With the departure of Tony Hayward from BP, I find myself questioning whether the CEO career path will continue to “run through finance first.” Many of you will recall that Tony Hayward was a Group Treasurer before he was elevated to the CEO position, a career path similar to many of his peers in the UK FTSE-100 and Standard & Poor’s Global 100. In fact, a Robert Half analysis of the career paths of 200 chief executives found that nearly 40% of the UK CEO’s had taken some sort of finance-based route to the top, compared to slightly more than 25% of the S&P CEO’s. This focus on financial skills is often attributed to the Post-Sarbanes-Oxley era, where CEO’s are required to certify the accuracy of their companies’ financial statements, as well as the current economic environment.
Tony Hayward’s background enabled him to analyze figures, handle the investment and shareholder community, and demonstrate business acumen to BP’s stakeholders, all of which are vital to the CEO role. Why, then, did he so publicly fail in his handling of the recent oil spill in the Gulf of Mexico—a failure that culminated in his departure as CEO? Everything that I’m reading indicates that he should have thought “with a little less head and a little more heart.” He should have shown more empathy for the people in the Gulf region whose homes and livelihoods have been negatively impacted. He should have done a better job communicating and building trust with the public. In short, Tony Hayward should have been more of a touchy-feely “people” person.
But touchy-feely “people” people don’t come from finance—they come from HR. And it’s rare for a CEO to come up through the HR function—not unprecedented, but rare. James Strong, CEO of Woolworths Limited, the largest retail company in Australia and New Zealand, is one example of a CEO who started out as an HR professional. He has found that his HR background has made him very good at selecting people and building teams, which is extremely important in a CEO role. He also points to two additional skills that HR people bring to a CEO role—communicating a business plan to people who will execute it, and then motivating them to make an ordinary business into a really successful business. Armed with these skills, there’s no reason that an HR professional who has a full understanding of the business can’t step into the role of CEO. So, why don’t they? Why do so few CEO’s rise through the HR function?
As I’ve mentioned many times before, I think it’s because HR people (which in most companies, includes learning professionals) typically lack business acumen. The HR professional who aspires to become a C-Level executive must be a good businessperson, who just happens to specialize in HR. This means that the HR professional must first understand the business, and then understand how what she does helps the business succeed. Business acumen is what puts the “C” in the C-Suite titles and warrants a “seat at the table.”
In my view, HR professionals should make an effort to understand the financial aspects of their companies. Similarly, finance professionals should take a cue from Tony Hayward’s recent blunders and become more people-oriented. If we could somehow combine the best traits of each of these two professions, we just might be able to create a truly great CEO—one who could meet the challenges of day-to-day business leadership, as well as the rigors of crisis management… one who could think with both her head and her heart.
Let me know your thoughts. As always, you can post your comments to this blog or send an email to me at my personal email address:
pae@tmiwebmail.com.
