Filling the Void

Why honing tomorrow's finance leaders is a lot harder than it looks.

A high-flying career in finance is often all about being in the right place at the right time. But in Frederick “Fritz” Henderson’s case, it was more than that. The 47-year-old — who’s just left his job as vice chairman of GM Europe to become group CFO of the loss-making car maker in Detroit — can thank an aggressive leadership development program for where he is today. Shortly after joining the General Motors treasury team in 1984, he became part of a corporate program that allowed him to move swiftly through finance into operational roles in Asia Pacific, Latin America, Africa, and the Middle East, taking on tough assignments, including his last one — axing 12,000 jobs and making other major cost-cutting moves in Europe. It’s not surprising that the word among GM watchers today is that he’s a strong candidate to be CEO Rick Wagoner’s successor.

In an environment where the skills being honed in finance have become sought after by all parts of a company, it’s easy to see why career paths like Henderson’s leave corporate leadership experts swooning. His focused, disciplined development — transitioning from finance to operations and back again, while combining a mix of different job rotations in different functions and in different countries — is hailed today as best practice leadership grooming.

Yet is Henderson’s route to the top the exception rather than the rule? Ask the current generation of CFOs about their own leadership development and most will concede that it’s been more by accident than design that they’re in the corner office.

That said, their career paths will look more straightforward when compared with those of the up-and-coming ranks of CFOs. Reflecting the much wider range of skills being demanded in finance today, stretching well beyond the technical know-how of accounting and auditing, future finance chiefs are already getting involved in far more parts of a business outside of the traditional finance remit.

All this is happening as the old perceptions of leadership are in flux. While there is still admiration for the “great man” school of leadership epitomized by the likes of GE’s Jack Welch, there is growing recognition that a more consensual approach, such as that honed at Toyota or BP, can require different types of skills, to encourage leadership from many parts of the organization. (See “After Darwin,” at the end of this article.)

And perhaps because of all this change, many HR experts reckon that today’s companies aren’t nurturing the type of leaders they urgently need — what Tsun-yan Hsieh and Sara Yik of consultancy McKinsey refer to as “the 3 percent to 5 percent of employees throughout an organization who can deliver a breakthrough in performance, by launching a new product, by entering a new market, or by more quickly attaining better operational performance at a lower cost, for example.”

From his vantage point, Jonathan Gosling, head of the Center for Leadership Studies at the University of Exeter in the United Kingdom, has a dismal view of today’s leadership programs: “Most companies don’t get it all right; about half fail outright to make any sort of positive impact.”

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