Who makes the best CEOs? ‘The CFOs!,’ say firms’ finance guys

Jose T. Sio. Photo from https://sminvestments.com

Ever wondered why the last decade has been riddled with tumultuous financial crises unlike in the past? Globalization may have played a role but for some, it may also be because of who’s on the driver’s seat of most companies in the world.

“Four decades ago, most chief executive officers (CEOs) were chief finance officers (CFOs). Only in the last decade do we have more and more CEOs who are not finance guys. This is why we have more financial crises and scandals. CFOs should play a leading role in corporate boardrooms,” says SM Investments Corporation (SMIC) CFO Jose T. Sio, who earned the prestigious “ING FINEX CFO of the Year” title in 2009.

At a recent CFO Forum sponsored by the FINEX Research and Development Foundation, Inc. and the Ateneo de Manila University Graduate School of Business (AGSB) in Makati City, seven CFOs from industry-leading companies in the country shared their insights into the significantly changed roles and heightened responsibilities of a CFO during periods of volatility as well as opportunities.

In addition to being bean counters and number crunchers, companies now need a CFO who reacts fast and spots good value. “This kind of CFO must entrench himself well into his organization so that he can add greater value,” says Romeo Bachoco, CFO of Golden Arches Development Corporation, owner of the McDonalds franchise in the Philippines.

“Today’s CFO must be able to go beyond the numbers. He must have an entrepreneurial mindset and look at things in a different way to ensure the growth of his company is sustained over the long term,” said SM Prime Holdings, Inc. CFO-turned-CEO Jeffrey C. Lim, who won the ING FINEX CFO of the Year Award in 2012.

Amid the rapid pace of globalization and rising competition, Jaime E. Ysmael, CFO of Ayala Land, says companies have no choice but to continue to innovate and evolve. “This means CFOs have to play a more strategic role in their corporate organization. CFOs must improve their ability to think and act like CEOs,” he stresses. A more economically integrated Asean market by 2015 also exposes companies to both risks and opportunities so CFOs must be able to cope and expand his knowledge of these markets, he adds.

Luis Juan Oreta of Manila Water Company, who calls himself “an accidental CFO” for not being a Certified Public Accountant like many of his colleagues, says competition for capital is “getting more intense” as the economic pie grows. “This means investing on stronger risk management systems and greater financial disclosure to differentiate ourselves from competition,” he adds.

Mark Yu, who earned a degree in physics with engineering in the US but got called back home by his family to serve as CFO of Seaoil Philippines, Inc., says a good CFO must also be a good communicator so everyone in the company would be able to understand how their individual performance impacts the organization. “The CFO must not just have a firm grasp of the numbers; he must know the story behind the numbers,” he stresses.