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Economic uncertainty is 'one factor driving CFO to CEO promotions'

Dec 15
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Economic uncertainty is 'one factor driving CFO to CEO...

Several factors, including economic uncertainty and a willingness to leave an employer, are driving promotions of chief financial officers (CFOs) to chief executive officers (CEOs), according to a new study.

The survey from the BearingPoint Institute analysed the career paths of 178 CFOs from European Fortune Global 500 companies between 2004 and 2013. This information was then compared to the performance of the STOXX Europe 600.

A quarter (26 per cent) of respondents climbed to the top of the ladder during the last ten years, with 61 per cent of those promoted to CEO leaving their original firm to further their careers and 33 per cent changing sector.

It also revealed that CFOs were more likely to rise to CEO during periods of economic uncertainty, such as the economic crash in 2008. BearingPoint also discovered that some industry sectors were more appreciative of a financial background than others.

Almost a quarter (22 per cent) of those that had climbed the ladder to the top had made the transition within the banking and capital markets sector, but the study revealed that this industry was open to promoting CFOs from other fields to the position of CEO.

Franz Hiller, partner and service line leader for finance, risk and compliance at BearingPoint, said sector knowledge is still important when it comes to making the transition to the top, with two-thirds (67 per cent) of respondents being promoted within their own industries.

The overall promotion rate of 26 per cent was higher than expected, according to Mr Hiller, but interviews with CFOs offered a reasonable explanation.

He said: "Historically, CFOs in Europe were often overlooked for the top job because of their largely operational role description. But changes in the internal and external business environment have raised the profile of the function.

"By setting up their finance departments to add strategic value to the organisation, the role of CFO has been transformed to become a true business partner and co-pilot of the enterprise. It is only natural that they have therefore become much more likely candidates for the CEO position along the way," Mr Hiller concluded.

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