FD to CEO: a popular transition, but does it work?
16th November 2011
A number of surveys since 2008, when finance became top of everyone’s corporate agenda, have reported a significant rise in the number of Chief Executives who come from an accounting background. Almost half of those in the FTSE100 have finance experience, compared to 31% before the global financial crisis; and 60% of CEO’s appointed in 2010 were former Financial Directors. The credit crunch saw more FD’s promoted to CEO as potential saviours or pairs of safe hands, but now, in times of recovery and growth, many are accused of missing the vital ingredients needed to succeed in the top job.
There is no doubt that since 2008, an economic focus has been imperative from the top down for businesses. FD’s have the technical and analytical skills to address issues such as cost management and are driven by the more commercial, results-oriented aspects of the CEO role, such as value-enhancing corporate deals, detailed results and risk management. They are already experienced people managers, with operational as well as financial experience, and have usually worked closely with all the other business functions, standing them in good stead to take the company forward.
However, many people believe that there is more to the CEO role than getting the numbers right, however tough the business climate. While an FD has to be balanced and risk-averse, a CEO often needs to be impulsive and make quick decisions to capitalise on opportunity. A CEO confidently leads the company with a clear, strategic vision, often relying on an enthusiastic, extroverted personality to inject positivity through the business. FD’s may know those balance sheets inside out, but by reputation aren’t always the most outgoing of spokespeople.
While it’s true that technical knowledge means more FD’s would make decent CEO’s than CEO’s would make decent FDs, there is clearly more than an accounting background required to make the successful transition to CEO. Those who succeed will either have a broader CV behind them or be stronger personalities than the norm, and indeed there are fortunately plenty of them. Leadership, charisma and self-belief are all intangible traits that the head of every business needs, but that not all of those coming from an “FD” role have – just ask Gordon Brown.
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