Lords of the Brass Ring

The time may be right for financial chiefs to ascend to the CEO post.

Your phone may be about to ring, and you may want to answer it. Executive turnover, which usually proceeds at a brisk pace, ground to a near-halt last year as many CFOs and CEOs chose to stay put rather than risk moving to a new and possibly worse-off company. Boards also hesitated to replace top management in the midst of the crisis.

Now, however, with the worst seemingly behind them, executives — and the boards that hire them — are once again looking around. Some 64% of executive recruiters said they are confident or very confident that the number of C-suite openings will increase during the next six months, according to a late-January poll by networking group ExecuNet, representing a 10-point spike in optimism compared with just a month earlier. “The whole market continues to open up a little bit more,” says Lorraine Hack, a partner at executive recruiting firm Heidrick & Struggles.

For finance chiefs who have spent the past two years with their heads down, what prospects will this postrecession market present? For some, it may be the chance of a lifetime, thanks to the higher profiles they have developed by navigating their companies through harrowing circumstances. In particular, CFOs wanting to ascend to the CEO position may find that their battle scars have earned them new opportunities.

But despite all the points in CFOs’ collective favor, some experts warn that those yearning for the top spot shouldn’t assume that making the leap will be easy.

Right Skills, Right Time

The challenges of the recession have, in many ways, whipped CFOs into shape for broader leadership roles. For one, as budgets and forecasts have been revised again and again, finance chiefs have typically spent more time with department heads and other functional leaders than most other executives, which gives them a particularly holistic view of operations. “CFOs have had such an opportunity to get a full look at the landscape of the enterprise that they make very natural candidates for the CEO chair,” says Tom Kolder, president of recruiting firm Crist Kolder Associates.

The recession and the credit crisis have also reshaped the CEO role to require more finance-related savvy — in particular, the ability to manage liquidity. Five years ago, proficiency in handling the capital markets “was probably last on the list of priorities for boards seeking chief executives, but now it’s first,” says Ed Heffernan, CEO and former CFO at Alliance Data, a company with more than $2 billion in annual sales that operates customer-loyalty and direct-marketing programs. He became CEO in 2009 and has overseen several major initiatives to ensure the company’s access to capital since then, including a $300 million offering of convertible senior notes and the negotiation of a new credit facility.

The number of big-company CEOs with CFO experience has more than doubled over the past 10 years.

In some cases, CEOs can’t hand off banking relationships to CFOs even if they want to. “These days, the big banks want to deal with CEOs,” says Heffernan. And as companies once again begin to weigh various growth plans, it’s important for a CEO to have an appreciation for how the company’s bankers or investors will react to a given strategy, he says, because “analysts, rating agencies, and banks are going to Monday-morning-quarterback you on these decisions.”


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