Brave New World of CFOs
Panel Session Moderated by Prof. Robert H. Gertner
Alison Nickum, '06
Issue date: 4/28/05 Section: GSB News
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One of the panel discussions comprising the second session of the management conference was "Brave New World of CFOs," a discussion of the current and constantly-evolving roles of CFOs in the midst of increased pressures, additional regulation, and growing responsibilities.
The first panelist, Thomas T. Daniels, '87, a consultant from the executive search firm Spencer Stuart, talked about the new environment surrounding CFOs, starting off by mentioning the significant amount of turnover in the world of CFOs. In fact, according to a recent survey, 63 percent of CFOs believe that work-related stress is affecting their health. In addressing the phenomena responsible for this high and continually-increasing amount of stress, he first addressed the "demand side." Here, he noted that causes like new circumstances (such as more regulatory review and oversight), a changing environment (including heightened awareness among the public about CFOs), and additional required skills (namely, the desire for CFOs to have more empirical experience) have contributed to this highly stressful environment. On the supply side, concepts such as more empowerment of CFOs and less firm loyalty (the average 55-year-old has had 6 jobs, while the average 30-year-old has already had 4 jobs) also provided context for the current situation. In the course of his discussion, Mr. Daniels also mentioned some relevant demographic information: statistically speaking, finance is still the most prevalent path to CEO - some 26% of CEOs come from a background in finance, more than from any other function.
Next, Hugh F. Johnston, '87, the Chief Transformation Officer of PepsiCo (recently transitioned from CFO), spoke about his view of the CFO's world. The CFO sits in the middle of many issues, such as business challenges, globalization, corporate governance, and of course, shareholders. Mr. Johnston noted the increasing role that non-government organizations, universities, communities, etc. play. He also provided an interesting comparison of the types of skills/roles CFOs are expected to have, and how they can be almost paradoxical. CFOs are to have both hard and soft skills, be both experts and generalists, stewards and strategists, "bean-counters" and big thinkers, are expected to both control and collaborate, be both accountants and technologists, partners and consciences, and, he joked, human and God. In conclusion, he noted a few key themes to take away: do less, not more - focus on value drivers; don't look to management reporting to drive growth; and remember that it's important to invest in finance staff, not just IT staff.
Reuben Gamoran, '87, Vice-President and CFO of Wrigley, was the final panelist to weigh in on the subject. Having been at Wrigley for the 20 years since his graduation from the GSB in '85, Mr. Gamoran gave an overview of his path to the CFO position. He started out in accounting, then moved to manufacturing, the treasury, international, then became controller, and eventually was named CFO. Mr. Gamoran commented on how a CFO often acts as an advisor and counselor to the CEO. He talked about the trends vis-à-vis Sarbanes-Oxley and the increasingly strict regulatory environment, and how boards are now ever more demanding that the CFO is someone they can trust.
Comments within the panel discussion included that some of the traits a CFO can offer to a firm are a healthy skepticism, a resilient personality, and perhaps most importantly, backbone. When asked about what they might look for in a successor, the panelists noted five main attributes in addition to the vital characteristics of personal quality, leadership, and integrity: a control background; experience in operational finance; experience in planning; and experience in strategy. Additionally, Mr. Daniels noted that another critical trait a CFO aspirant must have is the ability to manage downward. Although most people have the ability to manage both across and upward, Mr. Daniels said that many CFO nominees are ultimately "shot down" because references indicate that perhaps the nominees might have stepped on too many toes along the way. Apparently, sometimes the nice guys finish first.
The first panelist, Thomas T. Daniels, '87, a consultant from the executive search firm Spencer Stuart, talked about the new environment surrounding CFOs, starting off by mentioning the significant amount of turnover in the world of CFOs. In fact, according to a recent survey, 63 percent of CFOs believe that work-related stress is affecting their health. In addressing the phenomena responsible for this high and continually-increasing amount of stress, he first addressed the "demand side." Here, he noted that causes like new circumstances (such as more regulatory review and oversight), a changing environment (including heightened awareness among the public about CFOs), and additional required skills (namely, the desire for CFOs to have more empirical experience) have contributed to this highly stressful environment. On the supply side, concepts such as more empowerment of CFOs and less firm loyalty (the average 55-year-old has had 6 jobs, while the average 30-year-old has already had 4 jobs) also provided context for the current situation. In the course of his discussion, Mr. Daniels also mentioned some relevant demographic information: statistically speaking, finance is still the most prevalent path to CEO - some 26% of CEOs come from a background in finance, more than from any other function.
 Photo by Dan Dry |
Next, Hugh F. Johnston, '87, the Chief Transformation Officer of PepsiCo (recently transitioned from CFO), spoke about his view of the CFO's world. The CFO sits in the middle of many issues, such as business challenges, globalization, corporate governance, and of course, shareholders. Mr. Johnston noted the increasing role that non-government organizations, universities, communities, etc. play. He also provided an interesting comparison of the types of skills/roles CFOs are expected to have, and how they can be almost paradoxical. CFOs are to have both hard and soft skills, be both experts and generalists, stewards and strategists, "bean-counters" and big thinkers, are expected to both control and collaborate, be both accountants and technologists, partners and consciences, and, he joked, human and God. In conclusion, he noted a few key themes to take away: do less, not more - focus on value drivers; don't look to management reporting to drive growth; and remember that it's important to invest in finance staff, not just IT staff.
Reuben Gamoran, '87, Vice-President and CFO of Wrigley, was the final panelist to weigh in on the subject. Having been at Wrigley for the 20 years since his graduation from the GSB in '85, Mr. Gamoran gave an overview of his path to the CFO position. He started out in accounting, then moved to manufacturing, the treasury, international, then became controller, and eventually was named CFO. Mr. Gamoran commented on how a CFO often acts as an advisor and counselor to the CEO. He talked about the trends vis-à-vis Sarbanes-Oxley and the increasingly strict regulatory environment, and how boards are now ever more demanding that the CFO is someone they can trust.
Comments within the panel discussion included that some of the traits a CFO can offer to a firm are a healthy skepticism, a resilient personality, and perhaps most importantly, backbone. When asked about what they might look for in a successor, the panelists noted five main attributes in addition to the vital characteristics of personal quality, leadership, and integrity: a control background; experience in operational finance; experience in planning; and experience in strategy. Additionally, Mr. Daniels noted that another critical trait a CFO aspirant must have is the ability to manage downward. Although most people have the ability to manage both across and upward, Mr. Daniels said that many CFO nominees are ultimately "shot down" because references indicate that perhaps the nominees might have stepped on too many toes along the way. Apparently, sometimes the nice guys finish first.
 Photo by Dan Dry |
 Photo by Dan Dry |
 Photo by Sherry "GSB Model" Hameed |