Having amassed more than 15 years’ experience at IBM Corp. on a steady ascent toward the top finance job, J. Donald “J.D.” Sherman did what any sensible executive would do: he chucked it all to become CFO at a company 1/300 the size of IBM.
Sherman’s experience is not at all peculiar; many senior finance executives get to the top spot in just that way. A recent study by executive search firm Christian & Timbers found that fully 87 percent of new CFOs at small technology companies took those positions after holding senior (but non-CFO) jobs at large-cap tech firms. In many other industries as well, those who have accumulated significant big-company experience are logical candidates to assume the helm at smaller firms, and many are eager to do so.
The move, however, is not for everyone, and those who would emulate Sherman’s march to the top need to proceed carefully lest their first CFO post prove their last. “Many people want to get ‘CFO’ on their résumés,” says one executive recruiter. “But while the title may be nice, there are many things to consider. Your work life can change dramatically.”
Large companies typically offer large advantages, including stability, lots of resources, and juicy perks. At a smaller company, first-time CFOs may find themselves confronting anything from a turnaround situation to an impending initial public offering to some nasty corporate-culture crosswinds as the business matures from start-up to established player.
That, in fact, tends to be the primary appeal. When Sherman left IBM for Akamai Technologies Inc., a provider of Internet hosting and E-business services, he saw “an opportunity to make more of a difference than I ever could have made at IBM. On the other hand, my finance staff at IBM was larger than Akamai’s entire payroll.”
CFOs who move down in order to move up seem almost universally game for the challenge, which is for the best, given that recruiters agree that to be a CFO at a big company you must first be a CFO at a smaller one. As controller for the corporate business group at Dell Inc., Lloyd R. “Skip” Sorenson received plenty of calls from executive recruiters. “Ninety-five percent of them were for jobs that didn’t appeal to me,” he says, “so I’d recommend other people. But then one day you do get that call that makes you take notice.”
For Sorenson, that call came from Vought Aircraft Industries Inc., a company that may have been close geographically, but that was a good long way from being the sort of Fortune 50 high-tech giant Sorenson was used to. While taking the top finance spot at Vought represented a return to an industry he knew well, having worked at McDonnell Douglas Corp. and at the aerospace-equipment systems division of Allied Signal Inc., annual sales at privately held Vought barely surpass what Dell racks up in a week. What was the allure? “The explosion in private-equity deals,” he says, “has created a lot of opportunities for people who want flexibility, autonomy, and the chance to make a large contribution to the success of the company. Of course,” he adds, “you have to deliver.”