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Is it easy for chief financial officers to become chief executive officers? Not according to one of the former. By Kate Belgrave, CIMA senior web editor.
Spinvox’s chief executive officer Andrew Cherry isn’t convinced that CFOs make the world’s greatest CEOs. He thinks they are two scarily different beasts.
In an amusing talk at a recent Hays Finance Leadership Forum he related several stories to bring the point home.
‘There was a CFO who was leaving his office late one evening. As he was walking along the corridor to his car, he saw the CEO standing by the shredder with a piece of paper in his hand. He asked if he could help.
‘The CEO said: "I have this sensitive and important document here, and my secretary has gone home."' So the CFO turned on the shredder, inserted the paper and pressed the start button. ‘ "Thanks," said the CEO. "I just need the one copy." ’
That might be a story that needs telling more often. Cherry said people still think that CFOs and CEOs have pretty much the same sort of mind. But they do not.
No more swashbucklersHe said the financial press now seems convinced that CFOs make the best CEOs. He said: ‘A respected article recently spoke about "a shift in what boards look for in a CEO. They are less interested in the swashbuckling executive of the 1990s, and more likely to choose a trusted manager who shows the right blend of operational and financial expertise."’
But Cherry agrees with other commentators who say that is all about boards feeling a little nervous about some of the wilder trends of the past.
‘Recession, dotcom and telcom meltdowns and a rash of corporate scandals have led boards to view a strong financial background as essential to a strong CEO. You see an ebb and flow as different functions step into the limelight, as Jeffrey Sonnenfeld, Dean of Yale School of Management has said. In other words: "Today’s board wants a CEO who can help them understand the puffed-up proposals coming in from companies, bankers, consultants and attorneys." ’
It’s all about different personalities. ‘The CEO has to be an extrovert and put a bright perspective on things. The CFO by contrast, has to be more balanced and reflective.’
The demands of the two roles call for different talents.
Cherry said that there isn’t a lot of leeway for CEOs. ‘You don’t tend to get very long timeframes, or opportunities to learn. You’re in the spotlight.'
This story spotlights a CEO’s plight:
‘A friend joined a company as CEO, and the old CEO took him into a room and said he wanted to share some of his secrets. The old CEO presented the new man with three numbered envelopes. "Open these up if you ever encounter any problems," ’ he said, and put them away in a cupboard.
‘The company went well, but there was a downturn in sales halfway through the year. The new CEO took out the first envelope. It said "Blame your predecessor". So he called a press conference and explained that the problems were his predecessor’s.’
‘Things picked up, but the next year, they took another dip. The new CEO remembered the second envelope. This one said "Reorganise - a classic solution". So he reorganised, sacked some people, and reduced costs.
‘Things continued as before, until a year or so later there was another downturn and he at last had to go and look at the third envelope. It said "Prepare three envelopes".’
CFOs, meanwhile, have a different problem.
‘A CEO had his executives round for a BBQ,' said Cherry. 'He had a huge mansion, a garage full of cars, and a swimming pool.
'The swimming pool was full of crocodiles and sharks, though. The CEO said "If any of you guys jumps in and swims across to the other side, I’ll give you whatever you want." No one said anything, so they turned to go back to the house. Then, there was a splash and suddenly the CFO was in the pool, thrashing towards the other side and fighting off sharks. He made it and jumped out, with a crocodile snaping at his heels.
‘The CEO said: "Fantastic! You’re the only person on the executive team who had the balls to do that. Ask for whatever you want!"
'The CFO said: "You can start by telling me which bastard pushed me into the pool." ’
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