This is the first of two articles about how finance professionals who are a step or two away from a CFO seat can make the final strides.
How did finance professionals come to be on the CFO track and, ultimately, land a finance-chief job at a big public company?
Certainly, all of them became deeply skilled in the technical aspects of the profession, and virtually all gained advanced abilities in the areas of leadership, strategic orientation, and communications. Still, their stories are remarkably divergent.
Some never set out to be a public-company CFO, instead envisioning that they might one day run finance at a small company, but eventually got the opportunity anyway. For some, it was the convergence of right time, right place. Some leveraged a harmonious relationship with the CEO that just clicked. Some set their sights on a top finance seat early on, but their path to that goal had some unexpected twists.
Whatever route they took, veteran finance chiefs have clear views on what executives rising through the ranks must do to be qualified for and succeed in the role. Below, five prominent CFOs relate those views, cast in the context of their own experiences.
Scott Schenkel, who in July will complete his second year running finance at eBay, came up through a path that is common to a remarkable number of prominent peers: the “CFO factory” at General Electric. He worked there for 17 years before joining eBay in 2007, and looking at the series of positions he held since his career began, it seems clear that he was on a CFO track from day one.
But being ready for the job may not be the same as believing you’re ready. “I don’t think there’s ever a point in time where it crystallizes, where you go, ‘yeah, I’m ready, I’ve checked all the boxes,’ ” Schenkel says. “You work toward it, and at some point, if you’re keeping your eyes open and managing your career, you get there.”
His move to eBay a decade ago was intentionally designed to prepare him to one day take the finance reins at the online marketplace. The CFO at the time was Bob Swan, a respected former GE colleague. Schenkel says he was “very invested” in ascending to the post whenever the incumbent left, which happened in 2015 when Swan became the CFO of Intel.
Along the way, Schenkel did a lot of things to prepare. He attended every board meeting for seven years. Unlike many CFOs-to-be, he had a big role in working with investors and sell-side analysts. And he got well immersed in eBay’s businesses by regularly conducting operating reviews.
And yet he says it’s “practically impossible” for someone to have strong experience in every area that’s important to being a CFO. “I don’t think it’s realistic,” he says. “You’ll never get to all of them, at any depth. What you can do is get exposure to all and be sufficient in many.”
Even some of those that may have most of the bases covered find, upon attaining the role, that they don’t have the proper chemistry with the CEO, the rest of the management team, and the board. “If you’re not on the same wavelength and willing to be a partner and learn from and push each other, it’s not best for the company,” Schenkel says. “That plays out in a number of different fashions, but often it ends up with the CFO gone.”
Whether executives can become finance chiefs with holes in their résumés, as Schenkel suggests, is actually a matter of debate within the CFO ranks.
“I don’t subscribe to that,” says Carol Tomé, the longtime finance chief at The Home Depot. “It’s incumbent upon the sitting CFO to invest in his or her team and make sure that if they don’t possess all the skills required, that they get them. In fact, I personally believe that my legacy will be defined by the quality of my team.”
According to Tomé, the ability to clearly communicate is the skill most often missing from people who are a step or three away from earning a promotion to CFO. The role demands a lot of communicating — to boards, the management team, staff, investors, analysts, banks, rating agencies, and in the case of Home Depot, hundreds of thousands of store associates.
A big key is “understanding that your message is all about your audience, and not about you,” says Tomé. That’s not intuitive for a lot people, she notes, so it’s one of her most important staff-development priorities. But, she insists, everyone who could otherwise be a CFO can learn to be an effective communicator.
While Tomé has always worked in finance and has been in her current post since 2001, she didn’t set out to become a CFO. Most of her early-career experience was in treasury, and her only career goal was to continue to grow and put more tools in her toolkit. But after joining Home Depot in 1995, she began to get more opportunities in finance.
“I found I liked being at the table, liked operational finance and internal controls, and loved the investor relations piece,” she says.
Despite her staunch belief that companies do have a right to expect that CFO candidates will have all of the requirements, Tomé agrees with Schenkel that even qualified candidates may nonetheless doubt whether they do. “Does anyone ever feel like they’re fully qualified before taking a job?” she says. “I think the answer is no. But it’s extremely helpful if you have enough confidence and smarts to surround yourself with smart people and build a large network.”
Dominic Caruso, the CFO of Johnson & Johnson since 2007, knew early in his career that he wanted to lead a finance organization, but he didn’t see beyond doing that at a small company. He attained his goal in 1992 upon being named to head finance at Centacor, a pharmaceuticals firm. For the next seven years he helped the company grow, to the point that J&J paid $4.9 billion to acquire it.
Seeing first-hand what would be required of the CFO at a very large, complex global company influenced Caruso to pursue varied assignments and development plans that enabled him to display his skills.
Those experiences not only helped propel him to his current post, they also helped shape his belief that those with the desire to be a finance chief at a public company must be willing to spend 40% to 50% of their time assessing aspects of the world outside of the company, such as the industry it plays in, the national and global economies, and regulations.
That orientation provides value for the company, of course, but the ability to think outside the company’s boundaries also aligns with the world views of CEOs and boards. “Candidates for a potential CFO position are assessed against a number of external criteria,” Caruso says. “They are judged against candidates outside the company, and judged by board members who have seen multiple CFOs in multiple settings.”
In fact, a need for outside perspective has led J&J to modify its process for filling key finance positions.
Historically, the company brought in high-potential people from universities and trained them internally, such that ultimately they often became ready for executive positions without having worked for any other company. That process still applies, but only for about 75% of executive appointments. For the past three or four years, J&J has been hiring some experienced people from outside, for both divisional finance leadership positions and Caruso’s next-level staff.
That’s happening for two reasons. For one, there were some gaps to fill that couldn’t be well addressed through an internal solution. But also, the performance of companies in most industries is more subject to economic cycles than J&J’s performance is, given that the company plays in the medical devices and pharmaceuticals spaces as well the market for packaged consumer goods that are fairly recession-proof, like Band-Aids, Tylenol, baby products, and contact lenses.
“We wanted to get some perspectives from companies that have had tougher times,” Caruso says. “I mean, this isn’t like Oz, where everything is always just great. The world around you has a lot of pressures, and if you haven’t experienced them, it could be detrimental to the company and to individuals’ development.”
For some CFO hopefuls, timing may be everything. One person could be ready for several years before getting the opportunity, while another could be thrusted into the role while still a couple of years short of being truly ready, according to Marc Stapley, chief administrative officer at genetics and biology research and testing firm Illumina.
Stapley, who was the company’s CFO until being promoted to his new post in January, was in the former camp. “You have to have 90% of your leadership skills honed before you get the job,” he says. “It’s such an important position that it’s too much of a risk for companies to hire somebody with limitations or somebody they have to make allowances for.”
There’s a new CFO at Illumina, Sam Samad, who reports to Stapley, as do the company’s general counsel and the leaders of human resources, information technology, and business development. As was the case when he was the finance chief, he says, his view is that all of the folks who work for him are better in their fields than he is.
A natural consequence of gaining that level of expertise, and combining it with a certain degree of leadership ability and business acumen, is the desire to look elsewhere if the path to the CFO seat is blocked by the incumbent.
Before Stapley joined Illumina he served three years as vice president of finance at Pfizer. Frank D’Amelio, the drug firm’s CFO then and now, has seen several other top lieutenants depart for opportunities to run finance at other companies, as well.
“Am I sad when they leave? Yeah,” says D’Amelio, who came to the company as CFO in 2007. “But I’m happy they’re getting that job, because that means we’re developing our people. Plus, it’s a magnet to attract more talent.” It also opens up development and advancement opportunities down through the organization.
At the time D’Amelio first became a CFO, at Lucent Technologies in 2001, he’d had little experience working on the corporate side, having spent much of his career in operations. His final pre-CFO post was president of Lucent’s switching business. “I learned everything on the fly — earnings calls, capital structure, everything,” he says.
But, like others interviewed for this article, for those with an eye on a CFO job, D’Amelio puts leadership and communications skills first. “Certain people have those skills inherently, others can develop them, and others can’t,” he says.