A natural career aspiration for many CFOs is from executive to boardroom. Finance chiefs have much to offer in the role of director, but it's important for CFOs to be thoughtful in their approach if they wish to be elevated to the board.
Senior client partner with executive recruitment business Korn/Ferry International, Robert Webster stresses that CFOs need more than financial skills to get a board position.
“Companies are looking for people with broad management experience, strategic skills and those who can get on with other board members and reach decisions through consensus. They need to be a well-rounded individual, not just a numbers guru," he adds.
Webster notes CFOs do have an advantage given their strong financial acumen and the skills they acquire as part of a senior management team. “Unless they are looking at the world through a very narrow lens they should be able to make the transition to the board room quite well," he says.
Warwick Peel runs the Future Directors Institute and Startup Boardroom. He says CFOs tend to lean on numbers to guide their decision making, but a board role requires a holistic approach to governance and risk.
“When we recently assembled an advisory board, the client was explicit that the board members must have a whole stakeholder approach. This means any CFO applying for a board position must understand their employees, customers, the business environment and shareholder returns. The idea is to consider the quadruple bottom line," he says.
Below are some strategic skills that can help to get a seat at the boardroom table:
Transferrable skills
There are many skills CFOs learn in their role that are transferable into the boardroom, such as financial and analytical skills. CFOs who are able to look at the bigger picture are particularly sought after in boardrooms.
When it comes to transferrable skills, Peel says the ability to demonstrate a sophisticated understanding of not only the numbers, but also an ability to analyse them and provide evidence-based decision making frameworks is what companies are seeking.
“These are highly sought after skill sets for the board room. Having the experience to build in the assumptions that others may not see as indirect risks is a very valuable skill set," he argues.
Peel says other skills that boards really value from CFOs include the depth of experience that comes from being involved in many transactions, whether that is mergers and acquisitions, trade sales or joint ventures. “The broader financial and commercial acumen is highly valuable," he adds.
Making the transition
One of the easiest ways to make the transition is to be the CFO and then be appointed to the board as an executive director.
“This doesn't happen as much now as in the past. So the first step for CFOs is usually to make search firms aware of their interest. Then prepare a CV that demonstrates they have a broader outlook than just as CFO for a company. Point out involvement with management and if IT reports to the CFO role it's also good to highlight that as well," says Webster.
Highlighting mergers and acquisition involvement also helps to show broader experience beyond the numbers.
Peel's advice to CFOs looking to secure a board position is to look for ways to develop new skills. “Future Director's Institute runs a board kick-starter program for aspiring and existing directors. The one key focus of the program is encouraging aspiring directors to concentrate on their real areas of passion. The idea is to go for roles with companies that the CFO has a genuine interest [in]."
Avoiding mistakes
Webster says it's important for CFOs to go into the boardroom with a focus on adapting their experience and skill set to the board.
“Boards are looking for expertise in particular and someone who has been the CFO chair for a listed company has an advantage due to their strong financial skills that are valuable on the audit and risk committees," he says. “But if that's all they offer, boards may not be attracted. So I think it's important to really highlight any M&A, technology, strategic and risk management skills to demonstrate your skills are boarder than just accounting skills," he says.
Peel's final piece of advice for CFOs who wish to become directors is to broaden their horizons.
“CFOs can sometimes think in straight lines with a shareholder return lens. While this is important, the boardroom requires so many different perspectives. For instance, you need to be able to identify what disruption looks like for the organisations you're applying to."
“Think outside the box to display how you're going to bring value and diversity of thought to the board," he explains.
Key Takeaways on Road to Boardroom
Road to the boardroom
- Great financial skills are a prerequisite so CFOs need to also work on strategic skills
- CFOs must be able to demonstrate an ability to be a team player to be successful in securing a seat at the board table
- When applying for a board position, highlighting IT, risk and M&A skills can be key