Best Finance Chiefs: Skills or Range?

Is it better for CFOs to work in several industries, or to have great accounting chops?
Lisa YoonAugust 13, 2002

In the current issue of MIT Sloan Management Review, performance of externally hired chief executives from the same industry is compared with that of CEOs who join a business from other industry. On average, CEO performance was the same for either kind of CEO, for up to three years after the appointment…

Closer look shows results varied more among CEOs who brought only transferable skills from outside the industry, however. “CEOs from other industries tend to try different or new things [in terms of management approach],” explains Constance Helfat, associate professor of business administration at Dartmouth’s Tuck School of Business and co-author of study.

But what about CFOs? Industry experience is one of enduring issues of debate among CFOs on the move: is it best — for both company and finance chief — to try out different industries, or is mastery of transferable skills of accounting and finance what really counts? “You can’t apply the same findings to CFOs,” asserts Helfat, “because different companies have different types of CFOs. Some are strategic partners and some are accountants…”

Dirk Landis, Chicago area managing partner for rent-a-CFO firm Tatum CFO Partners, agrees. He says the answer lies in the scope of specific CFO job description. Except for highly regulated industries (such as banking and insurance), Landis says CFOs from other industries are usually successful at new company — provided said CFO has worked in number of industries. “You take a world-class athlete from multiple industries with lots of experience,” says Landis, “and they usually end up best.”

That said, the narrower the scope of the job, the more it behooves a CFO to know the industry.


Catalytic Convert: Kevin McDonnell joined catalytic coatings maker Catalytic Solutions Inc. as CFO, SVP… McDonnell joins from Digital Insight Corp., where he held same posts. At Digital Insight, McDonnell oversaw IPO, $120 million secondary stock offering and several acquisitions. Prior to Digital Insight, McDonnell served as EVP and CFO of Rockford Industries, sold to American Express in 1999.

>>Handheld-device maker Handspring Inc., appointed William R. Slakey VP, CFO. Slakey was most recently CFO at semiconductor company WJ Communications. Before that, worked at SnapTrack, a wireless tracking systems maker and QUALCOMM subsidiary… Earlier, spent time at Palm before spinoff from 3Com as senior controller position.

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