Grooming CFOs to be CEOs

This case focuses on David Sokol, an executive who has made a “name” for himself in recent years within the energy industries. After becoming recognized as a successful “turnaround” agent for troubled companies, Sokol was hired in 1992 to serve as the chief operating officer of JWP, Inc., a large, New York-based conglomerate. At the time, JWP had an impressive history of sustained profits and revenue growth that was being threatened by the company’s far-flung operations and unwieldy organizational structure. Unknown to Sokol, JWP’s impressive operating results over the prior few years had been embellished by the company’s

• Management: Is the company's management competent? Are they people with integrity, good reputations and diligence? Do they publish financial reports regularly and on time? Do they have open communication with their shareholders? The CEO (Chief Executive Officer) plays a key role in the management of a company. Although this must be a consideration, it does not mean that a CEO with a magnificent record with one company will automatically achieve the same proficiency with another.

Another central feature of the board of directors is the question of whether the CEO is also the chairman of the board. When the CEO is also the chairman this is often referred to as “CEO duality”. In the US the CEO is often the chairman of the board. Studies have shown that the board in most cases

Southwest airlines, a company that is known to have strong employee relationships, believes that the happier an employee the better productivity they will have. Southwest Airline CEO, Gary C. Kelly, has stated that in order to have a strong company he needs to take time building strong relationships as well. “Happy Employees = Happy Customers. Happy Customers keep Southwest flying” (Southwest). He created an environment that challenges employees to be innovative which lead to creative solutions. Gary C. Kelly is able to initiate structure within the company, since he had a clear goal and direction for the company employees were not confused. If Southwest Airlines was to change their leadership style to reflect a

Earlier in his career, Jim was a controversial figure among investors and financial analysts on Wall Street. They blamed Jim for being too generous towards Costco’s employees and not bringing immediate profit to the shareholders1. But after weathering the recession and retaining a return rate of over 10 percent, Jim Sinegal is now revered on Wall Street. His ideology of building a long-lasting company has been successful. Additionally, during the recession, unlike other CEO’s, Jim implemented policies that prevented lay-offs and, in the process, managed to keep Costco’s balance statement in the black. He used strategies such as establishing a strong identity for their private-label offerings. For example, after the economic meltdown, Kirkland Signatures (Costco’s private label) was able to provide customers with a low cost alternative while maintaining the quality they were accustomed to.

For the time being, CEOs and board members argue that their corporations are built on principles of individual hard-work and sacrifice, for example, Ray and Walt Disney were people who liked to do it themselves,

2. Are the roles of the chairperson and chief executive officer (CEO) exercised by different individuals? This clear division of responsibility would help to counterbalance the power and influence of the CEO in the decision making of the company’s directors. Furthermore, this would enhance the supporting role that may be assumed by the chairman in being the CEO’s confidante.

Schafer and Bell (2005) discuss some of the things a Chief Executive Officer must do in order to provide strong financial leadership. One thing a Chief Executive Officer must do is hire a financial staff that is knowledgeable about not only basic finance practices but those that are specific to nonprofit needs such as the ins and outs of restricted and non-restricted funds and the use of the Statement of Accounting Standard 117. The CEO must also hire an appropriate amount of staff to make sure everything is being done in the most efficient manner and allow for accountability. Schafer and Bell (2005) also talked about following a standardized set of financial practices that help keep the organization in line with everyone else so if new staff do come in they are able to come into a system that they are more than likely familiar with. The other thing that Schafer and Bell (2005) talk about is having a uniform accounting system. To do this an organization must have a chart of accounts which helps keep track of all financials and makes it easy for non-finance staff to interact with. Most of all, whether an organization’s CEO has a finance background or not it is their responsibility to develop that skill so they are able to successfully navigate that aspect of their organization and have a strong financial presence so they are able to lead in that

Although the CEO states that the CFO’s style compliments his own style, their differences in strategies and overall mindsets may prove disastrous for the company. The fact that the CFO thinks the company should consider selling of their existing services line while the CEO is talking about acquiring an entire company for their service lines makes not synergy between the two. They may spend more time spinning their wheels arguing over viewpoints than making progress in the company’s growth. Additionally, the CEO’s concern that he may lose the CFO if the deal is finalized should not be a showstopper for the CEO if the deal is in the best interests of the

Through my research I found additional traits in Mr. Graham’s leading which helped make him such an effective CEO. One of these was his ability to understand and accept his own faults and uses that information to help bolster his weak areas with the strengths of his teammates. Friends of Mr. Graham say he was very mindful of his personal flaws and always willing to admit them. Another was, the balance between leading and following which he was able to achieve. He would not step beyond what he felt would be deemed acceptable by his fellow workers. He wanted accountability to his board of directors. He viewed it as a protection and a guide

As the community’s new CFO it is my responsibility to ensure fiscal responsibility, budgetary balance, and to address the ever on growing financial challenges of a steadily developing community. The current five-year forecast anticipates an annual revenue increase of 2% counterbalanced with an additional 4% cost increase to operate. This leaves the community with a projected 2% deficit in the overall budget moving forward. Compounded to this issue is the ever developing need for capital improvements throughout the community that have yet received funding or have been budgeted. This is not a sustainable model and requires an enhanced financial strategy to offset overhead costs while still providing the opportunity for economic growth within the community. Below is a four phase financial policy that consists of several stratagems that will help positively affect the community financially, economically, and socially. This plan includes shrinking inefficiencies in expenditure budgets, increasing the revenue stream to supplement the cash reserve funds, and the implementation of alternative revenue streams to supplement capital improvement projects over the next 10 years. Finally, by using these three initiatives as a foundation to build fiscal responsibility and increase purchasing power, it is necessary to continually strive toward strengthening in the recognized bond rating of the community. By combining all four initiatives, the community can maximize its growth

On the other hand, the cons of hiring a CFO to be a CEO would be that the person would not exude great energy, nor would be highly motivated. The person would be more prone to turn away from open competition, and would not accept criticism. Specifically, the person would stick to traditional markets and products and will not seek for new ideas and innovation as these can be risky, foregoing opportunities. Therefore, the

When Roger Enrico, Chief Executive Officer for PepsiCo, took over he began to examine the corporation. Going on the belief that if you can't make diversification work, give it up. For nearly three years PepsiCo has been undergoing a major strategic transformation. PepsiCo's chairman, Roger A. Enrico, stated in his letter, "…And while 1998 certainly offered its share of challenges, I'm very pleased to report that our strategy is beginning to payoff."

To successfully steer a corporation across the span of years by integrating its strengths toward the goal of creating wealth, requires from the CEO exceptional thought and judgment. Excellent CEOs are as rare as MLB-caliber pitchers or NFL-caliber quarterbacks. And in the business world, every day is the Super Bowl. There is no off-season or respite from the need to perform at one's peak.

Detailed examination of the impact Jack Welch has had as CEO over the past twenty years reveals a leadership style that is the driving force behind a