The irresistible rise of the Chief Financial Officer

by .
Originally published in Observe: The Odgers Berndston Global Magazine

Chief Financial Officers rarely make headline news – unless you have been the top bean counter for Google, that is.

So when Patrick Pichette, the CFO of Google, said he was stepping down to travel the world with his wife, it splashed across serious broadsheets and the tabloid press around the world. In his resignation note (posted on Google+, naturally) Pichette observed that he was  a “member of FWIO, the noble Fraternity of Worldwide Insecure Over-achievers” and that his almost seven years as Google’s CFO had been “a whirlwind of truly amazing experiences”.

Few CFOs achieve the kind of prominence – or the almost US$31 million from his Google stock incentives between 2010 and 2013 – enjoyed by Pichette. But I somehow doubt that walking up mountains with his wife will be enough for Pichette in the long term.

Many will try to seduce him back into the corporate world – but Pichette is now too big, too experienced, too obviously multi-skilled, to simply go back to a finance role. The temptations of taking a CEO role, or more likely a Chairmanship, to actually oversee the control of a company, will be great. He has just the right experience and leadership qualities to have innumerable companies, big and small, politely pounding at his door. For he fulfils this brief identified in a study of exceptional CFOs: “Today, success requires the CFO be strategic, operationally savvy and forward-looking. They need the ability to influence a broad group of stakeholders, and to communicate in a straightforward, compelling manner.”


How times have changed. Once upon a time, all that was required of the CFO or Financial Director of a company was that they kept a close eye on the numbers and made sure the ship kept to its course. But now they – or at least the really good ones – are expected to do so much more, be so much more; in fact, to be a surrogate CEO. Little wonder, therefore, that many of them have set their sights on the top job – and, indeed, are taking over the top job. Today, the average CEO starts the job at the age of 52, and the average age of a Harvard MBA is 27, so there’s a 25-year preparation time to scale the ladder.

There’s plenty of statistical evidence from around the world that the growing tendency for CFOs to step up to the CEO role is a reality. Take Canada. Back in 2004 only 14 per cent of Canadian CEOs had previously had a senior executive finance position. Ten years later that had grown by more than 57 per cent, to 22 per cent. Perhaps unsurprisingly, given the importance of the natural-resources sector to the Canadian economy, as many as 33 per cent of CEOs in natural resource companies have been in an executive finance position. According to Scott Thomson, CEO of the Canadian company Finning International Incorporated, and who was formerly CFO of Talisman Energy, the switch between the roles of the CFO and the CEO role is striking: “It was interesting how different the CEO role is from [that of] the CFO. As the CEO, most of my time is spent with customers, employees and suppliers.”

Moreover, CFOs are increasingly looked on as excellent Chairs-in-waiting. The good CFO will have a reputation for prudent, patient, low-ego sound judgement – a ‘good pair of hands’, which goes very well with the non-executive role as Chairman/woman. There are fewer examples of CFO-to-Chairman moves than CFO-to-CEO moves, but some notable ones exist, such as that of Andrew Higginson, a long-time finance chief of the well-known UK retailer Tesco. When he left Tesco in 2012 he took on two chairmanships: at N Brown, a listed fashion group, and Poundland, a private equity-owned retailer.

The CFO-CEO marriage

The debate over whether a good CEO comes from an operational rather than a finance background is almost as old as the hills. Back in 2006 McKinsey posed the question “do chief financial officers make desirable CEOs? … the CFO’s portfolio of skills would seem to serve well as a platform for that final leap to the boss’s suite. Or does it?” Almost a decade ago, about 20 per cent of all CEOs in the UK and the US were once CFOs, dropping to 5-10 per cent in Europe and Asia, according to McKinsey, who conducted a poll of investors, advisers, CFOs, CEOs and Board members, asking whether CFOs make good CEOs. The result was inconclusive: “For every respondent who believed strongly that CFOs make good CEOs, another vehemently opposed the idea.”

You can read the rest of this report on Observe.

Sign up to be kept up to date