MBA

CFO * CPA * MBA

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I doubt the controversy around whether CFOs “need” a CPA or an MBA is going to die down anytime soon. There are lots of opinions … just ask 10 different people.

If you’re the candidate without a CPA, you probably feel one isn’t necessary. Same for an MBA. Just read some of the comments on the Proformative discussions around this issue.

From a company perspective, a credentialed CFO is a matter of preference … and that preference really is not impacted by what a candidate believes to be true. That fact adds up to a lot of frustration on the part of CFOs who feel they are qualified to do the job despite lacking the required credential.

Apparently, recruiters, who are hired by a company to find candidates who meet a list of specific requirements., also hold differing opinions. Another post on Proformative around this same issue generated this comment from one of the members …

FEI SF recently had retained recruiters from Russell Reynolds and Spencer Stuart spark on what employers are looking for today in a CFO. Financial planning was the top skill being sought as companies need to look forward and develop scenarios in these uncertain times. CPA is not needed and in fact Controller skills are less sought after in this post SOX implementation era. Experience is most important vs degrees.

But, a post this week on CFO.com which talks about who CFOs are hiring said this …

But there is clearly a growing preference for those with broader business training. More than 2.5 times as many survey respondents (16%) have added people with MBA degrees than subtracted them (6%).

Specifically, companies need finance people who not only bring analytical skills but also influencing skills. They also require staffers with the ability to work across functions and, most important, the confidence to be credible business advisers, says Jeff Thomson, president and CEO of the Institute of Management Accountants.

The most desirable finance staffer, says Donald Kilinski, CFO practice leader at recruiting firm DHR International, is a CPA who then gets an MBA. Such a person may be more able to advise on strategic matters, such as what projects should be funded, whether something should be acquired, built, or bought, and whether products or services should be eliminated.

So there you have it. Everyone’s got an opinion. Here’s mine:

Know your value.
Know who needs what you bring to the table.
Play in that space.

If you don’t have a CPA and have no desire to get one, that’s fine. Focus on the companies who desire the proven ability to solve their problems over credentials. Same for the MBA.

One final comment. While I see the same MBA trend noted above, MBAs have become somewhat of a commodity … unless they are from a top-rated school. So, don’t buy one just to get one. Get one to add overall value to your proven track record of performance.

The CFO Track

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There is an interesting study from Ernst & Young on the career path to the CFO for the top EMEIA (Europe, Middle East, India, and Africa) companies. I’ve provided some of my thoughts compared to what I’m seeing in the States …

— The MBA was the most important educational consideration in the rise to CFO with only 3% holding both the MBA and an accounting background.

This is vastly different than what we see nationally with many CFO job descriptions “requiring” or “preferring” a CPA. In my conversation with an executive recruiter yesterday, he said his CFO profile always includes a public accounting background.

— 70% of the CFO hires came from a different sector.

While that is a very high stat, I do see that trend here in the States as well. Companies are recognizing that a breath of fresh air from outside the industry can help them to stop doing what they’ve been doing in order to get different results, even if that difference is merely getting unstuck.

— 57% were internal hires vs. 43% external hires.

These numbers align pretty well with CFO.com’s stats last November where 57% of Fortune 1000 company CFOs were promoted from within. What is worth noting stateside is this … 59% of those CFOs who were hired externally were sitting CFOs. It remains very challenging to secure the CFO seat if you haven’t held the CFO title sans an internal promotion.

— Operations-oriented divisions account for 26% of the CFO hires.

This isn’t at all surprising. In fact, it’s a bit low when compared to the recent Accenture study which says 59% of all finance executives are consistently involved with improving operational performance. Of those 59%, 24% have daily and 44% have weekly communications with their operations counterparts.

Another very interesting point from the Accenture study … “Respondents overwhelmingly select interpersonal, communication, and leadership skills as having a substantial impact on their professional effectiveness.” What are you doing today to build your professional skill set for tomorrow?

To CPA … or Not?

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It’s tough love time. 

A coaching session with one of my clients around what skill sets he might need as he moves towards his dream of being a CFO got me thinking about the old “to CPA or not” dilemma some Chief Financial Officers (and wannabes) face.  Some companies require it; some companies prefer it; and other companies don’t care. If a company falls into the first category, it’s unlikely a candidate addressing the unfairness of that requirement will change anyone’s mind. 

Here’s the thing. It’s not about you.

If you’re car shopping and what you really want is a sleek Jaguar with all the bells and whistles (my personal dream); but the car salesman says, you know, what I think would work better for you is this model right out of the Flintstones era complete with manual steering and running shoes to protect your feet … would you buy? I’m guessing the answer is no. 

Now I’m not at all implying there is that big of a gap between a CPA and a non-CPA … and no offense is intended. I’m exaggerating to make this point. You know what you want and it’s unlikely you’re going to plop your bag of money down to buy what the salesman wants to sell you rather than what you want to buy.

That means, you have two viable options …

–Get a CPA. An operational CFO with both a CPA and an MBA is a very high-value target. If you’re goal is to play in the public company space, it might make sense to get the credential.

–Get visible to your target market. If you don’t have a CPA and have no desire to get one, that’s fine. There are still plenty of opportunities available to you, too. And to the right audience, you are still a high-value target. Stop spending time targeting companies who require a CPA and get focused on who needs what you have and is willing to plop down a bag of cash to get it.

While complaining about the unfairness of the requirement is certainly an option, it’s unlikely to change anything. A much better strategy is to play from your strengths to the right audience.

CFO Recession Impressions

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The November 2009 CFO Magazine contained a survey of Senior Finance Executives’ thoughts on the impact the recession was having on their role/career. Very interesting results particularly because responses were categorized by Chief Financial Officers, VPs of Finance, and Controllers.

Here are a few that jumped out at me …

–41.7% of CFOs said the recession has enhanced their career opportunities

–42.4% of VPs of Finance say it has harmed them because of fewer opportunities both internally and externally

–56.6% of CFOs say their role has become more important and respected 

–86.8% believe they have a voice in the company beyond finance

–27.9% feel they are stuck in a siloed role

–66.6% of all finance leaders say specific past experience (treasury, investment banking) has helped them achieve their current role

–48.3% attribute success to demonstrating their abilities such as IPO, restructuring

–28.5% of CFOs believe operational experience will help them advance

–3.3% believe that an MBA or CPA will be beneficial

–30.5% of CFOs would leave for the right job

–39.1% would NOT leave, citing enjoyment  of their current role as the reason … NOT uncertainty of the current environment

Interesting is the discrepancy between the belief that operational experience will help CFOs advance (I believe that’s true as well) and where having an MBA or CPA falls … particularly in light of so many companies making those credentials a requirement. What exceptional talent might companies be missing out on by adding that requirement?

Also curious was the reason CFOs cited for staying in their current jobs … enjoyment?

Thoughts?

CFOs as CEOs

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After Business Times Online posted an article on the rise of CFOs into CEO positions, one of my Linked In colleagues, a recruiter who works with private equity clients, asked for my thoughts on the topic. 

In preparation for my keynote at the Prophix User Conference back in April I did extensive research on this topic. While the article points to the recession as the driver, my belief is that it is a trend not likely to abate once we hit the other side of the recession. So, here are my thoughts …

–Strategic Leaders vs. Bean Counters

I believe the opportunity arose about the time that CFOs began making the transition from bean counter to strategic leader with a seat at the executive table. The hottest CFO prospects today are those with the ability to predict financial trends and who bring an operational background (particularly when they also hold a CPA and and an MBA). From a career perspective, two of the smartest things a CFO can do today are gain operational experience and claim a seat at the executive table.

–Proven Operational Contributions

There is a difference between experience and contributions … and this is particularly true of a CFO with his sights set on a CEO position. In fact, as companies continue to tighten their belts, you may even see a decrease in the role of the Chief Operating Officer, since the accomplished operational CFO can handle both roles.

For example, the COO of oil and natural gas exploration and production company Anadarko Petroleum Corp. is being replaced by the CFO with much broader responsibilities that include overseeing the company’s exploration, development, production, and mid-stream and marketing operations.

Execunet points to the fact that 2 of the 8 most in demand job functions are operations management and finance.


–Networking

While many CFOs are not the best networkers, for whatever reasons, those who are reap great benefits. And the value of internal networking cannot be downplayed. Conventional wisdom says that it is easier to move up internally, than externally, in large part because you are “known and have momentum and sponsorship.” If you’ve grabbed your seat at the table, you have the power to ensure you are known and have the momentum to, perhaps, win that coveted leadership position.

CPA CFOs

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There was an interesting Finance Quiz in CFO.com recently. For those who missed it, you can read it here: http://www.cfo.com/article.cfm/7938502/c_7935456?f=home_todayinfinance

For me, and for those of you on a CFO–track, this question should have caught your attention.
3) What percent of today's Fortune 1000 CFOs have neither an MBA nor a CPA?
a. 92 percent
b. 24 percent
c. 10 percent
d. 55 percent

Answer: b. Twenty-four percent of Fortune 1000 CFOs have neither a CPA nor an MBA. In 2003, many more — 41 percent — lacked either qualification.

A–players who want to go to the top need to understand the importance of this statistic. The number of CFOs – who are not credentialed – has dropped considerably in the past three years, and that number will continue to fall.

CPA CFOs are the candidates of the future. According to Spencer Stuart, the number of CFO-CPA’s among Fortune 1,000 companies has almost doubled in the past two years. The trend to recruit CFO’s with more technical accounting backgrounds will probably only continue into the next decade. Not being a CPA will make it increasingly more difficult to compete for top CFO positions.