Making the Leap

CONVENTIONAL WISDOM: It's easier to move up to CFO internally than externally.
Company men and woman have certainly done well recently. New CFOs at NetJets, which sells fractional jet ownership, and cable operator Charter Communications each logged about a decade with their firms before their big promotions. The new CFO at giant coal company Peabody Energy was there for 20 years before getting the nod, and Terry Endsley was at truck maker Navistar for more than 30 years before his promotion.

"It is easier to move to the CFO ranks internally than it is externally because you're known, and you have the momentum and sponsorship," says William Reeves, executive recruiter at Spencer Stuart. Seeing one company through many economic cycles also has its value, says Endsley. He says he never thought of leaving as he moved up through the ranks, because he "always felt challenged" in his roles thanks to economic fluctuations, major restructurings, and the influence and strategies of four different CEOs.

But this piece of conventional wisdom begins to look a little suspect when you consider that about 50 percent of newly hired Fortune 1,000 CFOs come from outside the company, and only 20 percent of all Fortune 1,000 CFO hires have the title when they leap, according to a Spencer Stuart tally. That makes sense if you consider that large companies will often groom multiple people to succeed the current CFO, leaving many qualified candidates to look around when the job is filled (if not before).

Many outsiders reach the CFO's job by leaping and bounding from company to company, gaining vital skills along the way. Scott Francis, for example, started his career at Ernst & Young and spent four years at The Williams Cos., before moving to a Williams spin-off (WilTel Communications) and seeing it through bankruptcy in 2002. He then became a controller at privately held Vanguard Car Rental just as it was emerging from bankruptcy and relocating its headquarters to Francis's hometown of Tulsa.

But Francis knew he wanted to do more, such as signing a 10-K himself and taking part in analyst conference calls. "I'd supported many IR functions, but I'd never been the voice on the call," he says. He got his first chance to be a CFO in September, joining Oklahoma-based cable-television supplier ADDvantage Technologies.

Why was ADDvantage, a small public company also based in Tulsa, willing to take a chance on him, when he hadn't been a CFO or worked in the cable industry before? The company wanted a CFO who had "a strong [Securities and Exchange Commission] background, a good public-accounting background, and success in implementing Section 404 of Sarbanes-Oxley," which microcaps are subject to for the first time this year, answers ADDvantage chief operating officer and former CFO Dan O'Keefe. Francis fit the bill on all counts — but so did 20 other candidates. The company hired him largely because he had the right personality fit for the company, says O'Keefe, who was impressed by the extent to which Francis had "rolled up his sleeves" at Vanguard. Among other things, Francis had hired more than 30 people in less than four months and attended training sessions in Florida with them. "That's a doer," says O'Keefe approvingly.

He acknowledges that Francis will have to learn about the industry and several areas of the job, including risk management and investor relations. "In some areas he'll hit the ground running, but other areas will take him months and even years to gain familiarity with," says O'Keefe. But he figures that would have been true for any new hire, given the complexity of the industry. "We have a strong leadership team here that will mentor Scott like they mentored me," he says.

CONVENTIONAL WISDOM: You need international experience.
Overseas experience is widely regarded as an unalloyed positive for would-be CFOs, and as even small companies increase their global presence, time abroad may become more important for aspiring finance chiefs. A foreign posting "gives an executive a whole different way of looking at business," says Russell Reynolds's Rickman. Candidates with such experience "are much better placed to move more quickly through their careers," he says.

But at a time when young finance staffers are increasingly resistant to domestic relocation, packing up for an assignment on the other side of the globe can be a daunting proposition. Jeff Burchill, CFO of commercial property insurer FM Global, says he would like to see more staffers in the company's Rhode Island headquarters take roles in FM Global's offices in such places as the United Kingdom, Canada, and Asia, but few are willing to go. "What's working against us is a lot of two-career families," says Burchill, where the spouse would have to give up a job to move. Joe McCabe, vice chairman and a member of the executive committee at executive search firm CTPartners, says he sees the same phenomenon at many companies. "It generally stems from concerns about work/life balance," he says, but staying home will ultimately limit a finance executive's options.

Is there any way to compromise? A number of current CFOs say yes. Burchill, for one, is trying to broaden the horizons of some of his staff by having them handle more international responsibilities from their desks in Rhode Island. Meanwhile, neither Cisco Systems CFO Frank Calderoni nor Bill Foltz, CFO of online advertising sales representation firm Gorilla Nation, has ever lived abroad, but both say they gained global chops by spending weeks and months at a time in foreign locations, negotiating key deals with international partners.

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