At the 4th CFO Innovation Malaysia Forum in Kuala Lumpur this week, one topic of discussion was the career progression of the CFO towards non-finance paths – to become a COO, a CEO and member of the board (or board chairman).
And why not? The modern-day CFO is supposed to be a business partner to everyone in the organization, which means he or she would be gathering experience and expertise (and a track record) in operations, sales, marketing, legal, human resources and strategy.
That’s one reason why former CFOs Indra Nooyi has moved up to the top post in PepsiCo, Scott Davis in logistics giant UPS, and Joe Kaeser in Germany’s Siemens AG. In Asia, former finance chief Sing Hong Fun is now CEO of China South City Holdings, Chan Kwok-hai is Head of Greater China for Hang Seng Bank, and Madhu Rama Chandra Rao is Acting President of Shangri-La Hotel Public Company.
But personality could also be a factor. Conscientiousness and extraversion are traits that are commonly associated with accounting and finance. A new study the US National Bureau of Economic Research suggests that these traits will not serve CEOs well in terms of R&D intensity, growth and profitability.
It’s one thing to undertake business partnering, which is becoming a normal part of the CFO’s remit. It’s another thing to go beyond that role and partner with a purpose
Tips From KL
In the Malaysia Forum, there was broad agreement that the CFO, indeed, is on the fast track to the top. One panelist had himself become a CEO and COO in Indonesia, and is now a member of the board of his current company in Malaysia.
“It was a very interesting experience and I learned a lot,” he said of his time as chief executive. And also, of course, earned a lot more than the finance chief. In 2014, CFO Innovation found that, on average, CFO compensation Asia-wide is equal to only about 63% of the average CEO package.
Some CFOs are compensated much lower than that. In the same study, the top-earning chief financial officer earned US$4.5 million in 2013 – just 14% of his CEO’s US$31.9 million in total earnings that year.
So what can you do as CFO today to open up the path to the corner office? Here are some insights in Kuala Lumpur:
Rack up a track record in a business role. It’s one thing to undertake business partnering, which is becoming a normal part of the CFO’s remit. It’s another thing to go beyond that role and partner with a purpose.
“Volunteer to lead a project,” said the CFO of a technology company. This will let you learn first-hand how to run a business, demonstrate that you are capable of performing more than a supporting business role, and put you on the succession-planning radar of the CEO and the board.
But you have to succeed – and you must make sure the company’s financial management does not suffer. “This is where having a strong finance team is very important,” said this CFO. Make sure the finance function can continue to perform even when part of your attention is diverted elsewhere.
One bonus: Letting others in the finance team take a leadership role also burnishes their track record and potentially puts them on the track to take over from you. That will help with morale and strengthen commitment as finance team members see their own career paths becoming clearer as well.
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