that moves the organization forward. In this regard, trust becomes a very important part of the process — trust in the vision and trust in the teams charged with executing the plan. People are more likely to take a risk with someone they know and trust than with someone they don't. As such, CFOs turned CEOs are well served by honing their ability to empower their teams to build confidence in each other. Regular readers will know that I'm a big fan of the concepts espoused by emotional intelligence and nowhere are they put to the test more than in the transition from CFO to CEO.
What all this boils down to are opportunities for accounting professionals in general and for CGAs in particular. Our certification program is guided by a philosophy that extends beyond preparing members for financial leadership. It encourages them to view the challenges and opportunities they face throughout their careers as more than accounting issues — to see them as organizational issues. It discourages silo thinking by emphasizing the cross-functional nature of the financial manager's role. It promotes a strong work ethic and advocates an approach to ethics and integrity that is beyond reproach.
These are sound fundamentals upon which to build a solid career. A career that leads to professional and personal rewards — and quite possibly all the way to the corner offices of the CFO and CEO.
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