FDs take the tiller, by Alastair Dryburgh, Management Today, June 2009

This article is typical of those in Management Today; short, easy to read, some good points but could have been so much more valuable.

It starts with the statement that there has been a recent trend for CFOs to be promoted to CEOs. There is no statistical analysis to justify this statement but it ties in with my own perceptions and the list of recent examples is convincing – Shell, BSkyB, Ford and BT.

There is then an examination of the reasons why and the point is made that the current economic conditions are the main driving force, as strategies change from growth to consolidation, from acquisition to retrenchment. It would have been interesting to follow this point up further by asking the obvious further question – what about when things turn up again? Won’t these companies be stuck with the wrong type of leader?

There are some other suggested reasons for the CFO’s elevation that are quite contentious; one is that the CFO is the only other director apart from the CEO who ‘can see the business as a whole’. There might be some Marketing or Planning Directors who would challenge this view! More convincing is that the CFO has the advantage of being close to the scorecard and therefore speaks the language of business more convincingly than anyone else.

Another suggestion is that the CFO has the closest relationship with the CEO and, if this is handled successfully and harmoniously, this will make the CFO the obvious person to take over. More questionable is the view that the CFO is the educator of the business and will be in a strong position because of his or her ability to communicate about financial matters. This may be an ideal but not always the reality in my experience.

I was just thinking that the article had missed the most important factor of all when it was made via a case study that supports the article. Michael Queen of 3i is an example of a CFO promoted to CEO and he quotes the key factor as being the CFO’s high profile with shareholders and external analysts, whose views are important when the CEO selection is made. If they have the confidence of the Stock Market, their appointment will have the right impact on share price.

It would have been good to have more examples like Queen to support the article. The other two case studies are interesting but hardly relevant to the arguments being made. Articles from Management Today are sometimes on well chosen topics and make many valid points but often give the impression of being superficial rush jobs. Such a well regarded magazine should do better.

To access this article go to http://www.managementtoday.co.uk/news/915848