There has been a developing trend for twenty years or more, of CEOs and Chairmen of big organisations (for the sake of this blog we will reference FTSE 100 companies) being selected with either an accounting or finance background. Currently 58% of Chairmen and CEOs have a financial work history – this has been a steady rise and, looking back to the mid-nineties, accountancy and finance professionals only occupied 24% of the top jobs. What is it that has led to the prevalence of “number crunchers” reaching the top of the tree?
First, they understand a company’s financial motivations – in tough economic times (and even when times are good), having someone driving a company with their finger on the financial pulse will, mostly, guarantee that sound financial judgement permeates the entire organisation.
Secondly, they appreciate the decisions (tough or otherwise) must be made with the interests of many in mind; shareholders, employees, suppliers and more, all have a stake in the sound financial decisions of an organisation and they want to be sure the person making the decisions has the right profile to do so.
Thirdly, accounting and finance professionals have a deep understanding of ethical, illegal and downright dangerous operating decisions, and in a world erring on the side of caution and moving towards open and ethical practices, someone already armed with this knowledge is the perfect person to drive a company into the future.
Not everyone is happy with the prevalence of finance professionals running companies. Arguments have been made that having someone with such a background leads only to decisions made solely with finances in mind.
Will the trend for promoting accountants and finance professionals into top jobs continue? We cannot say, but their commercial acumen and ability to operate FTSE 100 companies is without question. 84% of FTSE 100 companies have an ICAEW Chartered Accountant operating at board-level, and when most CEOs and Chairmen are promoted from within, it looks likely that this trend won’t change in the near future.
Long may the “bean counters” reign!