18 Jun 2015
Want to be CFO one day? You need to take control of your career
Subscribe to our newsletter. Enter your details below.
It's time to take risks and have an opinion
Sometime in the last decade the role of the CFO morphed from number cruncher to powerbroker. Gone are the days of the lonely accountant, kept isolated from the rest of the company.
Today, the world's most successful CFOs are innovators who command a room and are sounding boards for the CEO. For aspiring CFOs this raises the question.
Am I on track to become this valuable strategic partner?
A recent study we conducted explored this very question.
In the course of our research we heard time and again that today's aspiring CFOs need to go beyond their core finance acumen. They need to develop broader operational proficiency, greater knowledge of the business as a whole and wider experience with external stakeholders.
As Brian MacDonald, a former CFO now serving as CEO of Hertz Rental Equipment, told us, "Getting to CFO is 80 per cent functional/technical and 20 per cent leadership skills. Once in the CFO chair this equation is turned on its head."
So what steps should Canada's top finance talent be taking as they chart their course to the C-suite? Here are four things we recommend to all aspiring CFOs.
Go beyond your accounting designation
CFO candidates often think "OK, I've got my accounting designation, I'm ready to go." But for today's CFO, the accounting designation is table stakes.
Since 2004, Canada's top 100 publicly-owned companies have seen the CFO steadily acquiring more accounting designations (70% had an accounting designation by 2014), while the MBA has actually been declining (in 2014 24% had a Master's degree). Obtaining a CPA designation is important, but this alone is not enough.
Aspiring CFOs should consider adding a CFA to develop their capital markets skills and/or pursue an MBA or finance-specific leadership development program to develop their strategic and operational thinking.
Having a powerful academic combination will help demonstrate your ability to think beyond the numbers and help you stand out from the crowd.
Take a "corkscrew" approach to your career
While education is fundamental, successful CFO candidates are primarily shaped by the quality and diversity of their career experience. Some of the best-in-class companies we spoke to regularly move their finance talent around the business, giving them exposure to different financial and operational areas and issues. Google's finance people do three-year rotations, while General Motors deploys their finance talent to areas of the business that are the most challenged.
As an aspiring CFO, you need to seek out as many different and varied experiences as possible.
Consider a temporary move outside of finance to another function and don't be afraid to change industries if the opportunity becomes available. This "corkscrew" career path, taking you across different functions rather than simply vertically upward through finance, ultimately creates a CFO who is business savvy, operations focused and strategic. It is these CFOs who deeply understand how the company really makes money, not just how to read what shows up on the income statement.
Hone your stakeholder relations skills
Our research indicates that newly appointed CFOs have typically had limited interactions with key stakeholders such as investors, audit committees, investment bankers and the media. Aspiring CFOs should not wait to be asked for exposure to these key audiences, but should actively look for opportunities to engage with them at every opportunity.
Consider spending some time in Investor Relations to hone your media and communications skills. Push to attend board and audit committee meetings with the CFO when appropriate. Ask to sit in on meetings with investment bankers or key investors as they arise. Getting to know the key stakeholders you will need to interact with as CFO, as well as gaining an appreciation for their priorities and objectives, will enhance your likelihood of being chosen for the CFO role and will also accelerate your effectiveness once on the job.
Take risks and have an opinion
CFOs are traditionally seen as rule-driven, process oriented, and not particularly comfortable in the limelight. But when we reviewed the psychometric profiles of close to 300 top CFOs and finance executives from around the world, we found their profiles highly similar to business development executives and entrepreneurial CEOs. They are, in fact, quite flexible, open to change and able to deal with ambiguity without getting flustered. And the data also shows that top CFOs are often the voice around the executive table that calls for change and encourages others to think outside the box.
Bobby Kwon, SVP at George Weston Limited, pointed out to us that "the CFO needs to strike a constant balance of being an advocate while also being a challenger."
Are you an active and vocal contributor around the executive table in your firm? Are you recommending non-traditional options, encouraging sensible risk-taking and looking for innovative solutions whenever possible?
In addition to proposing new ideas yourself, do you actively engage in constructively honing, shaping and testing other people's ideas and assumptions?
The CFOs of tomorrow are focused on the journey as much as they are the destination. Be one of them.
Co- author of this Insight is Hugh Arnold, former Dean of the Rotman School of Management at the University of Toronto, adjunct Professor of organizational behaviour and HR Management and Academic Director of Business Leadership for Finance Executives Program. Ross Woledge is CFO Practice Leader for Odgers Berndtson in Canada and is a senior member of the Financial Services practice.