The Chief Finance Officer (CFO) can bring a fresh perspective to the Chief Executive Officer (CEO) role, but the move is not a natural progression, according to a study.
Some distinguished finance executives have taken to the helm with aplomb, but for every finance chief who is offered the helm, there are many who are looked over for the position because their perspective is too narrow or averse to the spotlight.
However, this transition is becoming more common with the emergence of charismatic modern financial executives who are not content with a backroom function and are taking advantage of opportunities to be one of the faces of the company.
In a study by McKinsey & Co, there was evidence to support that Chief Finance Officers (CFOs) should take on the lead role in one of two scenarios: when financial capabilities serve a company’s present needs or when the CFO question has the broader experience expected of a Chief Executive Officer (CEO).
Respondents in the study, who encompassed the full range of stakeholders, agreed that to become a successful CEO, a CFO needs hands-on general-management experience. This entailed the ability to focus on the entire organization, including the task of motivating employees, rather than simply mastering the numbers or figures. CFOs who had worked in more than one company and under different CEOs were seen as having an advantage as candidates for the position.
There was a strong perception that CFOs perform well as CEOs when companies are going through situations that require financial discipline and focus, such as attempting a turn-around or implementing mergers, acquisitions, or divestitures.
As such, CEO with experience in the top finance slot “understands key performance indicators and how much they can improve the performance of an acquired business”.
In managing the sometimes precarious transition to the new role, CFOs are advised to relinquish the controlling nature of finance and give their people room to maneuver, delegating responsibility while building a strong network of teams with complementary skills. Most importantly, they should adopt the holistic CEO mindset, which involves going beyond the numbers and delving into operations and stakeholder engagement. In fact he should be an all-round person.
It is gratifying to note that elsewhere in South Africa especially, CFOs are taking the positions of CEOs and are doing wonderfully well because of their knowledge, not only in the numbers or figures, but in and effective management and administration as well.
Sam Bediako-Asante, CGIA, is the CEO of Sambed Consult, a Management, Business, and Investment Consulting firm. He is also a former Banker; a Professional Administrator; a Chartered Investment Analyst; and also presently, a certified and an accredited SA Specialist of the South African Tourism; Abu Dhabi Tourism; Jumeirah-Dubai Tourism and Qatar Tourism in Ghana.
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