Financial DNA not a must for CEO’s job: Study

MUMBAI: About 700 American companies listed on the Fortune 500 or Standard & Poor’s, or both, that undertook an executive search in 2014, did not, in most cases, hire a CEO with a natural talent for finance. Less than a quarter (only 20%) of the 61 CEOs hired by large companies in the past year had any experience in finance, meaning they had spent part of their career as a CFO or in a lesser finance role, such as controller or treasurer, or were once an investment banker, according to a report by BTI Consultants, a part of Kelly Services Worldwide.
In other words, a financial services background is generally not a prerequisite for CEOs and its importance to executive recruiters is said to be waning. The trend is no different in India. BTI Consultants, which leveraged its working association with more than 100 top corporates in India, believes that — while hiring CEOs — most companies look beyond aspects such as “financial DNA”. Instead, they focus on business acumen and skill sets, including ability to focus on growth, drive change, take tough decisions on resource allocations, take calculated risks, influence and run businesses in an ever-changing and evolving market. Companies also look for CEOs who are visionaries and those who can provide direction.
In the existing scenario, financial institutions and banks look at hiring CEOs having a strong financial knowledge. While that gets the maximum weightage, some stress is also being laid on evaluating skills like business acumen, ability to drive change and innovation, focus on growth, building team and managing talent.
On the other hand, for non-financial focused industries like IT, telecom, FMCG, retail, consumer durables and pharma, companies look at hiring CEOs with similar skill sets. However, the primary weightage is not given to financial knowledge, according to BTI Consultants.
“We have also seen large Indian companies, a few startups in India, Fortune 500 organizations and MNCs in the consulting space giving some weightage to education and the colleges that one has graduated from. However, significant emphasis is on the corporate track record,” said James Agrawal, MD, BTI Consultants India.
The highlights of the report, which TOI is privy to, throws insights on how the trend has become pronounced post the financial crisis. So executives with financial expertise are finding the CEO position more elusive. “Whether we like to think it or not, the vast majority of companies are reactionary and downturns tend to be when the value of a finance toolkit increases,” said Agrawal. Interestingly, no leadership competency matters more than the capacity to understand the evolving needs of customers in detail. “At Godrej, we look at leadership through the lens of our Godrej capability factors of ‘leading self’, ‘leading others’ and ‘leading business’. We believe that leadership is more than just delivering results and we want Godrej leaders to be emotionally mature and self-driven — that is, people who can lead themselves and, in turn, are able to mentor and grow their teams,” said Nisaba Godrej, executive director, Godrej Consumer Products.

She believes that the mark of a great leader is “someone who can make herself obsolete”. “This ability to lead self and others is key because we will only be able to achieve our growth plans if we are able to continuously nurture and develop the next generation of leaders,” said Godrej.
S Venkatesh, executive director (HR) at KEC International, an RPG company, said, “Considering that the world is yet to turn the corner, organizations will need CEOs who can instil a culture of frugality and cost control. The other challenge is to manage the increasingly complex regulatory environment and governance requirements.”