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More finance chiefs are finding their way into the CEO slot, as Burger King's John Chidsey recently did.
Helen Shaw, CFO.com | US
April 12, 2006
John Chidsey was Burger King's chief financial officer and president until last week. That's when he moved into the CEO suite, joining the growing club of chief executives that have held the CFO title on their way to the top.
Although not all finance heads aspire to the number one position in a company, about 20 percent of Fortune 100 chief executives were once finance chiefs, an increase from 12 percent 10 years ago, CFO magazine noted in an October 2005 article,The Top Spot.
Chidsey's career path is an example of one of the many routes that finance heads can pursue when their goal is the chief executive role. Before becoming CFO at Burger King, he was the president of two divisions, the Americas and North America. Prior to joining the company in March 2004, Chidsey had served as chairman and chief executive officer for two corporate divisions at Cendant — Avis Rent A Car and Budget Rent A Car Systems, and Jackson Hewitt. Previously, he was CFO of two divisions of PepsiCo. Both Chidsey and Burger King were unable to comment due to the company's quiet period pending its initial public offering.
Gaining experience through a division management role, as Chidsey did, is one way for a CEO hopeful to demonstrate leadership skills, notes Bob Muschewske, a senior vice president at Personnel Decisions International. That said, moving into a division leadership role sometimes presents too many risks for the individual and the company. The change can interfere with the company's CEO succession plans or the finance chief could decide a unit line role is not a good fit, notes Muschewske. If a role change isn't possible, then the challenge for a CFO is to demonstrate broad capabilities beyond finance. A CEO hopeful "needs to be seen as a key party in defining the strategic direction of the company who enjoys the business, being with customers, and talking with line managers," said Muschewske.
James Quigley, chief executive officer of Deloitte & Touche USA, also emphasizes the importance of broad experience through unit management, particularly the responsibility for executing a business strategy. In the Sarbanes-Oxley regulatory environment, finance executives find themselves under a brighter spotlight, which provides many opportunities to display their skills, according to Quigley.
"SOX has dramatically strengthened the CFO's hand because it provided significant new accountability responsibilities," says Quigley. Chief executives, who rely heavily on CFOs during the certification process for financial statements, have gained an elevated respect and understanding for their finance chiefs, he adds.
At approximately half of Deloitte's clients, estimates Quigley, the CEO was previously the chief financial officer. That's because the number two person in a company understands the company in a granular and deep way. "The CFO has a seat at the table: a seat in the boardroom, at the strategy table, at the table where deals are being done. That breadth of perspective uniquely qualifies the CFO to succeed his boss," added Quigley.
In addition to acquiring the skills gleaned through running a business on a daily basis, a CEO wannabe must convey corporate knowledge and interest in conversations with the board, advises Muschewske. CFOs should engage in a personal public relations effort because boards may not always consider the finance head to be a legitimate candidate. "You can help create the perception people have of you — you can create it narrowly or broadly — depending upon how you talk about [your] insights into the business."
There are many paths to the chief executive office, and CFOs are well positioned to take them. Muschewske, who has seen many finance chiefs jump into the top spot, says "That is because they have demonstrated the skills over and above the CFO skills."