This article was first published in the April 2017 China edition of Accounting and Business magazine.

In recent years, it seems to have become fashionable for any ambitious CFO worth their salt to aspire to be a CEO eventually. Even in Malaysia, we have seen many top corporations led by CEOs who were once CFOs or finance directors. 

It can be argued that CFOs have the necessary expertise and are uniquely placed to make the transition from heading the finance function to driving a company forward. 

While the expectation for CFOs to step up to the next level persists, the reality appears to be somewhat different. Studies indicate that an overwhelming number of CFOs are perfectly happy to remain right where they are without being pressured to become a CEO or managing director.

In EY’s latest CFO global research study (2016), The disruption of the CFO’s DNA, more than 70% of the 769 finance leaders surveyed did not have aspirations to be a CEO; this translated into 79% of baby boomers, 76% from Generation X and 73% of Generation Y. 

On why most finance leaders are content to remain CFOs, Ong Chee Wai, EY partner and deputy head, assurance services, says, ‘The broadening scope of the CFO role and the potential to influence corporate strategy and drive business change mean that most finance leaders enjoy a high level of career satisfaction and perhaps see their career choice as one to be celebrated, rather than a staging post to the role of CEO.’ 

‘Many who wish to remain as CFOs enjoy the opportunity to challenge, bring solutions and be a partner without having the full responsibility of the organisation on their shoulders. They also enjoy the depth of insight into the business that finance gives them,’ he adds.

Ong also believes that a CFO can remain an integral contributor to a company’s success despite not having designs on the CEO’s position. ’The CFO today can be described as a co-pilot to the CEO, the conscience to the board and trusted front face to the market with the CEO,’ he says.

He explains that the CFO brings a different skill set, thinking, role and value to the business compared to other C-level positions, including the CEO. 

‘The CFOs’ unique optic across the organisation, their rare positioning as an objective, independent voice of the business and their fact-based discipline have them rightly placed at the forefront and within the inner-circle of decision-making,’ he adds.

Greater power and influence

Nurul A’in Abdul Latif, PwC Malaysia markets leader and partner, says that CFOs today wield greater power and influence, which could explain why they are choosing to maintain their posts. ‘In fact, we see many CFOs today helming a company’s transformation initiative, together with group strategy and other divisional heads.

To a certain extent, there are still different skill sets required of a CFO compared to a CEO. But as the role of the CFO evolves, the lines are slowly getting blurred,’ she adds. The role of the CFO is undergoing a historic change, she says, with the ‘new’ CFO now charged with value creation, becoming a business partner to the broader executive team. CFOs are now part of senior management and are involved in key investments and strategy execution decisions.

The key question raised is whether CFOs who do not desire to be CEOs are lacking drive and ambition. Goh Chok Siang, financial controller of the world’s largest condom manufacturer Karex, dismisses the suggestion. He says that the CFO has an important role to play within an organisation and is normally part of the top management team.

‘It is very critical that the CFO works together with CEO,’ he says. The CFO will always have his view from the financial [perspective] and the CEO’s is from the business viewpoint.  

Ong believes that it is a misconception to say that CFOs who do not aspire to the CEO role lack drive and ambition. ‘Rather, the unique community of successful CFOs is a highly driven, effective and scarce resource. Their unique skill sets allow them to not only provide a balanced and robust assessment of an organisation’s performance and direction, but to also bring creative solutions to key business issues and drive innovation to leverage growth opportunities. 

With the growing demands, influence and profile of finance leaders across the enterprise and among a diverse group of key stakeholders, it is not surprising when incumbents and aspiring executives view the CFO role as a highly motivating, rewarding and ultimate career destination by itself,’ he adds.

Integral contributor

Goh believes that a ‘traditional CFO’ can remain an integral contributor to a company’s success despite not having designs on the CEO’s position. ‘The CFO is the only person who knows all the cost structures of company projects regardless of whether it is a success or failure,’ he says. 

Armed with such information, the CFO can study the factors that affect why a project succeeds or fails and these will become an important input to the company’s success going forward.

Nurul A’in says it is unfair fair to brand CFOs as lacking ambition if they do not seek to become a CEO. ‘It takes drive and ambition for CFOs to even break away from their traditional responsibilities,’ she says. ‘That’s how the successful ones move up the value chain. They take immense time and initiative to develop the broader skills needed to step into the more commercial side of finance – working on their communication skills, analysing financial and non-financial data, understanding trends, sharpening their business acumen – to have greater influence in a business’s strategy-making process.’ 

Nurul A’in argues that there are few roles these days that have the luxury of staying ‘traditional’. ‘Whether finance, strategy or back-office support, you have to remain relevant and reinvent yourself especially with the advent of the digital economy,’ she says. 

‘A CFO doesn’t need to aspire to become CEO but must go beyond the traditional confines of finance to have a say in strategic issues.’

Given that CFOs have migrated from being a scorekeeper to strategist, Ong says there would rarely exist a business situation that requires a CFO to remain focused on traditional finance functions alone, ‘unless a business chooses not to explore any growth opportunities’. 

He notes that a good CFO is one who is able to identify and shape a role that balances the different responsibilities within the breadth of the job’s remit. ‘The degree of shift would vary depending on the aspiration, maturity, experience and attitude as well as the strategic, technical and interpersonal skill sets of the CFO,’ he adds.

Increasingly, CFOs face the challenge of striking a balance of being effective in their finance functions while contributing to developing corporate strategy. Goh believes CFOs play an integral role in developing a company’s strategic direction. ‘It is important that someone from finance is always in the strategy team to share their views on the current business environment such as developments in accounting standards, finance and economics,’ he says, adding that good team work between the CFO and CEO is essential in developing good strategies. 

MK Lee, journalist