Finance is fast becoming the route to the top – that’s the clear message from the findings of our annual FTSE 100 CEO Tracker. Over the past 4 years, we have been looking at the career progression of serving Chief Executive Officers (CEOs) within the FTSE 100 Index. This year, the findings reveal that nearly half (49 per cent) have financial backgrounds, compared to 31 per cent in 2008, indicating a stronger focus on sound financial management post-recession.
This trend for financial leaders looks set to grow. Over the past year, six of the nine (67 per cent) appointed FTSE 100 CEOs have financial backgrounds, including Andrew Harrison of Whitbread and Nicandro Durant of British American Tobacco.
These findings suggest that as the economy continues to improve, there is increasing demand for leaders who can navigate what remains a challenging operating environment.
But let’s take a closer look. To begin with, the downturn gave the number crunchers the opportunity to shine. During this time, many finance leaders held key roles at the decision-making table, helping organisations remain as efficient, effective and profitable as possible. This allowed many finance professionals to gain prominence and demonstrate their leadership skills to the wider business.
However, the downturn might not be the only driver behind this trend. The growth of the finance leader, as with accountants, may also be attributed to an increasingly stricter regulatory environment. No company likes surprises, so a greater part of a CEO’s remit is taking ultimate responsibility for regulatory issues, which were not as stringent a few years ago – a role much more suited to someone with past experience of technical accounting and finance. Furthermore, it can be reassuring, especially to shareholders, to have a leader with a core finance background who understands and can address these issues.
It is not only their fiscal skills that have made finance professionals more crucial to a company’s performance, but also their strategic insight and the communication of that to internal and external stakeholders. Commercial skills, including an understanding of how the wider business operates as well as its strategy and vision, are becoming increasingly important to a finance professional, with the finance function emerging from the backrooms and into the boardrooms.
Increasingly, CEO figures are taking a more collaborative approach and are first turning to the finance department – among others – before making any important, strategic decisions. Previously under-valued, traditionally back-office functions are becoming more important to the day-to-day running of an organisation. As a result, finance professionals have a new-found power in the business world; no longer is their role perceived as a matter of facts and figures or as the ‘go-to’ when things have already gone wrong. More and more organisations are realising how financial know-how can be a means to an end, rather than an end in itself.
Undoubtedly, a new voice is emerging from the finance function, one that has new governance and strategic responsibilities. It is more important than ever to have finance professionals capable of shouting louder about the numbers and offering real, strategic solutions to problems. For those looking to climb the career ladder, never before has the finance professional had such opportunity to stand out from the crowd.
Phil Sheridan is the managing director for Robert Half International’s UK operations where he is responsible for leading the organisation’s strategy and direction across more than 20 office locations. He is a member of numerous professional and accounting associations where he participates on steering committees and groups.