VideoYour phone may be about to ring, and you may want to answer it. Executive turnover, which usually proceeds at a brisk pace, ground to a near-halt last year as many CFOs and CEOs chose to stay put rather than risk moving to a new and possibly worse-off company. Boards also hesitated to replace top management in the midst of the crisis.
Now, however, with the worst seemingly behind them, executives — and the boards that hire them — are once again looking around. Some 64% of executive recruiters said they are confident or very confident that the number of C-suite openings will increase during the next six months, according to a late-January poll by networking group ExecuNet, representing a 10-point spike in optimism compared with just a month earlier. "The whole market continues to open up a little bit more," says Lorraine Hack, a partner at executive recruiting firm Heidrick & Struggles.
For finance chiefs who have spent the past two years with their heads down, what prospects will this postrecession market present? For some, it may be the chance of a lifetime, thanks to the higher profiles they have developed by navigating their companies through harrowing circumstances. In particular, CFOs wanting to ascend to the CEO position may find that their battle scars have earned them new opportunities.
But despite all the points in CFOs' collective favor, some experts warn that those yearning for the top spot shouldn't assume that making the leap will be easy.
Right Skills, Right Time
The challenges of the recession have, in many ways, whipped CFOs into shape for broader leadership roles. For one, as budgets and forecasts have been revised again and again, finance chiefs have typically spent more time with department heads and other functional leaders than most other executives, which gives them a particularly holistic view of operations. "CFOs have had such an opportunity to get a full look at the landscape of the enterprise that they make very natural candidates for the CEO chair," says Tom Kolder, president of recruiting firm Crist Kolder Associates.
The recession and the credit crisis have also reshaped the CEO role to require more finance-related savvy — in particular, the ability to manage liquidity. Five years ago, proficiency in handling the capital markets "was probably last on the list of priorities for boards seeking chief executives, but now it's first," says Ed Heffernan, CEO and former CFO at Alliance Data, a company with more than $2 billion in annual sales that operates customer-loyalty and direct-marketing programs. He became CEO in 2009 and has overseen several major initiatives to ensure the company's access to capital since then, including a $300 million offering of convertible senior notes and the negotiation of a new credit facility.
In some cases, CEOs can't hand off banking relationships to CFOs even if they want to. "These days, the big banks want to deal with CEOs," says Heffernan. And as companies once again begin to weigh various growth plans, it's important for a CEO to have an appreciation for how the company's bankers or investors will react to a given strategy, he says, because "analysts, rating agencies, and banks are going to Monday-morning-quarterback you on these decisions."
Former CFOs may even be particularly well qualified to lead growth in this environment, thanks to the rigorous frameworks they typically use to make decisions. A CEO with a marketing background, for example, "may have 25 ideas and decide to do them all," Heffernan says. "A good CEO today needs to know which 2 or 3 ideas are the ones that will provide the biggest bang for the buck."
The new and relentless focus on working capital and cash management also makes many CFOs ideal candidates to take the reins at a distressed company, where such a perspective is critical. Ken Hall was promoted in 2008 from finance chief and treasurer to CEO at troubled NexCen Brands, a franchiser of retail and restaurant chains. He says his finance background has been invaluable in leading the firm during the past year. "When you're going through a turnaround, managing by GAAP [generally accepted accounting principles] takes a backseat to managing for cash, cash, cash," he says, "and who better to understand that than a CFO?"
Many boards have recognized the value of a finance background during the past year, and some notable former finance executives have made the move to the CEO chair. Michael White, a former CFO at PepsiCo, was recently named CEO at DirecTV after serving as head of Pepsi's international business. John Greisch, former finance chief and president of international operations at Baxter International, just took over the top job at Hill-Rom Holdings, a medical-equipment maker. Last spring, Revlon promoted Alan Ennis from head of finance to CEO. And Chris Liddell, who left his post as CFO at Microsoft to become finance chief at General Motors in December 2009, is said to be a contender for the top spot at the struggling automaker.
Slow Going
Despite these newly appreciated credentials and an uptick in executive turnover, there is hardly a stampede to recruit finance chiefs to the top job. "We haven't seen even a mild increase in requests for CFOs to take CEO seats," says Chuck Eldridge, a senior partner at recruiting firm Korn Ferry International.
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