BearingPoint Institute study: economic uncertainty and willingness to leave employer also drive CFO-to-CEO transitions
Frankfurt / London, December 3, 2014 – A quarter of European Fortune Global 500 CFOs climbed to the top of the career ladder within the last decade. To do so, 61% of those CFOs switched to a new company; 33% even changed sector. These are the findings of a new study conducted by the BearingPoint Institute.
The study surveyed the career paths of 178 CFOs from European Fortune Global 500 companies from 2004 to 2013. When plotted against the performance of the STOXX Europe 600, the research additionally revealed that CFOs are more likely to rise to CEO during periods of economic uncertainty.
Considering the career paths of CFOs that became CEOs by 2013, it was found that some industry sectors were more open to the idea of a CEO with a financial background. Almost one quarter (22%) of the CFOs that became CEOs made the transition within Banking & Capital Markets, but the results of the BearingPoint survey also showed that the sector was open to promoting CFOs from other industries to a CEO position.
If you intend to become a CEO in Financial businesses, what matters most is your expertise in the finance function. This expertise must not necessarily be collected within the industry, but also finance experience in other industries counts. From this point of view Banking & Capital Markets businesses are more open to promote CFOs from the outside world.
Andreas Rindler, Partner and Head of Financial Services for BearingPoint in the UK
In general though, sector knowledge is still important when it comes to making the leap to the top. Even though they might transfer to a new employer, two thirds of CFOs were promoted to CEO within their industry. Prominent examples of CFO-to-CEO transitions within the same sector include Ian Livingston (formerly BT Group), Joe Kaeser (Siemens), Frédéric Oudéa (Société Générale) and Kurt Bock (BASF).
Franz Hiller says the overall CFO-to-CEO transition rate of 26% was higher than expected, but interviews with CFOs for the report offered a reasonable explanation for this.
Historically, CFOs in Europe were often overlooked for the top job because of their largely operational role description. But changes in the internal and external business environment have raised the profile of the function. The scope of CFO responsibilities today often also encompasses regulatory affairs, the compliance realm and a company’s digitalization agenda. By setting up their finance departments to add strategic value to the organization, the role of CFO has been transformed to become a true business partner and co-pilot of the enterprise. It is only natural that they have therefore become much more likely candidates for the CEO position along the way.
Franz Hiller, Partner and global Service Line Leader for Finance, Risk & Compliance at BearingPoint
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