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INCREASINGLY, MANAGERS SEE THE TOP FINANCE SPOT AS A WAYSTATION TO BECOMING CEO.
When Michael Smith left the military after serving in the Vietnam War, he hoped to turn his bachelor's degree in political science into a job at the Central Intelligence Agency. But the CIA was downsizing, and Smith got a job in the payroll office of a General Motors plant in Massachusetts. He returned to school for an MBA and landed in GM's finance department at headquarters. Today, after spending half a career in finance, Smith is the chairman and CEO of Hughes Electronics.
Increasingly, executives with good numbers skills and high aspirations are finding that the chief financial officer spot can be a waystation to the top corporate job. In America former CFOs are running Hilton, United Airlines, and Coca Cola, while in Europe former finance directors head companies as diverse as Hoechst, SE Banken, Ahold, and Asda.
"Years ago a CFO was basically a company's chief accountant," observes Robert Heidrick, president of the Heidrick Partners, a Chicago-based executive search firm. "Now, when we search for a CFO position, we look for someone with time on both the accounting and control side and the finance and planning side, someone with both domestic and foreign experience, who understands the whole company. Once you find someone who fills the bill, you've got a spectacular piece of the management team." And, he adds, "someone who can move into the CEO spot."
Not everyone thinks turning to financial officers to fill the top position is a positive trend. "You need someone at the top who really understands the workings of a company, but who also fully understands the financial aspects of a business," says John Percival, an adjunct professor of corporate finance and shareholder value at the Wharton School. "In the past this usually meant having a controller sitting next to the CEO explaining how a balance sheet works." Today, he fears, "it's a pendulum swing the other way, and it may be going too far."
The picture of the CFO as a numbers geek is "a stereotype, but oftentimes a CFO is not a strategist," says Percival. Many of those who jump to CEO, however, are, like Smith, actually people who have run...