Recently, most companies have adopted a way of promoting the CFO to the CEO. They consider this as a way of offering the best services to their shareholders. This trend of promotions has been discovered to have both advantages and disadvantages, but the final decision depends on the company policies. This assessment paper will be focusing on both sides of promoting a CFO to a CEO.
There is a wide recognition that the chief financial officers have all that it takes to serve the post of chief executive officer (Fick and Jeffrey, 2002). This is as a result of the dynamic and strategic role of the CFO from just a functional head to also acting as a corporate leader. Any chief executive officer with finance department knowledge would be well rounded with ideas of how the financial laws can affect the organization. He would also be in a position to assist in the creation of the official documents and the most appropriate way to submit them. A CEO promoted from a CFO post would act as a safety net and offer a watching eye to any deceit in the middle and lower ranks within the organization. He would also be in a position to assist the organization with his deep understanding of cash flows, costs and other types of expenses that are incurred by the organization.
In any company for the CEO to protect the company and its contents, it’s always advisable for him to understand law, regulations and policies concerning financial matters. This sums up the advantage of having a financial expert occupying a top management seat in any organization (Paul, 2001). However, there are known chief finance officers who were promoted to be the chief executive officers who recorded difficult tenures in the new position, for instance, Roger Smith at General Motors Corp. some of the CFOs have been achieving high marks in their new positions of CEOs like Edward Liddy in Allstate Insurance company. The poor performances of some CFOs when promoted as CEOs, is that they are faced with difficulties in dealing with new set of challenges. When someone is being promoted from a CFO to a CEO there are some changes which are expected like changing the way that one thinks, do things, and communications. For one to act as a successful CEO he would be required to adopt a higher thinking level in a more inductive manner and less deductive.
Additionally, other challenges faced by CFO to being a CEO are that, they have to work willingly and make crucial decisions based on few facts. Incase the CFO was not politically attuned he must change to be one, and be able to communicate effectively as he has become a leader of a large group of people within the organization. Not every CFO posses the required qualities of a leader, some lack the essential qualities like managerial skills hence they find it hard to perform some of their responsibilities (Zorko and Mark, 2001).
In the doctrine of a chief executive officer of any organization, he/she is expected to make decisions through gathering as much facts s possible, consulting his staffs, coming up with assumptions, and giving the alternatives a chance. After making the final decisions the CEOS are expected to tackle the next issue in disciplined and other times in a merciless manner which has been seen as a challenge to many CFOs who acquire this seat (Paul, 2001). In many organizations, the performance of the promoted CFOs is challenged when highly visible issues come up unexpectedly. Unlike other departments in the within a company, the chief executive officers are taken responsible for any action taken and the final outcome of it. This is a great challenge as they are involved with complex and urgent decisions which they are not in apposition to predict the outcome. Ex-CFOs are used to receive all the data on their desk before making any decision which is not possible in the office of a CEO.
Works Cited
Fick and Jeffrey. Rules forces CEOs and CFOs to certify financials. USA Today, p. 1B, 2002.
Paul, F. Making the Leap from CFO to CEO. Financial executives international, 2001. Web.
Zorko and Mark. E-commerce: How CFOs can seize the initiative. Financial Executive v.17 no3, 36-38, 2001.