Moreover, the idea that CFOs are so broad-minded that they are the first to be tapped for the CEO spot turns out to be a bit of a myth. Of current Fortune 500 CEOs, Spencer Stuart counts 83, about 17%, who have ever held a CFO position. Those who went straight from the CFO spot to the CEO chair are even more rare, numbering 19.
And the rate of such appointments shows no promising momentum. One of those 19 was chosen this year, in contrast to 3 in 2008 and 5 in 2007. At no point has the number of CFOs being named directly to the top spot hit anything close to a critical mass.
“Clients are asking for someone who can step up, but the reality is, I’m not aware of any Fortune 500 CEO who was recruited from the outside as CFO and went directly to the CEO chair,” says Christopher Langhoff, managing director of the financial officers’ practice at Russell Reynolds, who is working on a white paper on the CFO-to-CEO path. On average, it takes 19 years of experience with a company (irrespective of titles) before a promotion to CEO, he notes. That means “you shouldn’t take [the CFO] role banking on” a quick leap to the top spot. (As for how ex-CFOs perform as CEOs, results are mixed. See “When CFOs Take the Top Spot.”)
For the most part, CFOs themselves seem to have conflicting thoughts on exactly where they lie on the strategic spectrum these days. According to a recent CFO magazine survey of about 150 CFOs (see our 2009 career survey), nearly 90% say they have a voice in corporate strategy. A solid 35%, however, say CFOs are generally stuck in too-siloed roles. And only 1 in 5 say they have spent more time shaping company strategy during the past year.
Part of the issue, of course, is that the definition of “strategic” is hazy. For some, it simply means being invited to the meetings in which strategy is devised, rather than being told after the fact that, say, breaking into China is the new corporate priority. Too often, laments one CFO, “my input comes after decisions have been made, as opposed to on the front end.” Another says he has a voice on major decisions, “but not loud enough.”
For others, it means taking a defensive position that might be thought of as antistrategic, although that in itself may constitute an alternative way to be strategic. “CFOs offer balance to the management team by bringing a more conservative, risk-averse approach to business strategy,” according to one director of finance. That means “explaining the likely financial and risk implications of various scenarios — sometimes forcefully,” according to one CFO of a small (under $1 million) company.
For others still, “strategic” entails a dual mission: setting the agenda in collaboration with the CEO, and then building the financial infrastructure to help realize whatever vision emerges. The most common definition offered by survey respondents equates “strategic” with “visionary,” and describes a CFO who “actually has real input into the direction a company is headed; what it will be doing five years from now and how it will be done,” says one survey respondent.