In speaking with the chief human resources officer (CHRO) of a large company concerning his thinking about the succession plan for his own role, he described an interaction with a former colleague that I thought was pretty telling. The CHRO spoke with the colleague about possibly returning to the company in a strong number two human resources leadership role with an assurance that he would be put on a very short list for succession into the top HR position.

The polite answer the CHRO received was “Not interested; call me when your job is open.” The CHRO’s response? “The only way you’re getting my job is if you take this job first.”

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John Touey

This comment led me to extrapolate the thinking to the CFO role. I did some quick research on CFO changes in Fortune 100 companies over the past 16 months, and, guess what?  My friend’s reasoning was correct: the vast majority of those positions are held by executives who were either promoted from within or who came from a company that at least approached the size and complexity of their current organization. Perhaps Apple CFO Luca Maestri is an exception, but his previous employer, Xerox, is not exactly a start-up. Now these are mega-companies — the smallest has revenue of more than $30 billion. But, I believe this rule of thumb applies to differences in scale at lower levels as well.

In our firm’s experience, the inflection points in company size where there clearly are perceived differences in the duties and expectations of CXOs in general are as follows:

  • < $1 billion — The CXO is perceived as a doer/leader. Resources are constrained and executives at the EVP/SVP levels are often doing VP-level work as well. Decision-making is faster and more informal. CXOs still are required to practice their technical skills.
  • $1 billion-$7 billion — The CXO is transitioning to a true leadership role. Managing vision and strategy begins to trump technical and domain expertise. CXOs begin to manage truly senior leaders underneath them and must balance natural inclinations to get their hands dirty with being a coach and champion for those who report to them. However, lack of resources still requires a good bit of doing.
  • $7 billion-$20 billion — The CXO begins to move from a functional leadership mindset to a general management mindset. Organizational savvy and political competency become paramount to the ability to get things done internally. Cross-cultural sensitivity also comes more into play as the CXO begins to manage a global team of senior managers.
  • > $20 billion — The CXO truly is a visionary leader. He or she must be a master delegator running very large organizations (even in functional leadership roles). He or she must possess the ability to communicate a vision to an organization and encourage input from his or her direct reports, but also possess the courage to ultimately make decisions critical to the success of the business. These CXOs must be able to balance driving their companies toward a straight-line goal while anticipating and preparing for the unknown challenge beyond the horizon.

The experiences required for success at companies of less than $1 billion in revenue are so different from the mega-company that they almost become irrelevant to a Fortune 100 leader. What I have found in my executive search career is that this becomes an overt source of frustration for leaders of companies at the $1 billion to $7 billion level, because they often are passed over for consideration for equivalent roles in larger companies.

These executives are no less talented then their peers at the largest companies. However, the experiences that got them to the current point in their careers are not those that will get them to the same level in a larger organization. Sometimes, this is simply a perceived gap, most often by the mega-company’s board whose role these days is primarily focused on risk mitigation. Sometimes, the organizational complexity of a Fortune 100 truly is more than a CFO of a mid-size company is prepared to take on. In all cases, it is a real obstacle for CXOs in mid-size companies looking to make it to the next level.

Returning to the anecdote from my CHRO friend, his advice is right on point. If you are a CXO of a mid-size company who desires to move into the top functional or general management role in a Fortune 100, the clearest path to that destination may be a crooked one. A developmental assignment running a region or a division of a company that size will get you closer to that dream job than moving to a company only slightly larger than your own.

John Touey is a principal at executive search firm Salveson Stetson Group with 20 years of experience providing executive search, human resources and management consulting services to organizations in the healthcare, financial services, utilities, manufacturing and pharmaceutical industries. Follow him @JohnTouey.

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