Cash Management

Why Treasurers Are “Stuck”

Often overlooked as candidates for higher finance positions, they need to get out of a mindset where they see their careers as strictly vertical. T...
Avital Louria HahnMay 16, 2008

Few doubt the importance of treasurers, who manage companies’ lifelines from cash to risk management. And even though in recent years some of their duties have been automated or outsourced, they have taken on new, often strategic roles to still qualify as some of the hardest workers in finance.

But paradoxically, when it comes to advancement, opportunities are scarcer for treasurers than for controllers. Fewer of them graduate to a CFO chair. And when a treasurer spot opens up, treasury-department staffers often are bypassed in favor of outside hires. “Treasurers know that they touch all the cash in a company,” says Blanche Roberts, a senior consultant at Chicago-based Zehren Friedman Associates. “Yet they don’t always feel highly valued.”

Zehren-Friedman conducted a survey in late 2007 on how treasurers, assistant treasurers, and treasury directors perceive their career paths. Among 87 respondents, 52 percent said opportunities within their department were limited, while 43 percent believed they would have to leave their company in order to advance, according to Roberts.

In an analysis of CFO hiring patterns among the Fortune 1,000 that recruiting firm Heidrick & Struggles performed last year, companies that chose internal candidates picked controllers 34 percent of the time; only 14 percent of those promoted were treasurers.

For treasurers, the picture was even grimmer when it came to hiring a CFO from outside the company: a sitting CFO was the choice in 51 percent of the cases. Of the rest, controllers made up 15 percent and treasurers a mere 5 percent.

The preference for controllers over treasurers can be traced to the emphasis on accounting driven by Sarbanes-Oxley, according to Lorraine Hack, a member of Heidrick’s financial officers practice. A shift may be under way, though, as recent CFO searches have tended to put less emphasis on accounting, she adds. That doesn’t mean treasurers — or controllers either — will be getting more CFO jobs, however. The preference has always been for experienced CFOs, but that prejudice has been deepening lately. “Companies have gone more conservative,” says Hack.

The “stuckness” common among treasurers is by no means universal. In the financial sector, for example, treasurers possess the banking knowledge that is their company’s main business and are routinely named CFOs. One recent example is Martina Hund-Mejean, a former Tyco vice president and treasurer who took over the finance organization at MasterCard Worldwide in February.

Blue-chip treasury training programs also stand out as treasurer empowerment zones. Ford, General Motors, and General Electric are known for creating future leaders through such programs, which rotate people through various departments, including operations. Many of these programs’ alumni have gone on to hold CFO and other senior-executive titles, both at GM and at other major companies.

Other companies simply value treasury and tend to rotate future leaders through the group, even if they lack a pedigreed program. “In some companies, treasury is a strategic business partner and a leadership management resource, while in others it is just another operations area,” says Roberts.

Among the fortunate is Steve Bruffett, CFO of YRC Worldwide, who spent three years in treasury among several company groups he rotated through. After joining in 1998 as director of financial planning and analysis, he became treasurer of Yellow Corp., parent of YRC. In that role, he was involved in the company’s merger with Roadway, and later was promoted to senior vice president in charge of corporate development and investor relations. In 2005 he went into a completely different area, running operations on the Eastern seaboard. Bruffett, who became CFO in 2007, says, “Treasury is one of the great places to rotate up-and-coming talent.”

Looking at treasury as a vertical career can be limiting, says Roberts. Quite a few people are career treasurers, denying advancement opportunities for others in the group. Another problem is that, similar to the patterns in hiring CFOs, when companies fill the treasurer spot they tend to hire from the outside.

Those not committed to a treasury career would benefit by doing all they can to move laterally. In the Zehren-Friedman survey, respondents identified exposure to senior management as the most important need for advancement, followed by communication skills and advanced technical skills. Those who combine all three “add value and are more visible,” says Roberts.

But for treasury employees, gaining exposure to top management or access to training is not always easy. “When I speak to training departments, treasury is usually not on the list,” says Roberts. “They are usually under the radar.”

One key to moving up can be a willingness to gain operational experience. A quick look at résumés of top CFOs bears that out. At Cardinal Health, Jeffery Henderson is a former president of Eli Lilly Canada as well as that company’s former controller and treasurer. Bausch & Lomb CFO Efrain Rivera, a onetime treasurer, acquired operational experience as president of the company’s Canada and Latin America businesses.

Holding a variety of roles is important even in middle-market and smaller companies, such as those that are the typical clients of Tatum LLC, which provides senior finance executives on an outsource basis. “It is very unlikely that treasurers will be CFOs unless they get out of treasury and do the controllership function and the planning and analysis function,” says Cynthia Jamison, Tatum’s national director of CFO services.

A changed mindset may be in order for some. Controllers usually have accounting backgrounds and exposure to more aspects of the business, while treasurers are often former bankers with a narrower view. “Assistant treasurers often think about one next job — becoming treasurer — while an assistant controller will think of five different things, including audit, finance director in one of the company’s businesses, or even treasury on the way to becoming CFO,” says Kevin Ford, an executive recruiter with Korn/Ferry International.