Promoting CFOS to CEOs (Essay Sample)
Due to the increasingly complex nature of corporate finance, more and more corporations are tapping their chief financial officer to become their chief executive officer. The CFO brings substantial financial expertise to the position of CEO. However, there may be other reasons why the CFO is not necessarily the best person to become the CEO.
Please note that the CFO must have an external orientation: After all, the company is owned by its shareholders and if the company is to operate so as to raise the value of the shares it must consider not only the internal structure of the organization, its products, competitors etc., but it must consider the interaction between what the company 'does', and the way the 'market' evaluates its performance. It is the combination of the two that plays a role in affecting the market price of the shares and shareholders value. The individuals who must have an eye on this are usually the CEO and the CFO.
Please read the articles below, which are both available in Proquest. You need to click ‘ADDIONAL LIBRARY RESOURCES’ under the title of Online Library in the TLC Portal in order to access the links.
How a CFO can graduate to CEO
Corporate Finance; London; Jun 1999; Janine Brewis
Abstract: Positions of power within corporates are highly sought after, and today's chief financial officers and finance directors are increasingly becoming aware that they now have a realistic opportunity of becoming CEO. Part of the reason for the trend towards recruiting CFOs who can behave as strategic partners is that the investor community looks much more critically at the business performance and management strengths and weaknesses of corporates. This strategic positioning gives them an opportunity to buff up their image, and make themselves seen as a more credible candidate to take over the CEO role.
Do CFOs Really Make Good CEOs
Institutional Investor; New York; Aug 1989; Picker, Ida
Abstract: With the proliferation of corporate takeovers, leveraged buyouts, and restructuring in the US, it would seem that chief financial officers (CFO) hold the keys to executive wisdom. Recruiters report a growing trend of grooming CFOs for chief executive officer (CEO) positions, with some estimating that nearly 25% of top corporate leaders are former CFOs. Analysts, academics, and headhunters agree that the ideal CEO communicates well, is adept at managing managers, understands the company's product and operations, and provides a consistent vision. A recent survey by Management Practices Quarterly reveals that, of 83 new CEOs appointed in 1988, more than 18% came from operations-production backgrounds, some 23% had technical training, while only 14.4% had a financial background. D. Wayne Calloway, who became CEO of PepsiCo in May 1986, was formerly the company's CFO and is probably the best example of the valuable experience CFOs can bring to the CEO position.
Read the two articles above, look for newer articles on the subject by browsing the web and then write a two-page paper answering the following question:
Do you think finance departments are the best place to train future CEOs? Provide two actual examples of CFOs of publicly-traded companies who became CEOs of publicly-traded companies within the past 5 years. Do these individuals have the CPA and/or CFA designations?
Include a discussion of both the pros and cons of hiring a CFO to be CEO. Try to cite at least three articles in your paper in support of your arguments in favor of and against hiring a CFO to be a CEO. Remember to include a reference list and to refer to the articles you use in the body of your paper.source..
Finance mod 1 discussion case: promoting CFOS to CEOs
The finance department is suitable to train future leaders and CEOs of an organization, so long as they get to understand other business aspects. CFOs are increasingly communicating the corporate strategy to interested parties. However, in identifying talents care should be exercised to have finance people who have people skills, who can work well with others and are comfortable leading. Objections against the choice of CFOs as CEOs, is that they may lack requisite skills especially when there is a need for creativity and marketing, but they may already have previous experience with mergers and acquisitions. The case for having CFOs being CEOs is that they align the financial capabilities of an organization with needs, and especially when they have broad experience.
Christopher Swift the current CEO of Hartford Financial Services Group Inc, previously served as a CFO (The Hartford, 2015). Mr. Swift has a background in accounting and finance and holds a CPA, and being in the in the financial services industry the choice of Swift as a CEO is justifiable since he is well knowledgeable about the industry. Michael E. Mercer took over as the CEO of EV Energy Partners (EVEP) in March 2015, following the resignation of the CEO. Mercer was the Vice President and CFO, and having previously worked in finance but holding business administration degrees a bachelors’ (Petroleum Land Management) and Masters with no CPA or CFA qualifications.
Brewis (1999), points out that boards preferred CFOs who can work in teams and work outside the finance functions, even as organizations increasingly integrate their operations. Additionally CFOs typically focus on business performance and investors increasingly emphasize on the strengths and weaknesses of management through a corporation’s performance (Brewis, 1999). Hiring a CFO to be a CEO is beneficial if th...
YOU MAY ALSO LIKE
- Mental illness Essays
- Water pollution Essays
- Child labor Essays
- Schizophrenia Essays
- Smoking Essays
- Manifest destiny Essays
- Trifles Essays
- Vietnam war Essays
- Ethics Essays
- Globalization Essays
- Kite runner Essays
- Drugs Essays
- Artificial intelligence Essays
- George washington Essays
- The crucible Essays
- Body image Essays
- Recent Accounting ScandalDescription: Summarize the events of a recent accounting scandal. Identify how the illegal or unethical act was detected and describe the punishments that resulted (fines, prison terms, etc.)...2 pages/≈550 words | 2 Sources | APA | Accounting, Finance, SPSS | Essay |
- Accounting ScandalsDescription: Review the provisions of the Sarbanes-Oxley Act of 2002 to address the accounting scandals in the late 1990s and early 2000s (Enron, WorldCom, etc.)...2 pages/≈550 words | 2 Sources | APA | Accounting, Finance, SPSS | Essay |
- Article Summary & Analysis Description: Several companies are faced with economic problems on how to properly allocate the few available resources to maximize profit....3 pages/≈825 words | 2 Sources | APA | Accounting, Finance, SPSS | Essay |