Still, natural attrition will likely cause a shortage of big-company CFOs in the near future. Korn Ferry has already begun to address that problem by acquiring two executive coaching companies. The firms hopes that the affiliate companies will help groom CFO candidates who will become valuable when the war for talent accelerates, says Eldridge
Today, however, controllers will have break from their “linear track” if they seek a CFO job at another company, says Russell Boyle, who heads up the U.S. financial officers practice for Egon Zehnder International, another executive search frim. Controllers with CFO aspirations both inside and outside of their current companies must gain unit operating experience and lead corporate-planning efforts or investor relations departments to round out their resumes.
In fact, over the past few years, large, complex organizations have sought savvy financial executives to take the reins of corporate investor-relations function so that companies could communicate with Wall Street and investors in a sophisticated way, says Boyle.
In most cases, a company is hiring a skill set rather than an industry expert when they hire a CFO, adds Boyle, and insiders don’t always get the call. For instance, a company may be looking for an expert in mergers and acquisitions, asset divestiture, launching an initial public offering, or a combination of those skills, he says.
Controllers still have a leg up on treasurers in competition for the CFO seat, Boyle suggests. A treasurer’s focus is narrower than that of a controller because the treasury department centers almost exclusively on external triggers and events affecting capital raising, risk management, and banking relationships, he notes.
Eldridge points out that many boards remain gun shy about hiring treasurers—who are usually banking wizards—ever since the financial engineering schemes of Enron’s Andrew Fastow were found to be fraudulent.
Promoting from within is sometimes a matter of “hire the devil that you know,” says Boyle. However, he says the more likely reason for promoting a controller is that the executive has played “an incredibly important leadership role” across several divisions. For example, a controller who has rolled out an enterprise resource planning system for a multinational may be poised for a trip up the ladder. The same goes for a controller who has reworked a decentralized global finance and sales operation into a centralized system.
At smaller companies, Hack says, boards and investors are still looking for CFOs who are good accountants, can run tight ships, build financial infrastructures, and have operation and strategy in their backgrounds. In a category all their own are private equity firms, which are small from an organizational perspective, and usually seek operationally strong CFOs who don’t necessarily have public company experience. That’s where private company CFOs can go to gain public company experience, the headhunter says.
The bottom line for controllers who aspire to be CFOs, says Boyle, is that they must guide their careers away from simply providing analysis for the five-year plan and day-to-day financial management. They must become “the financially savvy person that the CEO wants to have a discussion with.”