Discuss,
Do CFO (Chief Financial Officers) make good CEOs (Chief Executive Officers)
Introduction
CFOs (Chief Financial Officers) are the managers of the finance department. They are in
charge of all the financial operations of the company. CEOs (Chief Executive Officers) are the
managers of the companies and are in charge of whole company. The basic objective of a
company is to maximize profits and all the management efforts are normally directed towards
achieving these objective. The most suited person to be a CEO in most companies is normally
the CFO. This is in line with the objective of the company as most CFOs have all the basic
knowledge of all the operations of the company due to the nature of financial management.
The basic training and qualification requirements of all CFOs include basic training in human
resource management, law, and business management skills. Most duties of CFOs, besides
financial management also include strategic planning and business leadership with direct general
responsibility and oversight on all company operations including procurement and other
technical business planning processes. Clariden Leadership Institute
These duties make the CFO the best replacement of any outgoing CEO as they have all the
knowledge of the operations of the company. In addition, most CFOs have a recognizable role
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based transformation, which is evidenced as the CEO in waiting status that their positions seem
to hold. The operating environment of a CFO that values cash, risk mitigation and calculations of
financial profit margins and ratios in the management set up provides the training needed for any
CEO. Sarbanes-Oxley Act of 2002 , section 407 Most companies make it mandatory for all CFOs
to have financial training and qualification as financial accountants or analysts before being
appointed as CFO. The modern duties of CFOs include primary skills and sound capabilities in
procurement operations of any corporation.
CFOs are the owners of vital business information, reporting and assisting in making business
decisions that are critical to the success of the corporation. CFOs are the strategic partners and
official advisers of the CEOs in most business set ups.
Majority of the current CEOs who are very successful in their businesses have at one time being
a CFO or acted as one in their current or former companies. For instance, the CEO and President
of EdR, Mr. Randy Churchey was Vice President and Chief Executive Officer of FelCor
Lodging Trust, Inc., a NYSE listed company i.e. a real estate investment trust (NYSE: FCH)
between the years 1997 and 2003. Randy took over as the head of EdR in January the year 2010.
He is a certified Public Accountant. www.EdR
Phillip B. Douglas is the Chairman and Chief Executive Officer of LifeCare Hospitals. He
joined LifeCare Holdings in January the year 2006 as a Chief Executive Officer until the year
2008 when he was appointed as the President of Lifecare Hospitals. He previously worked as the
CFO of Workscape, Inc, a technology-based human resources outsourcing firm. He is a career
Certified Public Accountant. www.Lifecare Hospitals
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In conclusion, Most CFOs find it easier to climb the ladder to become the CEOs as they have
been trained in all aspects of management which include Economics, Management, Law,
Business management, Stores management, Human resource management and currently also in
basic procurement management besides their primary role as financial managers. These training
and basic qualification as financial accountants provides an added advantage when it comes to
the selection of a Chief Executive Officer. Being the financial advisers to the CEO and also as
part of the strategic team, the CFO has all the information just as much as the CEO and is well
informed of all the company operations as he funds literally each section of the corporation and
as such he is well equipped with all the necessary information about the company.
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References
Sarbanes-Oxley Act of 2002 , section 407
Clariden Leadership Institute CFO Leadership Program: Changing Roles of CFO
