The wrong move

THERE IS significant anecdotal evidence to suggest that finance directors often fall short when promoted to chief executive. Across some of the many multinationals we have worked with, we witness instances of former FDs failing both to make the step up in leadership, and to remove the functional blinkers of their old role.

Leadership is essentially about three things: strategy, people and results.

Many of the best finance professionals will fall short in one, if not two, of these three main aspects. For example, they may focus their energies on strategy and results, but neglect to engage their leadership team effectively, and to inspire them to deliver above expectations.

Finance directors tend to be analytical by nature, and this can cause problems in two areas. First, they may not have the highly attuned emotional intelligence required to lead a complex organisation. Second, being analytical can lead to indecision. Analytical people often hate to make decisions without complete information, but this is the lot of the chief executive: decisions must be made on instinct and through educated conjecture. In terms of strategy, the training of a finance professional can also inhibit performance.

Bold visions are often needed to impel a successful strategy, but FDs may not think in those terms and they may not be comfortable in changing the course set by a predecessor. However, a chief executive must have the confidence to add, build, refresh or reinvent the vision and mission of the organisation.

Of even greater importance is the ability to articulate this vision in a convincing and consistent way. It is dangerous to underestimate the extent to which a chief executive must repeatedly communicate the organisation’s direction and the reasons for this direction. The leadership team and the wider community of employees need to understand the chief executive and be inspired by him or her.

The analytical mindset creates an illusion that an organisation can be managed as a set of systems and processes. This fails to recognise the highly interpersonal nature of the workplace. A chief executive needs to be able to diagnose, comprehend and manage the viral and emotional nature of the organisation.

Confidence in convictions

A further issue is confidence. Can FDs be confident enough in their strategic decision making, particularly in the first 100 days?

The nature of their professional training may counsel caution and deliberation when decisive action is needed in an uncertain economic context.

Another demand on the new chief executive is the development of a high-performing leadership team. This is the area where emotional intelligence is particularly vital. For a team to be considered high-performing, it needs strength in knowledge, competence and motivation. While FDs transferring to the chief executive role may bring excellent knowledge and understanding of the business, they often fail to motivate their leadership team effectively.

Do they have the capacity to understand the weaknesses of the team and, more importantly, the insight to understand what changes need to be made?

Ill-considered decision making in this regard can have a demotivating effect on the whole organisation. The new chief executive needs to move quickly to assert a new way of doing things, and to insert the correct people to make this happen.

You have to give your inherited people a chance, but there is also a need to move decisively in establishing the new order. We typically counsel our clients to make a final decision on who stays and who goes after two months in their new leadership role.

The previously mentioned functional blinkers that an FD may bring to the role of chief executive may be a real impediment to this. A number of years ago, we worked with a new country manager of a multi-national technology firm. This individual moved from the role of financial controller and had real difficulty in making an impact. The main problem was that he placed too much of his focus on the finance department and not enough on sales, marketing, operations or customer service. The temptation was too strong to get heavily involved in what was essentially the old role.

It is dangerous to assume that a move from the role of finance director to chief executive is the natural career progression. While the FD is, in many instances, the second-most powerful individual in a company, the knowledge and skills required for each role is markedly different.

Those who can make the move seamlessly are the exception, not the rule.

Those who succeed display an unusual degree of adaptability. In our work with senior leaders, we always advise them to play to their strengths: sometimes the move up is not the right move. ?

Garrett O’Keeffe is senior consultant with First 100 (www.first100.co.uk)