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 Preparing for a CFO Role By John L. Daly, MBA, CPA, CMA, CPIM
According to an October 2005 article in CFO magazine, majoring in accounting or becoming a CPA has not historically been the best route to becoming CFO. The article revealed that prior to the Sarbanes-Oxley Act, only 26 percent of all Fortune 1000 CFOs were CPAs. Most CFOs came from treasury, securities or banking backgrounds, not from accounting. Only after Sarbanes-Oxley has the percentage of CFOs who are CPAs risen to 45 percent. The same article also revealed that broad experience outside of accounting was a key common denominator among CFOs. What can you do to increase your chances of rising to CFO? Passing the CPA exam is a great start. However, you should view the credential as the beginning of your journey, not a guaranteed ticket of success. The knowledge a CFO needs is much broader than what you learned in preparing for the CPA exam. Further education, formal and informal, is required to be an effective CFO. More Credentials? A good way to continue developing your skills is to enroll in an MBA program. The difference in the quality of available MBA programs is immense. Top programs focus on turning out top-level executives. Stretch yourself and try to attend the highest-rated program possible. To get your CPA, you studied financial accounting, taxation and business law. You probably will not need more exposure to these topics in an MBA program. Instead, focus studies on banking, cost accounting, finance, human resources, information systems, organizational behavior and operations management instead. Sitting for the Certified Management Accountant (CMA) or Certificate in Financial Management (CFM) examinations will solidify and document your skills in many of these areas. Your First CFO Job Your chances of obtaining the top financial spot are obviously much higher if you start out working for a smaller organization rather than a Fortune 1000 company. A smaller company accountant will likely acquire a broader range of experiences than someone in a large organization. For example, if you are responsible for cash management for a Fortune 1000 company, you know your area very well but probably not much about other financial areas of the company. In contrast, a small company financial manager may gain experience in every financial area. My own resume, when I got my first “Only Financial Officer” (OFO) job, typifies the broad backgrounds of many CFOs. That resume showed a science undergrad degree, a year working in quality control, an MBA with an accounting major and finance minor, and five years experience at two major accounting firms consisting of a little auditing experience, a feasibility study for a public bond offering, and mostly IT consulting. I also passed the professional exams that allowed me to put CPA, CMA and CPIM after my name. When I took that small company CFO job, I had never closed a set of books in the real world. However, my knowledge of corporate strategy allowed me to contribute to a major company change in direction in my first six months. This change led to a six-fold increase in the company’s size over the next ten years and eventually I was a large company CFO, with other financial professionals working for me. Lifelong Learning What is your current level of learning toward CFO-level skills? There is a lot more to know to be an effective CFO than most accountants imagine. Anyone aspiring to a high-level job should embark on a personal mission of lifelong learning. A statistic sometimes cited in Institute of Management Accountants (IMA) publications is that people who read seven non-fiction books a year earn more than twice as much money as people who read only one. Non-fiction includes biography, history, self-help or business books. If you ask accountants who they know who reads that much non-fiction, the answer will often be the CFO or the CEO. If you want to rise in the corporate world, you should be reading too. I realize that it might be unrealistic to ask everyone who aspires to be CFO to read seven non-fiction books a year. Instead, I will ask you to set a personal goal of reading four good business books in the next year. It will help your career. I guarantee it. About the Author John L. Daly, MBA, CPA, CMA, CPIM, is president of Executive Education, Inc., a developer of continuing education seminars specifically designed for corporate financial executives. Forty accounting associations, including the MACPA, offer Executive Education’s seminars. Before that, John spent 15 years as chief financial officer for a Tier 1 automotive supplier and a large restaurant chain. He also has been interim CFO for several companies. You can reach him at Daly@ExecutiveEducationInc.com. Top |
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