by Cesar Bacani, editor-in-chief of CFO Innovation Asia
Taking on non-executive director positions on the boards of other organisations will give you the opportunity to demonstrate your leadership ability in roles beyond finance.
I remember interviewing Tan Wee Seng in 2007, when he was the group CFO of Li Ning, one of China’s leading sportswear companies. He was energetic, articulate and obviously at the top of his game. The next year though, I heard he had left Li Ning to pursue other interests.
Wee Seng has reinvented himself. He is a non-executive director of Xtep, a Chinese sportswear enterprise, and cosmetics company Sa Sa International. He is also an independent director of solar firm ReneSola and hotel chain 7 Days Group Holdings, and he is an independent non-executive director of baby products company Biostime.
I thought of Wee Seng when I spoke to Gerard Dalbosco, Oceania area managing partner at Ernst & Young. The accountancy firm has just released a new study, CFO and beyond: the possibilities and pathways outside finance. The research surveyed 800 CFOs in 347 large companies around the world, 15% of them in Asia Pacific, and examined their career paths in 2002 and 2012.
Only 15% of the CFOs in 2002 have become either CEO or CEO and chairman. Just 13% of the Asia-Pacific CFOs expressed a desire to become a CEO. But an overwhelming 82% of all 800 said they would consider another role after being a CFO, including an independent directorship. Indeed, 46% already serve as non-executive director of another company. That’s up from 36% in 2002. Why?
‘Because of the global financial crisis and the volatility that we’ve seen in global markets over the last five or six years,’ Gerard explains, ‘there are more boards that need people with strong financial capability and CFOs, of course, have a terrific understanding of the numbers’.
The strategic CFO who takes on broad roles, not just the transactional, compliance and reporting, is particularly in demand; ‘If they’re involved in transactions, in fundraising, in strategy development and so on, they bring a really broad range of capabilities to the board’, says Gerard. ‘Typically, CFOs bring a lot of those skills to the table’.
For the CFO aspiring to be CEO or executive chairman, a stint on the board, even as a non-executive independent director, can be invaluable. The personal and professional benefits, according to the report, ‘include a better understanding of boardroom dynamics, the cross-pollination of ideas and best practice, and exposure to different corporate culture.’
The researchers interviewed Susan Stautberg, who heads PartnerCom, a company that puts together and manages advisory boards for global companies. ‘You go on boards for three reasons,’ she said. ‘The intellectual capital, which is what you learn; the social capital, which is who you meet; and the creative capital, which consists of the ideas and concepts that you can find out about and bring back to your own company’.
CFOs themselves agree. Three-quarters said that being a non-executive director will bring general management or broad level experience, 65% point to getting exposure to another company or industry and 62% cite the opportunity to get a different perspective on running an organisation.58% siad it would give CFOs a chance to prove that they can lead beyond finance. There is life after being CFO. Just ask Tan Wee Seng.