Principles Of Finance

FIN 301

Principles of Finance

Case

Module 1

14 January 2011

Finance departments are the best places for CFOs to become CEOs. This answer was chosen because how can you run a business and make it successful if you don't know or have what it takes to be a CEO. CEOs are chosen because of their financial backgrounds and also because of the training they've received from their counterparts. Knowledge in all the finance departments is important when running the company as a CEO. If I was a CFO wanting to become a CEO I would want to know so much about the company from the ground up not just from the finance side of the house. Also having CFA/CPA experience is very important when running a company. Experience is an important factor today so that's why when CEOs are chosen they are chosen because they have CFAs and CPAs.

Those former CFOs who have excelled as CEOs have done so because they broadened themselves beyond their financial backgrounds and could relate well to people. CEOs are chosen because they have emotional stability to deal with broad range of issues and personality. Also within the search good leaderships and visionaries are founded. CFO is now expected to interact with their management boards and in particular with the CEO and contribute with the strategic planning. In the past CFO were looked at as storekeepers. Today many companies see CFOs as helpers in building shareholders value. The finance director (CFO) is a very important person in the investment community, it gives them the opportunity to spruce up their image, and make themselves seen as a more credible candidate to take over the CEO role.

When recruiting a CFO a company should be clear about what kind of candidate it wants. There are great expectations that the staff should know everyone in the market and have an intimate knowledge of clients' business strategies. Many large recruitment firms conduct searches for a wide range of executive functions. There are several Pros and Cons when going from CFO to CEO.