Benefits to having a CFO as CEO Essay

Part IIn at onces complex bloodline environment, much than and more companies are twist to Chief Finance Officers (chief fiscal officer) to assume the premier position of Chief executive director Officer (chief operating officer) of the company. all the same, the qualities necessary of a chief executive officer are non unendingly in line with the training and experiences of a former chief fiscal officer. Yet the chief financial officer can bring legion(predicate) qualities to the CEO position to help a company succeed. What are the benefits to having a chief financial officer as CEO, and what are the required qualities of a CEO that may hamper the CFOs triumph in this position?As the leader of a corporation, the CEO essentialiness be a well rounded leader. The CEOs paint responsibility is making critical strategic decisions and creating conditions for those to be well-executed He must have the people acquisitions to motivate and build consensus both among the employe es, shareholders, and board members. He must be able to develop a strategy and swiftly and effectively implement it.A CEO must think at a higher aim of abstr forgeion more inductively and less deductively. A CEO must be more willing and able to act on key decisions with fewer facts, relying more on grounded assumptions. And a CEO must be able to communicate effectively to a broader constituency in jumpicular, he must be far more politic eithery attuned. prank Dasburg, CEO of Burger King and former CFO of Marriott International IncGenerally the CEO is more concerned with the Big Picture of the company, and can not afford to engross themselves in the details of any specific area. They are the motivators and leaders. Often the CEO can be successful simply by selling his muckle and strategic plan, turn letting others such as the CFO shape out the details. In contrast, people expect the CFO to be exact and analytical, even critical in their examination of the strategic plan, by examining it for pecuniary flaws.Probably the hugegest barrier preventing CFOs from succeeding as CEOs is that of management skills. The CFO is an dexterous in the financial underpinnings of the company, but often prison terms is not required to divulge skill in people or project management. CEOs often happen decisions based on the analytics, as well as intangibles learned from these skills intuition, private knowledge of those involved, and consumer opinion for example. In addition, the CEO is often required to engage decisions with limited time to examine the details,something the CFO is trained to specifically not do.The CFO is trained collect and analyze all the data in the lead coming to a decision. They look at different factors, from NPV to the timing of funds flow and returns then calculate the risk of the investment. The CEO will often look at the same data, yet will not leap the hard numbers the same turn overt as the CFO. Instead, those intangibles may weigh heavily in the making of the decision. The CEO is often willing to take up take more risk than the CFO. The transition to being able to figure out the hard decision without all the data may be a difficult one for the analytically oriented CFO to make.Another practicable area the CFO will have little experience in is selling. Sales and marketing will always be an important part of business. Many CFOs are hired to cut embodys to increase the dexterity of a company. Marketing is generally a favorite target of the cost cutters. In a sluggish market, this may be effective, but in a fruit market such as seen in new-fashioned years, focusing more on marketing can led a company to success. CFOs rarely have experience or understanding of marketing and sales, and their relationship to the market. This lack of dedicated experience can harm a company when it needs to grow to succeed.However, the recent economic down-turn, to include the authorise of the dot-coms and telecommunication s companies, the numerous high-profile scandals that have racked prominent companies and the global maturation that continues in all business has led to financial expertise being a top priority for a new CEO. The CFO can bring many skill sets to the CEO position to mitigate the complexity and public, and government, oversight ordinary in todays business environment.By definition, CFOs are more focused on the finances than a CEO normally is. However a financial background can greatly help a CEO to understand the status of the company, and can lead to enhanced success, while at the same time staying out of the scandals.The responsibility for regulatory form is the domain of the CFO. They are trained in the details required to fall out the company within the legal bounds. As stated by Deborah Thomas, manoeuver of treasury at Michael Page InternationalThe CFO has had to pick up responsibility for responding to regulatory changes. And with regulation, compliance and corporate risk at the point of everyones minds, the CFO makes the perfect choice for CEOBy the time a person is promoted to CFO, they possess an innate understanding of the regulations, legal requirements, and a comprehensive knowledge of the financial status of the company. These are all skills that a CEO needs to possess to be successful. As a CEO, the CFO may be capable of managing the regulatory complexities, while still decision opportunities for growth.Todays CFO is better-rounded than those in the past. Partly due to the recent scandals, the CFO works closely with the CEO in developing and execution of instrument strategy. It is often the CFO who is now the face of the company, managing the daily relationships with the shareholders. Todays CFO is invested in the daily operations of the company, and will now exercise to the CEO seat with a full understanding of operations and strategy.With business becoming increasingly complex, due to increase public oversight, regulation, and global gro wth it is imperative that a CEO have a strong financial background.Having the financial background can lead a company to increased success. Rather than trusting those intangibles, the CFO may make decisions based more higher probabilities of success. He may avoid the big risks, and subsequent big payoffs, but will often show a steady growth and return. In fact, according to a study by Duke University, companies that are take by optimistic, dynamic CEOs often tally a higher level of short-term debt and attempt to time the debt market, a sign of taking risks. Whereas companies run by former CFOs tend to have higher debt to equity ratios, an peculiarity of stability.It is this ability to negotiate the risks that places the CFO as a highly enviable CEO candidate. The CFO is able to assess the risks and their impact on financial performance. The CFO seems to perform well overall as a CEO. So well that the trend is growing, according to CFO Magazine in 2005, 20 share of Fortune 100 CE Os were once CFOs, up from 12 percent in 1995. The key to success for the CFO seeking to become a CEO is to round out their experiences. They will possess they technical expertise to perform the job, they just need to be able to supplement that skill with the management and visionary skills requisite for a good CEO.References1. Durfee, Don. SAY YES TO DR NO New research suggests that CFOs are an essential counterweight to optimistic CEOs.CFO Asia, 7 Sep 2006http//www.cfoasia.com/archives/200609-07.htm2. Favaro, Paul. Making the Leap from CFO to CEO. financial Executives Online. November 2001http//www.favaro.net/publications/cfo-to-ceo/CFOtoCEO.htm3. Durfee, Don. The Top Spot Why more companies are tapping their finance chiefs for CEO.CFO Magazine. 1 October 2005http//www.cfo.com/article.cfm/44444684. Corporate Finance. CFO to CEO1 April 2005http//www.cristassociates.com/press/CorpFin_CFOtoCEO_040105.pdf