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The Road From Controller to CFO Is Becoming Less Traveled

controller to cfo

When my daughters, ages 10 and 8, are asked what they want to be when they grow up, my oldest says a professional basketball player, and my youngest wants to be a chef. Both good choices. No kid in their right mind would say accountant, journalist, or chief financial officer.

As children, Bill Brundage had visions of being a professional athlete or musician, and John Wall wanted to be a time traveler (an idea he hasn’t completely abandoned, by the way). Who would’ve known they’d end up being CFOs of successful companies? But here they both are, leading the finance functions at Ferguson Enterprises and Cadence Design Systems, respectively.

Here’s another similarity the two men share: They both had stints as corporate controller of their organizations before being given the CFO seat—a position they said helped prepare them for their current roles.

“I volunteered for everything strategic—all the grunt work on M&A, assessing capital allocation strategies, helping any of the executive management team with their challenges, helping the investor relations team, and going on the road to all sorts of out-of-the-way places to meet investors,” said Wall, who was appointed senior vice president and CFO of San Jose, Calif.-based Cadence in September 2017.

“Picking up these tasks regularly afforded me the opportunity to spend time with the CEO and CFO to understand the top things that kept them awake at night—and try to help them find a solution.”

Early on in his career, Erich Schnaufer had a strong desire to become a CFO. As his career progressed, Schnaufer took steps to become an expert in the roles he had, and once doing so, he began looking to increase his knowledge in other areas—both financially and commercially.

“I was open about my desire to advance my career, and my manager became my advocate, involving me in meetings and giving me opportunities to learn as much about the [CFO] role as possible,” said Schnaufer, who was appointed CFO of Chicago-based Ryerson Holding Corp. in 2016, after serving as the metal processing and distribution company’s controller for eight years and two years as its director of financial reporting. “That’s not to say I didn’t have to work hard to earn my position as CFO, but I built a network of people I knew would support me in my career advancement.”

Being a controller clearly offers a path to senior management; so why then are companies slamming the brakes on controllers moving up the ranks to CFO?

Taking an alternate route

According to a 2007 analysis by executive search and recruiting firm Korn Ferry, 33% of Fortune 500 CFOs who were promoted in 2006 came from the post of controller. But controllers were slighted at companies that sought a new CFO from outside:

Only 4 percent of external hires were controllers, while 58 percent were already corporate or divisional CFOs elsewhere.

More recent data from Korn Ferry isn’t too promising either. As of the second quarter of 2017, only 17% of CFOs from the 500 largest U.S. companies came from the controller or chief accounting officer role, up from 14% in 2016.

So, what gives? “The CFO role has become increasingly complex,” said Bryan Proctor, global leader of Korn Ferry’s Financial Officer Center of Expertise. “The ability to manage the reporting and control of the organization has long become table stakes. CFOs are now adding value in more ways—commercially, strategically, and operationally. Because of this evolution, the profile and source for CFO succession purposes have expanded. This has given more competition to controllers in how they drive value compared to their functional peers.”

As controllers, Wall, Brundage, and Schnaufer wanted to be a part of strategy discussions and understand the ins and outs of business operations, which made them worthy candidates to fill vacant CFO seats within their organizations.

“The holistic understanding of the accounting and financial reporting processes was a very valuable skill set I gained as corporate controller,” said Brundage, a former PwC’er who joined Newport News, Va.-based Ferguson in 2003 and was appointed CFO in March 2017.

“But I believe it’s important to have a wide variety of skills and experiences to apply to the [CFO] role. You need to be well-versed in financial analysis, with the ability to simplify complex data into actionable information to drive the business and results. Even more so, it’s critical to have strong business acumen and to spend time in operations to ensure you really understand what makes the business tick.”

Schnaufer added that working as a controller “required a great deal of structure, planning, and organizational skills, while as CFO, the world is fluid and forward-looking, which requires flexibility and creativity.”

“The world is not black and white; there is no one right answer. I am constantly factoring in multiple variables and making decisions based on the most recent data available,” he said. “In many ways, it’s like molding a lump of clay. You need a vision and then you can begin getting to work.”

And good news, controllers: Since becoming CFO, Brundage said he’s surprised by how little time he now spends on true accounting and financial reporting activities.

“Fortunately, I have a fantastic team in place,” he said. “Most of my time is spent working with our CEO, COO, and business unit leaders, helping to set and execute strategy and focusing on M&A opportunities.”

What does it take?

It took Wall 20 years of working in the accounting and finance trenches at Cadence before he became the company’s CFO. His message to controllers: Don’t give up.

“The road to a CFO role can often require a large degree of passion, perseverance, and luck,” he said. “Treat every day like it’s an extra day of rehearsal.”

Here are a handful of other tips from Wall, Brundage, and Schnaufer that controllers should consider while cruising along the highway to CFO:

1. Ask for advice. “People are generally kindhearted, so they will be happy to give you advice,” Wall said. “You just need to ask for it.”

And after you ask for advice, be prepared to listen, he added. “I know friends who followed my guidance to ask others for advice but subsequently got upset by receiving criticism,” Wall said. “Criticism is a gift, and a way to learn and progress in your career development.”

2. Gain exposure to areas outside of the controllership function. “Learn your industry and business inside and out,” Brundage said. “Take on challenging assignments that will push you outside of your comfort zone.”

3. Look at things from the top down and the bottom up. “It’s important to see the big picture and to understand how the individual pieces of the puzzles fit together,” Schnaufer said. “Just as the space program was not built in one day, many of the issues I deal with are extremely complex and require a systematic approach to break the problem down into manageable pieces.”

4. Be a dependable leader. “Aim to solve problems, and always follow through and do what you said you would do,” Wall said. CFOs also must have the ability “to influence and connect with associates at all levels and across functions,” Brundage added.

5. Don’t stay stagnant. “I didn’t specifically set my sights on CFO, but throughout my career, I’ve always looked for opportunities to grow and challenge myself,” Brundage said.

Schnaufer agrees, saying that successful executives understand how to calculate risk vs. reward, especially when it comes to their own careers.

“When I was controller, I made my manager aware of my career aspirations and, in the process, gained a mentor so that when the opportunity arose, I was well-positioned to take on the new role as CFO,” he added.

6. Treat each mistake as a learning opportunity. “I encourage my team to take controlled risks and then quickly learn from mistakes,” Wall said. “In any field, the person with the most experience is often the person who has made the most mistakes. If you don’t make any mistakes, maybe you’re not trying hard enough. I’ve certainly made my fair share, but I learned from every one.”

7. Build a strong team. “Controllers must be both technically and managerially strong—often this second skill is the harder one to learn,” Schnaufer said. “You need to be able to know with whom and how much to delegate. Your staff will only grow and develop if they’re given challenges, which at times will stretch them into uncomfortable situations. You must learn to effectively delegate in order to advance in your career; otherwise you will get stuck doing your last job.”

8. Communicate clearly. “I’m a firm believer in the principle that if you can’t explain something simply, you don’t understand it well enough,” Wall said. “Good communication will help you develop future leaders throughout the organization.”