Sheryl Nance-Nash
Robert Rostan wanted something different. He was the director of financial reporting at Sonic Automotive, an $8 billion public specialty retailer, but in 2006, he joined his brother’s company, Training The Street (TTS) a corporate training provider for Wall Street firms and business schools.
Today, as the CFO and principal of TTS, Rostan spends 30 to 50 percent of his time serving as CFO, and the rest teaching accounting, financial analysis, and corporate leadership to students. “I wanted something entrepreneurial,” Rostan explains. “I have helped grow my brother’s business. When I joined, I was the ninth employee, and we now have 30 employees.”
What he also got in return for what could have been a risky career move was a rewarding switch from one industry to another, a change that some CFOs may feel is elusive if they have thus far stayed within a particular sector. However, Rostan is not unique as finance chiefs have the flexibility to move between industries, as some prominent CFOs have proven. Microsoft CFO Chris Liddell, for example, made headlines back in 2009 when he announced he would become vice chairman and CFO at General Motors. And just this month, office-supply retailer Office Depot hired Stephen Hare, former CFO of restaurant chain Wendy’s, and Hertz, the rental car company, hired Thomas Kennedy, formerly CFO of hospitality company Hilton Worldwide.
“When CFO come from the outside, 30 to 40 percent of the time they are changing industry,” says Jeremy Hanson, managing partner of the global financial officers practice with executive search firm Heidrick & Struggles.
Key CFO talents like strong financial management, taking on legal and regulatory challenges, and leadership are all transferable. In fact, companies are allowing CFOs to switch industries more often than in the past, according to Paul McDonald, senior executive director at staffing firm Robert Half. When hiring these days, businesses most frequently are looking at a candidate’s technical regulatory expertise, says McDonald. “They are placing heavy emphasis on whether candidates have the requisite regulatory background, expertise about the compliance issues facing the organization, and the ability to navigate the firm’s business demands, such as pre-IPO planning.”
When companies are willing to make concessions on industry experience, they place almost as much weight on the person’s non-technical, or soft, skills. “These attributes can be a CFO’s trump card when he or she also has the in-demand technical regulatory and financial expertise,” says McDonald.
Where the Changes Are Happening
A number of career counselor Roy Cohen’s clients have moved to technology startups. “The belief now is that technology has replaced financial services as a destination for wealth accumulation,” says Cohen, who authored The Wall Street Professional’s Survival Guide. “While they take a hit on compensation upon entry, equity ownership – especially at the CFO level – is often substantial. My most surprising transition was a fellow who moved from a financial services firm to a company in the adult entertainment industry as its CFO.”
Some industries, such as oil and gas, are known for being insular, so CFO “outsiders” may have little chance of maneuvering into such companies. The same can be said for some organizations in specialized fields, like the sciences and health-care firms.
Those who have found way to industry-hop have done it for a variety of reasons. For one thing, they may find themselves in an industry that isn’t on an upward track – which means their pay won’t rise year over year either. Consider that in 2012, CFO pay increased 6 percent in the retail sector but fell 1 percent for those in the health-care field and 12 percent in manufacturing, according to analysis by advisory firm BDO. The bright spot was banking, where CFOs got an 18% increase.
To be sure, moving into financial services to try to get a pay rise wouldn’t be easy. “Regulatory demands in a given industry can make it more difficult to move into that area,” McDonald says. “Because of the compliance needs unique to their industry, they want CFOs who have experience navigating these specific issues.”
Of course, compensation isn’t the only motivating factor. “CFOs don’t like to get bored. They need challenges; otherwise, they aren’t happy campers,” says Samuel Dergel, executive search consultant and a specialists in the CFO position at Stanton Chase International.
How to Make the Switch
If you’re thinking of switching industries, here’s how to make the leap:
Network. Network all the time, both inside and outside your industry and your field. Participate actively in a leadership role in professional organizations, trade associations, and other boards of directors, says Jonathan Thom, vice president of professional staffing firm Express Employment Professionals. “Don’t wait until you are actively searching for a new position to begin networking – that is already too late in most cases.”
How important is networking? “CFOs who don’t make an effort to network outside their industry, via professional associations for example, are less mobile,” says Iqbal Ashraf, who manages Mentors Guild, a community of business coaches and consultants.
Test the waters. Consulting and interim work can be a great way to transition to a different industry. “You’ll gain exposure to the sector-specific demands and grow your network within the industry. These opportunities can also transition into full-time positions,” says McDonald.
Do your research. “It’s hard to put your head around what’s going on in that industry until you get there,” Rostan says. “Talk to others in that industry, leverage Wall Street research. Make sure you’re comfortable with the management team. Do you have complimentary styles? A big question, is can you make the situation there better, not just maintain the status quo?”
If you do some preplanning and play your cards right, you could end up as content as Rostan has been with his career change. “My move has paid off,” he says. “My compensation is now beyond what I had expected. I’m satisfied. I have the best of both worlds. I’m in the right spot.”
Sheryl Nance-Nash is a freelance writer specializing in personal finance, small business, general business, and career-related topics.