Making the Leap

Faster than a speeding bank run, more powerful than a loan officer, able to lease tall buildings in a single bound: finance executives practically need to be superheroes to make it to the CFO's chair these days. So goes the conventional wisdom, at least. Those who aspire to the top finance spot are expected to have substantial experience in all facets of the business, X-ray vision into the workings of the CEO's mind, and a compelling personal presence that inspires employees and investors alike.

What's more, the recent carnage in the financial markets may be making it harder for those who haven't previously been CFOs to join the club. "Most candidates for the CFO role who haven't held that post before are typically missing two types of experience: investor relations and capital markets," explains Jeremy Rickman, a partner with Russell Reynolds Associates' financial officer executive search practice. "In this market, it's going to be more difficult for them to get to the top." Specialists in those areas are also less likely to get there, says Rickman, because of the breadth of the CFO role.

Does this mean that finance executives shouldn't apply for the position until they have gained experience in every area of the company, traveled the globe, and held a CFO job somewhere else? Not at all. As we learned through conversations with CFOs, CEOs, and executive recruiters, those with otherwise strong financial credentials can find many ways to compensate for gaps in their résumés. Not that the conventional wisdom is wrong, it just isn't absolute. Through varying combinations of perseverance, savvy, timing, and luck, a number of recently hired CFOs have charted interesting paths to the C-suite. You can, too.

CONVENTIONAL WISDOM: You need substantial experience in accounting and controls.
No one is going to quibble with the notion of hiring a CPA as a CFO these days, thanks in large part to the lingering effects of the Sarbanes-Oxley Act. From 2003 to 2008, the percentage of Fortune 1,000 CFOs with CPAs grew from 29 percent to 39 percent, according to executive recruiting firm Spencer Stuart. The focus on this core skill seems likely to intensify as international financial reporting standards (IFRS) come to dominate U.S. financial reporting.

While being a CPA isn't always required, some type of experience closing the books is. "Can a non-accountant cross over and become CFO? It's possible, but I don't see it very often," says Marc Schonfeld, a senior executive recruiter in the New York/New Jersey area for Ajilon Finance. "Financial standards are so stringent these days that to try to bypass that [area] would be a real shortcoming for a CFO."

Given the recent attention paid to accounting, controls, and IFRS, it's not surprising that the list of controllers who have recently been promoted to CFO — including Greg Hayes at United Technology Corp. and Anna Brunelle at Tivo — is a long one. Some 23 percent of current Fortune 1,000 CFOs were most recently in accounting and controls, Spencer Stuart numbers show, compared with only 13 percent who were treasurers when promoted.

So how did Kim Nelson, who admittedly had zero direct experience in accounting, win the CFO spot last year at SPS Commerce, a midsize, Minneapolis-based supply-chain services firm? For one thing, she had a strong background in financial planning and analysis at big companies like Pillsbury and Nestlé. Also, before coming to SPS, Nelson served as investor-relations director at Amazon.com, a job she took in part so that she could better understand how the accounting department functioned. Although she didn't help close the books at Amazon, the IR job got her "intimately involved" in the process. "It was by far the biggest learning position I've had," she says.

Finding a boss whose priorities matched her skill set also helped. SPS chief executive Archie Black, himself a former CFO, says the top three things he wanted in a finance chief for the privately held company were the capacity "to help drive change," the ability to "see our vision and articulate it to the investment world," and "traditional accounting skills." Given that Black considered the first two "the most difficult and most valuable," Nelson was the strongest candidate for the job. "We got over [Nelson's lack of accounting experience] because…she is a very strong manager and I believed she would be able to recruit, train, and motivate a strong controller," he says. "You can't hire someone to cover up for a CFO who is weak in the first two [areas]."

Finance executives who are light on accounting skills may also be able to find opportunities in specific types of businesses. Private-equity-backed firms, for example, prize operational skills over accounting expertise, says Walt Williams, partner at recruiting firm Battalia Winston Amrop. "You don't care about [financial] reporting, you care about cash," he says. Meanwhile, investment professionals, who typically don't have any accounting experience, may be a welcome addition at capital-starved public companies during the credit crunch. Nasdaq-traded Vision-Sciences just hired former HSBC managing director Katherine Wolf as its finance chief, while Micromet, also a Nasdaq company, hired Barclay Phillips, former managing director of Vector Fund Management, as CFO.

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