Former CFOs may even be particularly well qualified to lead growth in this environment, thanks to the rigorous frameworks they typically use to make decisions. A CEO with a marketing background, for example, “may have 25 ideas and decide to do them all,” Heffernan says. “A good CEO today needs to know which 2 or 3 ideas are the ones that will provide the biggest bang for the buck.”
The new and relentless focus on working capital and cash management also makes many CFOs ideal candidates to take the reins at a distressed company, where such a perspective is critical. Ken Hall was promoted in 2008 from finance chief and treasurer to CEO at troubled NexCen Brands, a franchiser of retail and restaurant chains. He says his finance background has been invaluable in leading the firm during the past year. “When you’re going through a turnaround, managing by GAAP [generally accepted accounting principles] takes a backseat to managing for cash, cash, cash,” he says, “and who better to understand that than a CFO?”
Many boards have recognized the value of a finance background during the past year, and some notable former finance executives have made the move to the CEO chair. Michael White, a former CFO at PepsiCo, was recently named CEO at DirecTV after serving as head of Pepsi’s international business. John Greisch, former finance chief and president of international operations at Baxter International, just took over the top job at Hill-Rom Holdings, a medical-equipment maker. Last spring, Revlon promoted Alan Ennis from head of finance to CEO. And Chris Liddell, who left his post as CFO at Microsoft to become finance chief at General Motors in December 2009, is said to be a contender for the top spot at the struggling automaker.
Despite these newly appreciated credentials and an uptick in executive turnover, there is hardly a stampede to recruit finance chiefs to the top job. “We haven’t seen even a mild increase in requests for CFOs to take CEO seats,” says Chuck Eldridge, a senior partner at recruiting firm Korn Ferry International.
Indeed, the number of finance executives ascending to the chief executive post has increased but slowly over the years. According to data compiled by Crist Kolder, 15% of Fortune 500 and S&P 500 companies had CEOs with CFO backgrounds, up from 7% in 1999. While that represents a twofold increase, the overall number is smaller than one might expect given the finance chief’s growing stature. And CFOs who move directly into the CEO chair remain rare, making up just 8% of new CEOs at large companies in 2009.
Eldridge, in fact, wonders whether companies’ renewed focus on growth will prompt boards to look at marketing or sales executives instead of finance experts. “Companies are turning all their attention to growing the business. Does the CFO bring that to the table?” he says. “My hunch is that boards might look to get that skill set from another position.”