Do Cfo's Make Good Ceo's?

Topics: Management, Finance, Corporate governance Pages: 4 (1257 words) Published: April 18, 2008
The CFO possesses many significant advantages as well as disadvantages if he/she is chosen to become the CEO. Recently an increasing number of company boards have decided that in order to best serve shareholders it is prudent to promote the CFO to CEO. CFOs themselves remain reticent about any personal ambitions beyond the CFO role - at least in public. But given this recent string of high profile promotions there is an increasing recognition that they have what it takes to take over the CEO role. To understand why CFOs are more frequently getting the top job it is important to know what the contemporary holder of the post does with his time. Article entitled “CFO to CEO” explains that the Monty Python image of an accountant sitting in a corner counting beans has disappeared, says Ian Graves, district director of continental Europe, at recruitment agency Robert Half International. Bluntly put, CFOs are now a much more exciting breed. In the 1990s, the CFO role became more dynamic and strategic, moving from being merely a functional head to also being a corporate leader (“CFO to CEO”, 2005). CEOs can benefit greatly from a CFO background. They will have a well grounded idea of how the financial laws affect the company as well as how official documents are created and how they are submitted. In short, the CEO with this background will be another possible safety net and another eye looking for deceit in the lower ranks. There are other aspects may bring advantage as well such as a solid understanding of cash flows, cost rations, etc. Janine Brewis points out in her article “How a CFO can graduate to CEO” that it is good decision making to involve a financial expert into upper management since it is critical for good operations and for the company's management to understand law, regulations and policies regarding financial reporting. It serves to protect the company and its constituents. Part of the reason for the trend towards recruiting CFOs who can...
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