The year of the CFO
8 January 2009:
Add to that the upward push in costs and downward slide in demand, and the chief financial officer (CFO) will be called upon to shore up the P&L too.
The implications of his ascendancy will be felt far beyond the figures and will last much longer than it takes to make them look healthy again. There will be a shift in the balance of power in the boardroom, which will affect how companies are managed, what it feels like to work in them, the culture of business and even its language.
For the past decade the prevailing wind in boardrooms has been gentle. Emotional intelligence and innovation have been what counted, and what leaders professed to value. But those ideas are all but finished. No one will talk of EQ (“emotional intelligence quotient”) any more. It will be EVA (“economic value added”) instead. Thinking outside the box (an over-rated activity at the best of times) will not be celebrated. Ticking boxes will be.
As financial skills are valued more highly, CFOs will make it to the corner office in greater numbers than before. Recession, credit crunch and the increasingly complex nature of global companies will all play directly into the bean counter’s hands. Nominations committees will throw their trust behind the guy who has protected the creditworthiness of a company in hard times and won the trust of the market; they will pick him for the top slot rather than poaching an expensive star CEO from outside. This will be bad news for headhunters (who will vainly try to make good the shortfall by meddling in internal succession instead), but also bad news for CEOs’ bank balances as top salaries will halt their ever-upward march.
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Source: Economist - The World in 2009
