Schiffreport

TOP TALENT DEVELOPMENT
IN THE FINANCE FUNCTION

Profiles in Contemporary Corporate Practices
Prepared By Jonathan B. Schiff

for the
Finance Development & Training Institute
Distributed by CFO Research Services
CFO
RESEARCH SERVICES
1
TABLE OF CONTENTS
Acknowledgements and Dedication 3

Introduction—Why Study Finance Leadership Development? 5
Methodology 6
Executive Summary 7
Participating Company Profiles 9
Practice Descriptions (Companies A-K) 10
"Greenfield " Considerations: A Framework for Initiating 37
Discussion on Systematic Development of Finance and
Accounting Leaders
Appendix A: Characteristics of Primary Interviewees 38
for this Report
Appendix B: Interview Guide 39
Appendix C: About the Research Report Author 40
This report is published by Schiff Consulting Group, 127 Route 59, Monsey,
NY 10952. www.schiffconsulting.com
Distribution is courtesy of CFO Research Services, a unit of CFO Publishing

Corporation, 253 Summer Street, Boston, MA 022210. www.cfo-research.com
May 2003
Copyright © Schiff Consulting Group, which is solely responsible for its

content. All rights reserved. No part of this report may be reproduced or
stored in a retrieval system or transmitted in any form or by any means
without permission
MAY 2003 © 2003 SCHIFF CONSULTING GROUP

3
ACKNOWLEDGEMENTS
AND DEDICATION
I am grateful to all of the people who encouraged me and supported this
important research project. I offer my thanks to the former chairperson of the
Finance Development & Training Institute (FDTI) consortium, Rich Delcore of
Procter & Gamble, for his leadership, initiative, and interest in the CFO
Leadership Development Practices subject. I am also grateful to the current
FDTI chairperson, Alan Hencky of Intel, for his support of the project and his
valuable comments on early drafts of the report.
I am also grateful to the non-FDTI member companies that participated in

this study and generously provided exhibit material to enhance the practical
use of the report. These companies include: Cargill, Caterpillar, Conoco,
DuPont, FleetBoston, Northrop Grumman, Nortel, and Sprint.
I also want to express my thanks to the Financial Executives-International

Research Foundation and its staff, Marla Markowitz-Bace and Bill Sinnett, for
their interest in and logistical support of the project, as well as to Allison
Murray and Dr. Bobbie Moore for their help in bringing this project
to fruition. I am also grateful to both Lisa Nelson and John Fischer for
formulating and executing the graphic design of this report.
On a personal note, I dedicate this work to my wife, Bryna.
Jonathan Schiff
May 15, 2003

5
INTRODUCTION
WHY STUDY FINANCE LEADERSHIP DEVELOPMENT?
The consortium of large U.S.-based companies that comprise the Finance
Development & Training Institute (FDTI) viewed the topic of talent development
in the finance function as important for four main reasons:
1. Recently companies have realized that in order to achieve a higher level of

organizational productivity and effectiveness that results in competitive
advantage, a consistent, coherent, and comprehensive approach to developing
future leaders is required. Companies can no longer afford to apply a casual
or ad-hoc approach to identification, screening, selection, and placement of
key executives within the CFO function.
2. There is a sharper focus on succession planning within the corporate

community. Some of this focus stems from public attention that has been
drawn to succession planning in the context of internal controls, corporate
stewardship and governance perspectives. The question that is being asked is:
Are we bringing the right number of people through the ranks with appropriate
values, experiences and skills that are up to the complex and challenging
tasks encompassed by the work of a contemporary CFO organization.
3. Although leadership development issues pertaining to executives with

responsibility for general business management have been thoroughly
researched, there has been very limited research available on how companies
identify, select, develop and retain top talent within the office of the CFO and
the overall finance function.
4. In a broader sense, the definition of management talent is under review at

many companies today. This is the result of the recent spate of high-profile
business failures and public concern over the integrity of business leaders.
Indeed, respected academics from Columbia and Yale Universities have
recently challenged some of the assumptions and wisdom that, over the last
decade, popularized the “talent mind-set” concept that came to dominate
leadership development practice in many well-known organizations. For
more on this important and evolving debate, see the article, “The Talent
Myth,” by Malcolm Gladwell in the July 22, 2002 issue of The New Yorker
Magazine, pp. 28-33 or go to www.newyorker.com.

6 TOP TALENT DEVELOPMENT
METHODOLOGY
The methodology used consistently throughout this report involved a series of
interviews grounded in a detailed interview guide that is included in the appendix
section of this report. The interviews were augmented by a series of “drill-down”
face-to-face practice-sharing sessions that were held in Chicago and in Boston.
HOW WE GOT STARTED

The FDTI consortium is an alliance of 11 global companies that was founded
by Schiff Consulting Group in 1994 with the assistance of Chrysler
Corporation. The FDTI consortium currently includes the corporate members
detailed in Exhibit 1 (see below). The consortium regularly conducts focused
research and benchmarking with its members and with others.
Exhibit 1: Finance Development & Training Institute Member Companies

■ American Express
■ Cisco Systems
■ DaimlerChrysler
■ Dow Chemical
■ Intel
■ Liberty Mutual Group
■ Merck & Co.
■ Microsoft
■ Procter & Gamble
■ Verizon
■ Williams
In the fall of 2001, four of the FDTI companies formed a sub-group and
began to focus on the identification, selection, development and retention of
top managers within the CFO function. Following the development of an
interview guide, a benchmarking session was held on this topic.
Building on that valuable initial exchange of practices and issues, the

sub-group sought to continue the research and asked Schiff Consulting Group
to draw several other companies into this research process. These additional
companies include: Cargill, Caterpillar, Conoco, DuPont, FleetBoston,
Northrop Grumman, Nortel and Sprint.
© 2003 SCHIFF CONSULTING GROUP MAY 2003

7
EXECUTIVE SUMMARY
1. The goals associated with CFO Leadership Development are very common
across the industry for large global enterprises, however the approach to
reaching those goals varies dramatically. Some of the variation is a function
of company culture, some is attributable to the level and quality of human
resource services available to the CFO community, and some is attributable to
an evolving perceived importance of people management within the finance
and accounting function.
2. Most of the companies participating in this study have moved finance

leadership development to the front burner in reaction to chronic succession
planning issues, sudden departure of high-potential managers, and the lack
of a documented process for identifying, selecting, developing, and retaining
desirable finance and accounting staff. This often results in costly “churn”
and related disruption in key finance leadership positions. It is ironic that
only a few of the companies participating in this study have a legacy of
focusing on these issues in the context of building competitive advantage for
their companies.
3. It is heartening that in many cases the people participating in this study are
actually internal practice leaders, relative to other function managers, within
their organizations. Although often not viewed as innovative, particularly
when it comes to developing staff potential, in several instances the CFO
community is the role model for change and the test bed for new human
resource practices within their respective organizations.
4. Company culture has significant impact on the nature of CFO Leadership

Development practices. This influence is evident in several contexts:
■ The degree to which finance people are encouraged to share in out-of-
function rotations
■ The role that finance plays as a feeder for general management positions,
and
■ The significant rotations that are a virtual must-have “feathers in one’s
hat” for anyone seeking top positions within the company.
5. Some of the most effective CFO Leadership Development practices include

a clear distinction between development and performance management
objectives. This distinction is most often enabled by a detailed competency
model—a lexicon covering the gamut of relevant skills—including technical,
leadership, and business acumen categories. The effective models provide
sufficient detail to support a variety of common decisions regarding selection,
training needs, recruitment specifications, and succession planning across the
entire finance function.
6. Finance leaders in some of the companies “talk the talk,” but fail to “walk
the walk” with respect to transparency of their CFO Leadership Development
practices. There is a perception in some organizations that this process is still
a “locker room” exercise, cloaked in mystery, intrigue and misinformation. It
reflects a politically infused environment where “who you know is more
important than what you know.”

7. People responsible for finance leadership development have a varied back-

ground; see Appendix A, “Characteristics of Primary Interviewees.” We did
not detect any significant correlation between background, reporting line,
and effectiveness. The key values that seem to be common among the more
successful individuals are their passion for the task at hand and personal
commitment to sustained positive change. It is clear however, that a central,
unified focus for CFO Leadership Development is key to successful outcomes. If
responsibilities for training, succession planning, recruitment, and development
are not tied to a focused responsibility, authority and accountability center,
positive results are difficult to expect.
8. For many organizations a structured focus on CFO Leadership Development

is counter to the prevailing traditional culture in finance (and often across the
company). Therefore, it is critical to appreciate the change management and
internal communication needs before one begins to make changes in the status
quo, independent of how inconsistent, ad-hoc, or reactive these practices may
have been in the past.
9. In the contemporary business setting, there is a critical need to restore

confidence and credibility in finance and accounting practices both
internally and externally. It is even more important to systematically and
transparently identify, select, develop, and retain individuals with the
requisite temperament, values, personality, skills, and experiences. These are
the people who can help companies reduce their risk profile, attract and
retain the best talent, and improve decision quality with a view toward
enhancing worth to their owners.

9
PARTICIPATING COMPANY PROFILES

Company Profile
A Company A is a leading manufacturer of construction and mining equipment,
diesel and natural gas engines and industrial gas turbines. The company is a
technology leader in construction, transportation, mining, forestry, energy,
logistics, electronics, financing and electric power generation.
B Company B is an international marketer, processor and distributor of
agricultural, food, financial and industrial products and services.
C Company C supplies the computing and communications industries with
products that are the building blocks of personal computers, servers,
networking and communications products.
D Company D markets more than 250 products to more than five billion
consumers in 130 countries.
E Company E is a fully integrated energy company. It is involved in every aspect
of the oil and natural gas industry, including worldwide exploration,
production, transportation, marketing, refining and power.
F Company F is a major US retailer focused on pharmacy, consumer products
and general merchandise.
G Company G is a global chemical company, delivering solutions in markets such
as food and nutrition, health care, apparel, home and construction, electronics
and transportation.
H Company H is a large financial holding company. They offer a comprehensive
array of financial products and solutions to 20 million customers in more than
20 countries and territories.
I Company I is a global communications company serving 26 million business
and residential customers in more than 70 countries.
J Company J is a global aerospace and defense company. It provides
technologically advanced, innovative products, services and solutions in
defense and commercial electronics, information technology, systems
integration, and is the world's largest shipbuilder. Company J has operations
in 44 states and 25 countries, and serves U.S. and international military,
government and commercial customers.
K Company K delivers networking and communications services and
infrastructure for customers in more than 150 countries, including established
carriers, new network operators, leading wireless service providers and enterprises.

COMPANY A
“We really want to be the Setting
‘go-to person’ to help our Company A has recently appointed a new Corporate Controller. Since this
leaders run their organization appointment there has been an increased focus on strategy-based people
from a business perspective.” development in the function. Like many other contemporary organizations,
Company A’s finance function historically was consumed with detailed
“Six Sigma is working well transaction processing, but is transforming into a recognized center of excellence
for us and even human and a sought-after business partner.
resources processes for
accountants at our company The accounting and finance community at this global manufacturer has a
are being looked at under total of 1,200 staff divided equally between locations within and outside the
the Six Sigma microscope.” US. This Company uses the title Business Manager to describe the finance
leader who is an advisor to the operating vice president in each unit of the
organization. There are about 30 to 50 of these positions, equivalent in other
organizations to a business unit, division or sector–level financial executive.
Company A has also embraced Six Sigma as their primary process improvement
and performance management tool. Six Sigma is used across the value chain
at Company A, extending to all administrative functions including accounting.
Their new Framework, as depicted in Exhibit A-1, has been in place for just
over a year. The response from the internal customer base for accounting and
financial services has been strong with respect to achieving the “business
advisor” role. Although accounting and financial services staff are pleased
with the feedback, they also think that they have more value to deliver to the
business and that they can improve their internal processes from a Six Sigma
perspective.
The focus on top finance development stems from an emerging challenge to

fill many top positions within their function because of the impending retire-
ment of an entire “class” of leaders. An attractive early retirement package
turned out to be more popular than anticipated, exacerbating the leadership
pipeline issue. This Company’s pipeline issue also extends to the “feeder”
levels just below the top 50-position level. At this “feeder” level there is
currently not a sufficient number of “promotable” individuals to fill positions
at the next level without potential risks associated with not fielding those
with requisite experiences.

11
Exhibit A-1
Corporate accounting services strategy framework
Vision Critical Success Factors

To be the recognized center of excellence and sought after business partner • We must increase the value of CAS to the enterprise
through cost effective delivery of quality services.
• We must be proactive in providing insightful analysis
Mission and guidance on financial issues, including top tier
Provide valued accounting, related shared services and decision support to help the company achieve its metrics
goals utilizing our core expertise
• We must actively communicate key issues to all who
Values need to know in a timely manner
•Trust/Integrity • We must proactively provide a continual learning
•Sense of urgency environment and prepare our organization for change
•Teamwork • We must continue to attract and retain top talent for
•Respect CAS and facilitate the recruitment and placement of
•Accountability talent worldwide
•Stretch improvement • We must develop common methodologies &
processes that are consistently applied within CAS
Enterprise Value
and across the enterprise
We provide insightful analysis and proactively lead people • We must implement and leverage appropriate
supporting technology
to solutions. We are not afraid to highlight difficult issues
and ask tough questions
Customer People
We believe people should be able to work in a continuous

We are recognized for providing significantly value-added learning environment where all are shown respect, given
or the lowest cost services, in support of the enterprise responsibility, demonstrate integrity, and are provided the
strategy opportunity to perform meaningful, enriching work with the
support and encouragement of others
Business Process
We use 6 Sigma to ensure our internal processes and

enterprise processes that we manage are robust, efficient,
and are improved continuously
The company has made its first move to formalizing a systematic structured
“In the past, the important approach to top development, company-wide, by establishing a College
thing for accounting and of Leadership to address the needs of the top of the organization first. As a
finance was to close the books basis for the College, the Company developed a generic, cross-functional
and make a profit for the leadership competency model and assessment tool. They also retain an
Company. If there was time outside advisor to supplement their internal interview process and
left to develop people after 360º reviews for top development selection. The outside review focuses on
that, great!” identification of skill and competency gaps in top development candidates.
Like other functional areas, accounting participates in this corporate program.
This corporate program supports both the selection and development of the
future finance and accounting leadership pool, aimed at the top 5% of the
Company’s staff. The expectation is that in the near future this structured
approach will cascade downward and also be customized and detailed to
accommodate specific functional characteristics and needs, including those
unique to accounting and finance.
Recently, business management leadership has stepped forward and over a

“When things go well in this three-year period developed the College of Accounting. The College provides
practice space it is because a framework to educate their associates, using online delivery, in a variety of
top leadership decided that technical skills, including product costing, internal controls, and business
they need to continually and measurement.
proactively prepare leaders
for the positions that they Company A has a group of top business managers who meet on a quarterly
currently hold…It has to basis to talk about the people in their accounting pool. One of the
become apparent to the lead- responsibilities they have on an annual basis is to provide a “promotability”
ership that this will not hap- or a “potential” indicator. The approach is systematic. Four different
pen as a result of the “luck of levels can be assigned to an employee based on their long term potential.
the draw.” With respect to mentoring of high-potentials, there is no formal program;

assignments depend on whether the mentor has innate skill for mentoring
and/or has some high-potential people as direct reports who request being
mentored.
There are three perspectives considered whenever there’s a job movement or

placement—the individual, the business unit, and the enterprise must all be
considered.
Company A has always moved people about in the accounting function in a

planned and systematic manner, although there is understandable resistance
to this practice in some divisions.
At Company A, “potential” is dependent on whether an employee may

“Some of our folks that are be department head someday and would generally report to the facility
still not on board say: I’m not manager of divisional vice-president. In this context, an employee may need
going to let my best people go development to achieve these levels, but otherwise, a person may be well-
until you can provide me with suited to the current job and might not be moved around. (They become the
somebody who is a high technical experts by default.) Annual performance evaluation is done on a
potential employee.” numeric scale, and only bears reference to the current job. This practice has
recently been implemented at Company A, and there is no automated way to
gather the information yet. Company A’s ERP information system will ease
the administrative burden of this practice. Looking at a potential candidate,
selectors asked “what were they rated this year?” It wasn’t promotability that
was the issue--it was their performance.
Performance ratings are based on objectives and behavior. Objectives are

“I recently expressed my
tasks associated with performing the job that year or on a continuous basis.
concerns about the stream
Behavioral criteria are based on how you do the job rather than what you do
of future accountants for
on the job. In the Corporate Controller’s Division there is a performance level
my organization to the
evaluation criterion that helps employees understand how the performance
chairperson of the local
(objectives) and behavioral criteria will be evaluated. It is a one page matrix
university accounting
that provides a way to determine whether your performance is in the “valued
department. He told me
performance” category, which is the backbone of Company A, or whether
that this past semester,
some goals are being exceeded or not accomplished. Performance may be
23 business school students
compared to that of peers. On the behavior side, Company A has 16 or 17
met with him to change
their major to Accounting!” job related characteristics, similar to skills. For example: analytical skills,
communication skills, and accountability skills.

13
COMPANY B
Setting
“The top seven guys (in the About three years ago, the leadership of this diverse global organization
Company) realized that they that the talent and leadership pipeline within the CFO function was “drying
had an Achilles Heel with up.” This became even more important when the company’s leadership,
respect to our top talent as a whole, began to focus strategically on the “top talent” issue and its
pipeline.” relationship to producing and sustaining a competitive edge in support of
their businesses.
Often organizational leaders begin to focus on succession planning issues

as a direct result of experiencing negative effects of inattention to people
development matters.
For example:
1. When high performers leave the company precipitously.
2. When individuals with a limited skills portfolio, often with a strong
technical focus, find themselves promoted to leadership positions for which
they are unsuited, and performance issues surface.
Before focusing on CFO top leadership development, Company B first set out
to better understand its own culture and climate and conducted detailed
cultural assessments. One of the significant findings deriving from this
assessment was “the amount of discontent and cynicism towards senior
management present in the finance job families.” This finding significantly
affected the CFO top development plan and practices.
Identification & Selection

Based upon a multidimensional assessment developed by the finance
leadership, the company identified the 50 top finance managers, within their
pool of 450, and 8-12 of these were identified as the next generation finance
leadership group.
Company B-Talent Development Definitions:

Next Generation Leader: Demonstrates the potential and performance track record to lead a
substantial and complex business unit or function, within the next three to five years.
High Impact Performer: Individuals who may meet the description of the next generation
leader, but are more likely to move into that group in five or more years. The HIP category
might also include individuals with critical subject matter expertise who would be difficult
to replace.
A new element in Company B’s development process is the Finance

Leadership Forum, a rigorous 3-year program that focuses on identification of
competency in future finance leaders. A key take-away from this program
is that a surprising number of people who were initially identified as future
leaders are not viewed as “inspirational” or “visionaries,” in spite of possess-
ing high-levels of “technical ability,” “integrity,” and being “results oriented.”
This finding reinforced the results of the initial climate/culture survey.

Incentive plans are designed to reward key contributors to results. For finance
professionals, this occurs when an individual holds a position that has three
elements: impact, complexity, and freedom to act. This tends to occur with
someone who has been in the workforce for at least 6 years.
One drawback of this approach is that individuals who develop strong

leadership characteristics and potential earlier in their career may slip through
the cracks and may leave the company, sensing an unstated, but virtual, age
requirement for key leadership positions.
Open Issues
■ One current challenge is that some of the highest potential individuals within
the top development pool at this company are in far flung locations around
the globe. This results in a challenge to ensure both development consistency
and adequate attention from corporate headquarters.
■ The balance between financial or accounting technical knowledge and

leadership attributes is also coming into play. There is a need to detail all
of these competencies with a view toward an improved leader
identification process.
Exhibit B-1 Company B’s Identification & Assessment Guidelines
Learning Capacity Execution Capacity

• Keen sense of priorities
• Curious passion to learn
• Relentless determination &
more than taught courage to make things
• Adaptable, nimble happen
• Broad perspective • Manage/coach for high
• Conceptual strength performance
• Energy/passion for
excellence
• Optimistic
Knowledge • Compelling/authentic
• Deep & practical business Passion communicator
acumen • Resilient
Courage
• Macro economics &
political trends Integrity Behaviors
• Marketing • Discuss, decide, support
• Respect, candor,
• Finance commitment
• Risk management • Customer knowledge &
• Technology insights
• Supply chain management • Pursue & reinforce
collaboration
• Change Leadership
• Ensure & accept
accountability
• Challenge, innovate, change

15
COMPANY C
“While it is not expected that a Setting
senior leader will be performing Company C is a global leader in the manufacture of components intrinsic to
at the Advanced level in every computer and communication products. The Company’s Finance function is
competency, the model provides presently a well-developed business partner, as indicated by other Company
a common language for a leader organizations’ tapping Finance for senior roles in their functions. In addition, the
to discuss his or her performance Company enjoys a reputation of both fiscal conservatism and high integrity.
with their manager, and links to These two indicators taken together suggest that the Finance function balances
resources that can aid in technical expertise with business influence competencies.
developing areas for
improvement.” Nevertheless, an increasing proportion of the Company’s revenue is derived
from operations outside of the continental US, a trend that is highlighting the
need for Finance leaders with “depth and breadth” operating around the
world. Company C’s top development practices, therefore, reflect its concern
with ensuring that there is an adequate pipeline of Finance leaders to address
future needs. The primary emerging issue, therefore, is accelerating the
development of potential senior finance leaders.
The Company’s vision for Finance is to be a “full partner in business decisions

to maximize shareholder value.” Developing “effective leaders and partners
through career opportunities that foster improved performance and
professional growth” is a key element of the Company’s Finance Charter,
which supports the Finance vision. The Charter is included as Exhibit C-1.
Competency model:
The vision for Finance is also reflected in a well developed set of Finance
leadership competencies, which are part of a competency model for Finance.
The Company’s leadership competencies for Finance include:

■ Create a shared vision of success
■ Organization development
■ Foster innovation
■ Leadership excellence
Each of these competencies is defined with four levels of behaviors that

describe a performance gradient from Basic to Advanced.
As a supplemental tool, the Company employs an externally provided tool

every 12 to 18 months to provide feedback to individual leaders about their
leadership behaviors from subordinates, peers, and the individual’s direct
manager.
Identification and Selection

Company C has taken pride in its “free-market” approach to internal job
application, and open access to development opportunities, regardless
of position or level in the organization. Part of the free-market approach
consists of open job posting for positions up through CFO staff—1 levels.
Decisions on filling CFO staff level positions are made by the CFO in
consultation with existing staff members.

Performance reviews are conducted annually, and yield quartile rankings

of employee contribution to the Company for the year. Leadership and
promotion opportunities are not restricted to those in the highest quartiles
but consistent performance at that level is a key consideration for hiring
managers in filling open positions.
Extent of participation in stock options is a further indication of employee

potential at Company C. As part of the annual performance review process,
an assessment of the employee’s long-term potential for contribution to the
Company is made by the employee’s immediate manager. The company
targets approximately 25% of employees to receive share levels that
are roughly twice the base level that are awarded to other recipients. The
manager’s assessment, while subjective, must be defensible among peers
and the company’s 25% target provides suitable performance tension to
the discussions.
Retention
Trends and practices already mentioned have helped Company C to positively
address retention challenges. There has been ample opportunity to contribute
to the Company’s growth; in combination with variable incentive compensation,
including the emphasis on stock options for high-potential employees,
opportunity has kept top talent in the pipeline. In addition, the CFO has been
personally involved in coaching senior leaders, which has engendered
loyalty to the CFO. Retention of CFO staff has received the highest attention
from Human Resources staff, with corrective actions prescribed and taken
when negative trends are identified.
Development
Historically, there has been strong commitment from the top downward for
development of managers and leaders at Company C. In recent years, gap
filling efforts have focused investment on entry- and middle-level management
development programs. There is now increasing emphasis on training and
development for the top level.
As part of the performance review process, development needs for each

employee are systematically identified. Employees are expected to work with
their manager to create an action plan that addresses development needs; it
can include assignments, coaching, training classes, and other developmental
experiences jointly regarded as appropriate by the manager and the employee.
Development opportunities go beyond new positions, and have included

coaching and mentoring for those considered top talent. More recently the
senior finance leadership team is looking at the skill of “coaching others for
leadership”, going beyond basic coaching skills, and a pilot group of senior
leaders has received training on the concepts. Additionally, certain executive-
level leadership training opportunities, including discussion forums and
action learning, have been made available to levels just below the executive
level, and across the company.
Mentoring is a well-established part of the Finance culture at Company C. As

such, it is an accepted responsibility of leaders in the function to mentor those

17
coming up in the ranks, often from the time a new employee arrives at
the Company.
Finally, Finance staff know that they are expected to take on projects or task
forces that contribute to the health of the greater Finance organization,
beyond the scope of one’s own position. The expectation is not limited to the
top of the Finance hierarchy; it extends to an expectation that Company
finance leaders model Company values. For instance, leaders are expected to
take an active role in teaching culture classes and the leadership development
curriculum. Other opportunities consist of holding forums, sponsoring
“brown-bag” lunch topics, holding operations reviews, and conducting
cyber-chats.
Open Issues
Given the pressing need to keep the worldwide development pipeline well-
supplied with potential executives, several dilemmas may present themselves.
It is anticipated that there may be some tension between the existing

“free-market” philosophy of staff development and a possible need to focus
more on a “high potential” approach. Likewise, tension may be observed
between the desirability of placing senior expatriate Finance professionals in
non-US locations and the desire to develop local talent to fill those positions.
In addition, the post-Enron regulatory environment puts added tension on
the balancing of Finance technical and compliance efforts with Company C’s
Finance Vision to be a “full partner in business decisions.”
Exhibit C-1
Finance Charter
• Maximize profits by providing effective analysis, influence,
leadership and control as business partners.
• Keep the Company legal world-wide while maintaining high
standards of professionalism and integrity.
• Protect shareholder interests by safeguarding the assets of the
Corporation.
• Deliver world-class services and productivity.
• Develop effective leaders and partners through career
opportunities that foster improved performance and professional
growth.
Demonstrate the capability, mentality and leadership to be

effective partners, managers, and contributors.
It is all in the Charter.

2

COMPANY D
“The candidates for top Setting
development in our This global consumer product giant has a legacy of rigorous selection and
Company are selected development of future finance leaders. The Company has well developed
based on performance, general leadership development practices, as well as those specific and
potential, experience unique to the finance and accounting function. The finance function is an
and skills, in that order.” internal practice leader with respect to people development practices.
Selections for top development are reviewed annually with the CEO and
his leadership team, with each of the 12 business units. These reviews are
conducted quarterly, three business units at a time. The primary result deriving
from this selection and review process is identification of the subsequent one
or two assignments associated with this high-potential pool. There is currently
no specialized corporate training, recognition or public identification of these
individuals.
Selection & Development

From a corporate perspective the Company identifies the top 250 people (of a
total of about 105,000 employees) from all functions. It is interesting to note
that although finance and accounting represent only 5% of the headcount,
they are disproportionately selected (15%) for the top development pool,
representing about 8% of the eligible population (associate director and above).
In this context, the finance and accounting organization identifies its 60 top
development candidates, with a view toward placement in one of the dozen or
so top positions within the subsequent 5-10 years. This Company’s top devel-
opment group includes the direct reports of the CFO, but also includes key line
business CFOs. These 60 represent about 15% of the eligible management
group (associate director and up) and make up about 1% of the entire finance
and accounting staff. These candidates are handpicked by the finance leader,
in this case, vice presidents, of the business unit and are surfaced initially to
identify any “vetoes” from other vice presidents familiar with the candidate.
The selection criteria mirror those of corporate selection criteria highlighted in
the sidebar above. The selections are reviewed annually with the CFO leader-
ship team. Individuals can “roll” on or off in any given year. The individuals
selected for top development within the finance and accounting function…
■ Know that they have been identified and selected,
■ Receive regular exposure to top management,
■ Are “first-up” for the most challenging, broadening, and high risk/high
profile assignments and projects,
■ Are provided with specialized training, and
■ Receive aggressive salary management and option awards.
Development
Certain rotations and job assignments have been identified by Company D as
critical for top development. They include leadership positions in: investor
relations, international finance leadership-country specific, global shared services
and key product line CFO. This select group is also assigned special sponsors and
mentors, as well as outside coaches to aggressively address specific deficiencies.

19
An outside resource provides a detailed multifaceted assessment, addressing

personality, behavior, and leadership dimensions, based upon a series of
simulations. This exercise has been very well received by the target group.
The individualized reports deriving from this assessment have proved
instrumental in systematically structuring tailored individual development
programs for the top development group. The program has also provided
new, valuable insights regarding the candidates that had not surfaced via
internal processes. The outside supplier of this program uses a research-based
approach to identify 6 dimensions in describing the contemporary ”crisis” in
succession planning as shown below:
■ Attrition-Most companies will lose one-third of their executive staff in the next five years.
■ Turnover-58% of top talent change jobs in less than five years.
■ Cost-On average it costs about $1 million to replace an executive in the first year.
■ Lack of Skills-Weakness in key leadership skills: including innovation and change.
■ Shareholder Expectations-Corporate boards expect a systematic, visible leadership
development process.
■ Readiness-Less than one-third of companies are confident that they are fully prepared.
This Company’s development and training approach for future finance and
accounting leaders begins at the early career stage. Every finance and
accounting staff person entering the company is part of their Finance &
Accounting Development Program. The program is run primarily within the
business units. As they progress, strong technical performance is rewarded
through recognition in the CFO Circle. A select group, representing about 10%
of top performers from the early-career program, is selected for the
Accelerated Development Program (ADP). This group usually possesses 2-6
years experience with the Company. Acceptance into the ADP is based upon
the employee’s results, skills, business experience and potential for growth.
“To be selected for the ADP, The ADP includes 80-90 new entrants per year. The ADP is the pathway
they must demonstrate for the first appointed position, Associate Director. The ADP is a carefully
proficiency in both analytic monitored “up or out” high potential program. Less than half will make it to
and people development the Associate Director level. The ADP’s objective is to develop future business
skill blocks and must meet and organizational leaders for finance and accounting and to build broadening
minimum requirements in skills and experiences such as multiple geographic and multiple business
the other skill areas. They exposures. The ADP provides a series of rotations averaging 15-24 months in
must also show measurable length. However, these assignments are almost exclusively within the
contribution to business accounting and finance community. The ADP has won high marks for its
results and be “top” rated in a selection consistency and transparency, valuing top performers, forcing
forced ranked rating process. business unit leaders to share (and develop) talent, distinct recruiting
Finally, they must have senior advantage-- specifically for MBAs—and taking the mystery out of career
management potential.” pathing. The program has provided for a unified global approach to
early-career development. One of the key enablers of the program’s success is
an internally developed detailed finance and accounting skills dictionary,
together with a computerized program for its use, that has provided for a
consistent language and measurement platform supporting a variety of
critical leadership development decisions and training priorities.

It should also be noted that from a development perspective, one of the

Company’s “must haves” is individual exposure to business experiences out-
side the US. Although this experience is an emerging requirement at some of
the companies included in this study, Company D is the most exacting in
requiring multiple differentiated global experiences from its CFO top devel-
opment pool.

21
“Our CFO wants the future

finance leaders to:
COMPANY E
■ have exposure to many
Setting
facets and locations of the This finance function has a history of leading the way with staff development
company’s business initiatives that have been emulated by other functional areas across Company
E. The primary finance leadership theme has been pursuit of transformation
■ be externally focused
from a primarily transaction processing role to a business partnering role over
■ be technically strong the last ten years. They believe that consistency of message is critical to the
■ be strategic and visionary focus of their transformation process.
■ be knowledgeable about our
business inside and out Because this company was “spun-off” several years ago, the finance function
has become more externally focused. Also because of this change, certain key
■ bring diversity of thought
positions and related skills sets needed a quick fix, including treasury, tax,
within our team.”
internal auditing, external financial reporting and compliance, as well as
investor relations. With respect to bench strength, these practice areas
continue to challenge the Company.
The current finance leadership pipeline at Company E is strong with respect

to technical skills and stewardship skills, but lack current depth in what they
call “dynamic leadership.” However, they are encouraged by the fact that
increasing numbers of high-potential finance staff are being selected to
participate in Company E’s exclusive enterprise executive development
program run by MIT’s Sloan School of Management.

High-quality “raw material” is critical in fueling the top talent pipeline.
Company E attributes its success in competing for incoming talent to its
12-week program for new recruits. This rigorous program is pass/fail for
participants and exposes recruits to the Company’s finance and accounting
practice, as well as to its core business operations on a first-hand, experiential
basis. Other company functions have adopted finance’s lead.
The company has a challenge in leadership development because traditionally,

once an individual joins a function, be it engineering or finance, the employee
almost always stays in that function for their entire career. The current feeling
is that this mode does not help in building the kind of leadership team needed,
either functionally or for the company as a whole. Well-planned, structured,
and systematic cross-functional movement will be critical to meeting the
Company’s leadership needs for the future.
“Functions in our company are High-potential finance managers are identified on the basis of their ability to
often like the ‘Roach Motel’ make a series of upward promotions within the shortest time span—for
They check-in but they don’t example, how many upward moves can this person make within the next ten
check-out.” years? Conclusions about high-potential status are based on evaluation of
performance in jobs that average about two years in length. Annually,
Company E evaluates all those in the high-potential pool to see whether they
should remain in the pool. Members of this elite group are regarded as
“corporate promotables”.

“One of the best things to There are several dimensions to Company E’s development practice for
keep anybody interested in “corporate promotables” including:
working in a company is to ■ Annual development discussions and objectives
provide them with an
■ Regular exposure to high-level executives
interesting “stretch” job.”
■ Exciting and challenging “stretch” rotations
■ Invitations to participate in “internal university” programs
■ Rotation in a foreign subsidiary
Bench strength testing within the context of the 1,400-member finance and
accounting team is a front-burner practice at Company E. Of this population,
less than 10% are included in the top development pool. Their success in this
practice space is attributable to a combination of online information and tools
combined with a significant commitment to on-going dialog and human
touch. Their assessment process for future finance leaders is called their
Targeted Development Program. This assessment covers technical and
leadership skills, as well as personality traits and values. One of the most
interesting aspects of this Company’s practice is that they bring in an external
resource, the executive search firm Russell Reynolds, to evaluate their CFO
Top Development candidates. The outside firm has been very helpful
to Company E in identifying new risks and issues with respect to several
candidates that did not surface via the internal process alone. It also enhances
the objectivity of the process.
Perspective on Future Direction

Company E will need to focus on several actionable items in the future to
keep moving ahead. Finance leadership is planning to broaden cross-
functional development opportunities, as well as provide opportunities for
increased external exposure for finance people. They also want to gain insight
into the attributes that should characterize the next Corporate Controller,
Treasurer, Tax Director, or Director of Internal Audit. Finance Leadership also
intends to make better use of rewards and recognition as a component of their
finance leadership development program.

23
COMPANY F
“Within three years, we expect Setting
our business decision support The finance and accounting organization of this large national retail chain
activities to grow to 30% of includes about 400 staff, mostly located at the headquarters. Total employee
our resources, in contrast to headcount exceeds 50,000 and they operate thousands of stores nationally.
only about 10% today.” They are the largest retailer in their category. Historically, the development
culture has been focused almost exclusively on future store sales and service
leaders. The interview guide associated with the research project (a copy is
found in the report Appendix) created an opportunity to discuss the future
vision of finance with the CFO. The CFO expressed a vision of a finance
organization that would be “more of a strategic partner providing analysis to
support key business objectives, specifically when it comes to mergers and
acquisitions, partnerships, and benchmarking, and to be more involved in
major decisions and have more of an outside, financial analysts’ perspective
on the company.” For example: The CFO would like to see the finance team
help address and solve typical problems like inventory ‘shrinkage’ at the
store-level linking financial and business issues, managing M&A activity, and
improving investor perceptions. Such functions would of course be added to
the traditional roles of stewardship, transaction processing and financial
reporting.
“The exit interviewing process Selection & Development

provided us with very strong Today, Company F is a long way from achieving the CFO’s stated vision for
feedback with respect to how finance, both in terms of skills and culture. They have initiated the process of
important lucid career pathing transformation by re-organizing the finance function with a new segment called
tools are to the most desirable the strategic analysis group. The new group consolidates analysis capability
staff people.” across the finance function. However, Company F’s business is very transaction-
intense by nature. Today, the Company’s finance function spends about 60%
of their time in transaction-processing; 30% in compliance activities; and the
remaining 10% in business decision support services.
The company’s Finance HR practices have been informal in recent years,

and a morale opportunity has been identified by making plans more formal,
specific and internally “public”.
“It is interesting here, we have
a lot of senior people who To address these issues, Company F has started a process of competency
have been here for a long time identification to support career pathing and begin a formal, structured
with a lot of loyalty and succession planning process.
length of service, but in some
cases you see some ‘blocking’ The Company has also initiated the use of a performance and potential meas-
of development and some urement convention. It is used both to validate performance recommendations
have been in the same position and to surface candidates for promotion and special assignments.
for too long-Our community
currently does not value Currently Company F has conducted a formal approach of identifying and
lateral moves that would developing top talent within the CFO function. However investor relations
provide breadth of knowledge and other select finance positions are used as “job share” opportunities for
and increased exposure. brief rotations that have been well received. This practice has helped to
This, with a view toward address some of the company’s retention issues below the Director level;
broadening their skill set in these issues arise because of the extended tenure of individuals in senior
preparation for promotion.” finance and accounting positions.

Exhibit F-1 Company F

Organizational and Management Review Performance
and Potential Assesment Matrix
Organization:
Date:
Development Strong Outstanding
Required Performer Performer
High
Potential
Solid
Potential
Remains at
Current Level
Performance and Potential Assessment Matrix
Definitions
Potential
High Potential: Possesses high growth potential; capable of moving up two or

more levels OR into senior management ranks OR moving
further within the senior level ranks
Solid Potential: Has the potential to assume larger responsibilities beyond cur
rent position or move laterally to increase breadth of
contribution; capable of moving up at least one level
Remain at Current Level: Has limited potential for upward mobility; may continue to
provide valuable contributions at current level
Performance
Outstanding Performer: Frequently and consistently performs well above expectations
Strong Performer: Consistently displays solid performance; occasionally performs

bove expectations
Development Required: Requires development in one or more areas in order to

consistently perform at or above expectations (This may include
a high potential person who is new to their position or someone
who exceeds in certain areas but performance development in
other areas is needed to be considered a Strong Performer)

25
COMPANY G
Setting
“With respect to finance’s role
At Company G there has been a focus on a new vision for finance over the last
in integrity, let’s make sure
five years. The challenge in maintaining this vision is the impact of changes
that we are as pure as Caesar’s
in strategy and structure that are significant enough to render a fixed or
Wife in all respects.”
static vision ineffective. The Company has recently concluded that although
what finance will do in the future is about 75% of what they are doing today,
25% of their work will change, often radically, in an accelerated fashion. As a
result, finance leadership has maintained that there should be a unified
focused people-development strategy and practice across their diverse
business units globally. Historically, the Company’s approach has been a
preference for “make” vs. “buy” in leadership development. There is also a
strong consistent culture of integrity.

When there is a business unit CFO opening, the business has 49% of the vote
on selection and the finance leadership has 51%. Due to the rapid evolution
of Company G’s business, the rest of the identification and selection process
is imbedded in the following section.
“Finance is the strongest Development

competency across the Finance participates in the company-wide top management development
company in terms of program that is focused on the top 8 or 9 people who have been selected and
developing its people.” are in line for top slots within the CFO organization. However, the Company
came to the realization several years ago that although they had effectively
developed future leaders with a variety of useful skills, they were chronically
lacking in the levels of technical acumen required for advancement. As a
result, about three years ago, the Company launched the corporate Finance
University. The University currently contains seven distinct Colleges including:
■ Accounting
■ Business Analysis
■ Credit
■ Internal Audit
■ Mergers & Acquisitions
■ Tax
■ Treasury
“Our Company’s Finance In the first three years 12,000 people have been through the University. It
University consists of a should be noted that about 25% of those are non-finance and accounting staff
number of Colleges that seeking development in accounting and finance skills. A new program, the
provide financial competency eighth College, is being created to focus specifically on CFO development.
training and development to The CFO of the Company is the “Dean” of this new program. The colleges are
all employees to enable each consistently competency-based using a detailed model. A robust CFO
of them to perform and Development College will help support the identification, selection and
understand their roles and development process.
responsibilities better. The
result of this is proven to be Company G has promulgated a quality standard for the Finance University.
of compelling value to our A description of their Finance University Quality Standard follows:
Company.”

Company G’s Finance University Quality Standard

Our Quality Standards cover All Areas of Operation: Course Design, Development, Delivery,
Administration, Enrollment, Career Pathing Tool, and Continuing Professional Education
Measurement & Reporting
University courseware is delivered using traditional, online, and blended

systems around the world.
The company-wide Targeted Development Program (TDP) complements the

Finance University. Unlike the technical focus of the Finance University, the
TDP is focused on developing leaders based upon the Company’s detailed
leadership model.
The Company uses a process with very clearly defined criteria for the selection
of employees to participate in future leader development opportunities.
Aside from specialized areas like tax, the approach to development is still
generalist-oriented; future finance leaders need to experience a variety of
finance and accounting jobs across the CFO function to be considered for
top development. Although international experience is not formally
required, many of the high potential managers rise to the top of the
list because they possess that experience and have also managed
departments with large headcount. Another important criterion for selection
relates to the significant commitment—referred to as “energy”—required for
the top development track.
There are four levels in their “promotability" ranking:

■ Ready for senior or executive vice president
■ Ready for vice president level
■ Ready for director level
■ Ready for senior manager rank
Company G uses an equation to measure the effectiveness of their succession

planning process. They like to see 1.5-2.0 times the number of “promotables” for
each position. This results in creating a very strong “bench.” This quantitative
approach derives from the Company’s engineering culture and legacy.
This company values rotational assignments outside the finance function for
future leaders, most often occurring early in staff careers. At Company G, it
becomes more difficult to build such out-of-function rotation later in one’s
career. An emerging consideration that has bearing on selection is the degree
of involvement in the Finance University. This involvement is perceived to be
a very important demonstration of an individual’s commitment to both
technical competency and people growth.
One of the key rotations used to develop high-potentials at this Company is a

rotation in their mergers and acquisitions unit. This rotation is considered highly
valuable because it requires both technical acumen--in tax, treasury, financial
accounting and reporting, and information systems--and expertise in strategic
planning, team building, and communication. An M & A rotation can be a very
rich experience, often featuring a global context and significant time pressure.

27
Retention
This company has found that their commitment to job rotations is the best
defense against sudden departure of future finance leaders. Both exposure
to company officers and the “psychic reward” of being invited to assist
the Finance University cultivate competencies that can act to mitigate the
retention issue.
Open Issues
■ As the company continues to evolve as an entity there will be ongoing pres-
sure to maintain and grow a common finance culture across the company.
■ As the quality of the finance staff has strengthened, more of the best are
being invited to join other functions. This effect was anticipated, but not to
the degree currently experienced.

COMPANY H
Setting
The CFO’s stated vision for this large, diversified financial services company
is to become a world class customer service organization, coupled with a
commitment to integrity and professionalism. Interestingly, the Company
recently circulated and socialized the FEI’s Code of Ethics throughout their
finance organization.
The current finance leadership pipeline is regarded as being in very good

condition. Because of the very dynamic nature of the Company’s business,
employees’ skills have consistently been enhanced through exposure to a
variety of positions, responsibilities, and challenges. In addition, the
Company has embraced an organic growth strategy, resulting in increased
pressure to leverage internal resources to achieve goals.
Selection and Development

Company H’s finance function leverages several corporate programs for
leadership development, one of them is their Organizational Management
Review (OMR). The OMR and its major process steps are described in Exhibit
H-1 and H-2.
Rankings are made up of two components, performance and potential. Those

possessing the highest levels of both components surface for increased
attention and development. Forced ranking is employed in the context of the
OMR process. The OMR process cascades down through the organization and
has been fully embraced by the company.
The OMR process is coupled with another process that they call Strategic
Staffing. This Strategic Staffing process takes those identified as the highest
potential and the highest performers within the organization and matches
them with assignments and opportunities that will provide them with the
type of experience and skills that they need to move forward. The Strategic
Staffing process has been very successful within the finance function, but has
met more limited success in moving people out of finance and into other
functions for rotation. The focus of the Strategic Staffing process is about 10%
of the total 1,200 headcount in finance in this Company.
The top performers across the Company are invited to participate in the
Company’s “Senior Leadership Forum.” This rigorous program focuses
on strategic issues, and was designed using an action-learning model. The
individuals in the Senior Leadership Forum are not graded or ranked but it is
viewed as a key experience for high-potential/high-performers in Company
H. An overview of the program is described on the following in Exhibit H-3.
In this company, retention has surfaced as an issue recently. The company

addresses retention in several ways. Some efforts focus on compensation, but
leadership also thinks that they’ve mitigated retention issues because of their
commitment to work/life integration, and their well-publicized commitment
to diversity. They also feel that their development programming and stretch
rotation are attractive propositions and act to retain the highest potential staff.

29
Recently, the Company has gone further in its development process in the
finance organization. Finance leaders have been asked to identify their top 10
direct reports by considering the top 10 people that “you cannot live
without.” This process should identify not necessarily the most senior people,
but those most critical in taking the business forward and making sure that
there is a retention strategy at the individual level for key people.
Exhibit H-1 Company H

What is OMR?
The Organization and Management Review (OMR) is a process to ensure Management
leverages the talent potential in place to meet current and future business objectives; to
facilitate cross-organizational, forward staff planning; and to maximize the effectiveness of
employees. Specifically OMR is a process to create retention, succession and development
plans for high potential individuals.
Exhibit H-2 OMR Phases

Phases 1 – Preparation
The direct manager prepares by assessing his/her direct reports so that they may be
thoughtfully discussed during this OMR meeting.
Phase 2 – OMR Meeting:

Business Partners from HR and Learning & Development facilitate a discussion with managers
around a business unit’s talent with regard to:
■ Business challenges and opportunities (12-18 months);
■ Current/anticipated openings;
■ Capabilities of individuals and the team;
■ Development and performance management action plans, and
■ Succession planning.
Exhibit H-3 Senior Leadership Forum

Business managers and senior level managers who have responsibility for shaping strategy
and business results for business units, departments, or regions.
Program Outcomes:
■ Achieving new corporate strategies using current business scenarios;
■ Leadership implications for these businesses;
■ Challenges and barriers to leadership;
■ Personal responsibility as a leader, and
■ Modeling “one step ahead” leadership.
Provides self-discovery through experiential learning, links leadership themes across

management, and aligns leadership to corporate priorities and actions.

COMPANY I
“With respect to top Setting:
management development, A new Chief Financial Officer has been in place for almost a year. His focus
I would say development in is transitioning the Company’s finance function to be more of a business
the past that’s been handled partner and play more of an internal consultative role to the business while
in what I might call ad-hoc remaining uncompromisingly faithful to the objectives of financial steward-
fashion. In contrast, starting ship. This is a balancing act that the new CFO regards as crucial to the success
about a year ago, there was a of finance, both in supporting business decisions and in assuring the integrity
concerted effort to really look of accounting, financial and business practices.
at how deep are the pools of
talent across the organization Although this Company’s bench-strength with respect to succession planning
from an enterprise-wide at the manager and director level is considered both “strong and deep,” the
perspective.” bench-strength at the most senior level in the finance organization is currently
a concern—resulting in the Company’s interest in this study. Several senior
level finance managers are nearing retirement age, resulting in a stronger
focus on succession planning. One of the changes driven by the new CFO is a
significant focus on the strategic value of the development process to the
whole finance organization. Finance development will shift from an
ad-hoc approach to a more enterprise-wide and systematic process for talent
identification. There are several reasons, aside from the new CFO’s interest,
which have prompted the focus on leadership identification and development
for the Company’s CFO community. These include:
■ The entire Company’s approach to talent identification and development

■ Interest in attracting diverse top-flight talent from outside the organization

The CFO Top Development Program includes:
■ Assessments from several perspectives
■ Assignment to an executive coach from outside the Company
■ Formulation and regular review of an individual development plan
The Company-wide approach to senior leader succession planning and

development is sponsored by the CEO and COO, and the development of
finance executives is sponsored by the CFO.
The Company I leadership model includes six competency dimensions,

which are consistently used in the performance management system,
performance appraisal, and succession planning, and which are integrated
with a 360° survey. In terms of identification of promotion candidates,
extensive work has been done with respect to succession planning at senior
manager, director and officer levels. Two categories exist—“executive
candidate” or “highly promotable.” Out of their pool of approximately 1,200
eligible managers and above in the total finance organization, 75-100 are
identified as either “executive candidate” or “highly promotable.” However,
there is not yet a focus on an early-career identification practice; the process
currently only begins at the senior manager level.
Five or six of the most senior level individuals receive the highest level
of development services in order to prepare them for senior vice president
positions. A regular succession planning and talent review process has also

31
been initiated to assure continuity across finance and the Company. From a
development standpoint, there is also an Executive Academy designed to
focus on common development issues of newly appointed directors. About
30% of eligible candidates currently take advantage of this learning event.
Open Issues
Company I has:
■ Established a more consistent approach in its selection of targeted future
leaders
■ Improved by consistently offering appropriate assessment and development
activities for the developing leaders.
There is room for improvement in how the company defines and measures
successful completion of the customized assessment and development
activities. In addition, Company I will continue to focus on the development
and communication of short- and long-term measures of success. These
measures will illustrate the impact on the individual’s performance and the
company’s performance. The measures can be consistently communicated to
the future leaders’ executive sponsors.
In terms of new development opportunities, 3 to 6 month assignments for

high-potentials are being sought that can be action learning projects focusing
on business problems addressed by cross-functional teams. Leadership also
acknowledges the need for significant cultural change in finance toward a
more leadership-development oriented culture, as distinguished from the
traditional technical focus. Another issue that is significant to this company is
a lack of success meeting diversity objectives on the part of the finance lead-
ership team.

COMPANY J
“Going forward, the skill Setting:
sets requisite for effective Company J is a large-cap diversified defense aerospace contractor that provides
financial leadership are likely high technology products and services across the entire procurement
to be quite different in the spectrum of the Department of Defense of the United States and those of its
nuances from the skills nuances global friends and allies. During the past ten years, its remarkable top line
that characterize today's CFOs growth has been achieved primarily via acquisition. From a management
but the basics probably won't standpoint, the Company’s vice president and chief financial officer is
change as much.” responsible for the traditional finance and accounting functions. In addition,
the office of the CFO is responsible for strategic planning, mergers and
acquisitions, and contracts pricing and administration. The term business
management has been used to characterize this group.
Each of the company’s seven business unit sectors is headed by a president to

whom each sector CFO reports. Responsibility for development and training
for all sector personnel, including sector business management people, is
delegated by the sector presidents to the human resources functions within
each sector.Generally speaking, each sector HR function designs and delivers
training and education as needs are determined based upon close interaction
and liason with affected disciplines, including business management. In the
aggregate the business management community includes approximately
3,000 professionals and managers, 250 directors and 50 officers, of which
about ten are corporate level officers. The vice president of finance and CFO,
the vice president and controller, and the vice president and treasurer are
elected officers.

The identification and selection of business management officers is part of a
formalized process within each sector, under the auspices of the sector presi-
dents, with participation by the corporate vice president of finance and CFO.
The identification and selection of corporate level business management
officers, including the vice president and CFO, is a similar but different for-
mal process administered by the corporate HR function under the auspices of
the office of the chairman and CEO. The corporate vice president of finance
and each of the eight sector CFO’s prepare succession plans for their positions
and oversee the preparation of succession plans for each of their direct
reports. These plans are reviewed and updated annually. Three categories of
candidate readiness (now, 1-3 years, and 3-5 years) are used to rationalize the
candidates. Strengths, needs and a development plan is set forth for each as
part of the process. This process is supplemented by a Company-wide busi-
ness management talent pool that contains not only these candidates but also
individuals that the CFO’s believe possess high potential for becoming can-
didates within the next 3-5 years. Each of these individuals also has a formal
development plan that has been established by their various superiors. Taken
together, the candidates and high potentials add up to about 100 people.
Development
Responsibility for development of Company J people is delegated to the
sectors and administered through their respective HR organizations. While
this applies also to business management people, the business management
community, in some of the sectors, performs a strong lead role in development
initiatives such as rotation, mentoring, and diversity.

33
In addition, these sector business management organizations devote

considerable effort to training and education, having designed a number of
in-house training courses that range from basic accounting and finance topics
to various specialized offerings applicable to such functions as cost
accounting standards, government procurement regulations, International
Traffic in Arms Regulations (ITAR), and courses in contract pricing,
negotiations, and administration.
The spate of acquisitions in recent years has strained the resources available
within the sectors for training and education and has added to the challenge
of achieving and sustaining a single culture with respect to the Company J
business management community. In recognition of this strain, the corporate
vice president and CFO, along with the sector CFO’s, are committed to move
towards an environment in which the development of business management
people is done according to a more common approach and criteria. Efforts are
underway to identify best practices within the company and to share them
across all sectors. This may and probably will include education and training
efforts of business management people.
Retention
Retention, to the extent it can be influenced by a Company, is a function of the
effectiveness of people development efforts, primarily within the sectors.
These are designed to attract and retain top caliber business management
people. In general, the company has experienced retention issues only in
periods of defense spending cuts. These periods, the last of which ended
about two years ago, create an unavoidable atmosphere of uncertainty and
risk for employees. This causes some to seek other employment opportunities
where the risks and uncertainties are more to their liking.
Open Issues
■ Whether the decentralized approach to business management people
development continues to be appropriate for a Company, like Company J,
that has attained substantial growth and people via acquisition in a
relatively short period of time.
■ The identification of a suitable alternative in the likely event that the
decentralized approach is determined no longer to be appropriate.
■ The rate of change toward the optimal alternative should the Company
decide to move away from the decentralized approach.

COMPANY K
“In finance we have something Setting
called Accountability Alignment. The finance organization has developed and disseminated “overarching
It is actually a tool that we use values and guiding principles.” Instead of a stated mission or vision, it is a
to assure the accountabilities graphic image that is divided into four components: people leadership,
and objectives of the finance customers, competition, and processes. Exhibit K-1 provides a perspective and
leaders are in alignment with detail on the rapid evolution of the Company’s finance culture.
leadership accountabilities.”
These are the four items that managers are held accountable for. This graphic
model is unique to the finance function, although it parallels in concept
models in use by other functions. Shareholder value is at the bull’s-eye. This
approach has been in place for over four years; it was developed in response
to the perception that finance needed to become more customer-oriented. One
positive manifestation of the change is that finance now only spends about
10% of their time in transaction processing activities with the balance
available for compliance and regulatory services and for business decision
support. Company K, because of the nature of their business, is going through
its roughest time in its history. Consequently, finance is challenged to both
sustain the integrity of their systems and accounts, and at the same time
support the business. Supporting the business means increasing effectiveness
with customers and improving productivity as well as profitability.
Exhibit K-1 Company K’s Finance’s Guiding Principles and Values
We
We collaborate
succeed & learn We provide
when our from each opportunities
customer other for career and
We bring succeeds personal
the A-Team growth
We expect
to every open and
deal honest
dialogue
We drive
“win-win”
Customers People
We reward the
deal closure outcomes that we
Shareholder influence
Value
We learn Our Financial
from our processes are
competition forward-
Competition Processes thinking, time-
sensitive & add
value
We focus on
the drive for
market We value
share speed and
We expect flexibility
We compete effective
to win and timely
decision
making

35
Two years ago, Company K developed and rolled out a new model for
managing the company, called Key Accountability Leadership roles. They
identified the top line accountability for outcomes for every leader in the
Company. Outcomes are aligned with the income statement. This process
is supported by an intranet online tool. The reason for developing this
approach was rapid growth in a large matrix-type organizational structure.
Responsibility became less than transparent and roles were confused.

Within the CFO community there are 15 key leadership roles. Company K
considers the finance leadership pipeline to be very strong. There is an
intranet web-based tool in place for succession and development planning
globally, and the process is fully documented. Finance has also historically
served as a source of leadership for other functional areas of this Company.
The finance area has launched the Global Leadership Network, an enabler for
local and regional leadership development for the finance function across the
globe. The Global Leadership Network rolls up to an organization called the
Talent Council that is made up of the CFO and key players on their CFO’s
cabinet. The infrastructure provides a framework and administrative aid that
speeds the decision process. This process is detailed in Exhibits K-2 and K-3
on the following page.
Every six months, Company K does salary planning and evaluations.

Employees are placed into one of three buckets: Top talent, core, and needs
improvement. They identify the top 10-12% of their staff. Senior managers
need to corroborate the recommendation of someone considered for the top
talent rank. Company K’s online Priority system provides performance infor-
mation from both internal and external customers’ and colleagues’ perspec-
tives regarding an individual. In order to surface talent, yet another online
tool, Talent Reviews, is used. This tool provides insights about the strengths,
and weaknesses, interests, and aspirations of individuals. The tool also
includes information about what is important to the person, for example
interest in travel abroad or interest in staying close to home. This information
is rolled up and helps to identify talent that may not be surfacing through the
management channel.
Back-up
Exhibit K-2 How Do Feeder Pools Fit? Back-up
1. Identify 2. Connect 3. Develop 4. Retain
•Document Goals •Deliver Individual

Talent Segmentation and
Feeder Pools
Talent Segmentation Support Tool Value Proposition

Employee Name
Francis Potter
Pat Harrison
Depth
1
7
SKILLS & EXPERTISE
Breadth Range
Experience Need
M/FJCIOthExpertiseExpertise
5
3
4
2
Skill
3
4
Avail.
2
3
PERF. & CONTRIBUTION
External Beha- OutputSustainedAppliedChange Cust.
vior
5
6
5
4
Contrib.Learning
6
3
4
2
4
6
ATTRIBUTES
5
3
Ldr-
6
4
P&C
16
13
TotalAction
Orient. ship Score Score Code
50
47
2
4
Accountabilities (IVP)
JJ Brooks 1 3 2 2 6 6 6 5 2 2 6 3 17 44 3
Jo Smith 3 4 1 1 3 4 4 2 2 4 4 2 10 34 5
•Create Individual Talent Profile

Acceleration Pool Development Checklist (Sample)
Name:
Acceleration Pool Category:
Value
Global Leader
Current Role:
Business Leader
Performance Leader
Mentor:
Leadership Edge
Key Experiences On -the Job

Had experience before? Need more experience? Comments
Proposition (IVP)
43% 54% 32% 36% 50% 75% 68% 57% 36% 57% 64% 54% 67% 52%
Josephine
Overall % For Item Summary
Fix - It Projects Yes of Key No
Contributions Yes No _________________
& Impact on Business (last 1 -2 years)
Completed By (manager/leader name): Anthony Leader Employees Entered 4 Start - Up Projects Yes No Yes No _________________
Average Performance & Contribution Score 4.7 (Calculated Automatically) Large - scale Projects Yes No Yes No _________________ BROWN
Average Total Performance & Contribution Score
14 Project Management Yes No Yes No Global ID:
_________________
Policy/Strategy Formulation Yes No Yes No _________________
Current Role:
Merger & Divestiture Yes No Yes No _________________
Location:
Cross- Functional Roles Yes No Yes No _________________
International Assignment Yes No Yes No Manager:
_________________ Mobility:
P&L (profit & loss) Accountability Yes No Yes No _________________ Attrition Risk:
BU:
E Sponsor:
TIV
Education and Training
Strengths: Development Needs
Has completed before? Recommend attaining? Comments
MBA/ graduate -level education Yes No

R A Yes No _________________
ST
LBS/HBS Strategic Leadership Yes No Yes No _________________
Leadership Solution Selling/ABE Yes
U No Yes No _________________
ILL
Other Yes No Yes No _________________
Page 3
Architecture: KALR Priorities Key Experiences: Next Assignment(s) Timing
Individual Value Proposition:
identification Future Potential
10
NORTEL NETWORKS CONFIDENTIAL 06/02/2000
Talent Reviews
IVP •Challenging Work

Key Job Bench Strength
Organization Name
External
Candidates
•Rewards- financial/
Key Jobs Ready Now 6-12 Months 12+ Months Identified
President Sales & Marketing

J.L. Curry J.P. Dench S.L. Domon
E S.P. Air
IV
Joe Bloggs P.J. Smith (Microsoft)
AT
VP Internet Sales
non financial
Mary Doe R. Gustavson
TR
VP Optical Marketing
GAP
Leadership Edge
Harry Hussein
VP Optical Sales
S
LU
Jane Title J. Cameron
VP Wireless Internet
IL
F. French
VP International Sales
GAP P. Kerns
NORTEL NETWORKS CONFIDENTIAL

Current Key Jobs
Emerging Key Jobs

8
06/02/2000
•Recognition
Identify, Develop & Retain Leaders

Exhibit K-3 Leadership Edge Development Strategy

Talent Pool Development Strategy
Assessment Experiences Formal Training Coaching/Mentoring
Top Talent Leaders ready Job Challenge Profile Fix-It/Turnaround - possible Determined by individual Leaders in other parts of
for a move to Key Novations Stage 4 roles Account Mgr., Sales Executive Educational organization
Emerging Accountability Role in 6-12 Assessment Director, R&D Director, Experience Leadership Development
KAR Leaders months with some targeted International Assignment Coach
development. Accountability Profiler
(accelerator Track 2 participants feeder IVP
pool dev’t) pool + others who
demonstrate potential
A subset identified as Job Challenge Profile – possible roles Functional Determined by individual Leaders in other parts of
having the potential to Novations Stage 4 roles, Sales Director, IPT need organization
LE Track 2 move into a Key Assessment Leader, PLM, NPI IDP Continued Leadership Development
Accountability role within 2- Manage Track 1 initiatives Coach
3 years. IVP GEL specialty courses
Assessment Centre Build Leadership Culture in Executive Sponsorship – Key
Track 1 alumni who Nortel – Leadership Accountability Leader
demonstrate real potential Messages and initiatives
+ others who demonstrate
potential
Top Talent (or feeder pool Job Challenge Profile Project and Task force Individual Development Group mentoring with Advisory
for TT) identified as having Novations Stage 3 leadership planning Workshop and Council (Executives) members
strong leadership potential Assessment Line to Staff switches discussions with One-on-one mentors LE Track
early in their careers and manager and HR prime 2 and Emerging KAR Leaders
LE Track 1 the willingness to make the IVP Networking Opportunities define formal and
personal commitment to Priorities Action Learning Projects / experiential training HR Prime / Coach
become a Leader at Nortel Leader for Hire requirements – GEL,
Networks Business courses, LE
– possible roles – training events
marketing, finance,
business development, EA,
Business Development
Finance Development Program: 3 year of rotation/specialized training
“We asked finance people why Development

they wanted to stay with the Critical to development are several key rotations that require excelling in
Company. Surprisingly, the finance support within the business unit context, but just as important is a
answer wasn’t financial. The senior level rotation at the corporate level. Candidates also need a strong
answer was that they wanted to appreciation and understanding of key aspects of treasury, customer financ-
be in a company that would ing and audit. The Company has increasingly become creative in reducing
develop them and give them development cost by focusing on internal resources to the extent feasible
opportunities for the top jobs.” using internal instructional resources, internal mentors, and rotational assign-
ments. Those identified for top development participate in the Leadership
Edge program. Success in this program leads to participation in the
Accelerated Development program. These programs are general leadership
programs in which finance participates. Those at the very top are assessed
individually by an outside resource, and tailored development programs are
designed for them.
Retention
Since the decline in the economy and more drastic effects in Company K’s
industry, retention of staff as an issue has mitigated. It is not being ignored,
and the online tools are helpful in reducing the incidence of losing high
potential top development candidates.
Open Issue
A significant challenge going forward will be the ability to sustain the “peo-
ple centric” focus during increasingly challenging and turbulent times.

37
Greenfield Considerations—A Framework for Initiating

Discussion on Systematic Development of Future Finance and
Accounting Leaders
At the suggestion of the former chairperson of the FDTI, Rich DelCore,

Director-Global Finance HR, Procter & Gamble, the following “Greenfield”
Considerations are offered in assessing existing CFO Leadership
Development strategies, programs and practices, as well as to provide
guidance for organizations considering formulation of new CFO Leadership
Development practices. This section is presented in question format with a view
toward enabling and facilitating internal dialog on this important practice space.
1. Who owns finance and accounting talent?
2. What are the skills and competencies that are critical to our function and
organization’s success?
3. Should top development candidates know that they have been “selected?”
4. When should the leadership development program begin?
5. On what basis should individuals be selected for early-, mid-, and senior
level positions?
6. How should we communicate regarding leadership development within
the CFO community?
7. Who should own the “talent?”-The function, business unit or corporation?
8. What is the objective of our training offerings? Are they aligned with CFO
Top Development objectives?
9. Is our succession planning process understandable and explainable?
10. Is our assessment process objective and does it yield valuable insights into
gaps in need of closure?
11. Are gap-closing activities articulated with the assessment processes?
12. Does your CFO Top Development program produce a competitive advantage
for your enterprise?
13. Is your leadership development program attractive to the quality of position
candidate sought?
14. Does your leadership development program address diversity issues?
15. What tools are at staff’s disposal to help them understand and manage
their careers?
16. How capable are our supervisors in developing their staff and surfacing
talent?
17. Is the finance leadership development process aligned and articulated
with the general leadership development process?
18. To what context should finance and accounting “feed” other functions
with talent?
19. To what extent should we leverage existing internal technological
capabilities to support CFO leadership development?
20. What dedicated resources do we need to support our CFO development
process?
21. How can we identify valuable rotations that will enrich our future leaders
with needed skills and experiences?

APPENDIX A
Characteristics of Primary Interviewees for this Report
Company Primary Reporting Line Personal Background

CFO/Controller HR Dual Finance HR Blend
Reporting
A X X
B X X
C X X
D X X
E X X
F X X
G X X
H X X
I X X
J X X
K X X
Totals 42% 25% 33% 50% 42% 8%

100% 100%

39
APPENDIX B
CFO Top Development Practices Research
Interview Guide
1. Why is the topic of CFO Leadership Development of significant interest to

your company and its leaders at this point in time?
2. What specific issues need to be addressed in CFO Leadership Development
in your organization?
3. What cultural aspects in your company influence CFO Leadership
Development practices?
4. How is your current finance leadership “pipeline” viewed both internally
and externally?
5. Have you formulated a finance leadership and/or general leadership
model? If so, please describe in detail.
6. What impact have issues surfacing from the Enron debacle impacted CFO
Leadership Development?
7. What is your organization’s leadership vision, with respect to top
management development?
8. What is the CFO’s vision with respect to top management development
within his/her span of control?
9. Please describe and document CFO Leadership Development practices at
your company, with respect to:
(a) identification
(b) retention
(c) development
10. To what extent does CFO Leadership Development practice leverage and/
or participate in general top management development practices
including:
(a) identification
(b) retention
(c) development
11. What is working well, with respect to practices in this space in your company?
12. What aspects of CFO Leadership Development practice present
challenges in both the short-and long-term?

APPENDIX C
About the Research Report Author
Jonathan B. Schiff
Jonathan is the author of over 50 articles and research studies on accounting,

controls, leadership development, performance management, CFO practice
development, and cost management. He is also the founder, in 1995, of the
Finance Development & Training Institute (www.fdti.org) a twelve-member
company consortium, led by Intel. He has worked with some of the most
recognized global companies in a management consulting role including:
AT&T, American Express, Amgen, DaimlerChrysler, GE, Glaxo SmithKline,
Home Depot, J.P. Morgan, Johnson & Johnson, Microsoft, Nabisco, NBC,
SNET, Turner Construction, and Williams Companies. Jonathan has served as
chairman of a Nasdaq-listed company audit committee and his unique view-
point and perspective are sought regularly and quoted in the national business
media, including most recently in Business Week and in The Washington Post.
Jonathan received his Ph.D. from New York University. Before completing his
Master’s degree in accounting at NYU he worked as a staff auditor with Price
Waterhouse. Recently, Jonathan completed collaboration on a new Harvard
Business School Case with Professor Robert Kaplan on business turnaround
and completed a sponsored research study for the Consortium for Advanced
Manufacturing-International, titled, Enhancing Research and Development
Productivity Through Aggressive Financial Management. Jonathan is also a
regular commentator for the Financial Management Network monthly video
and e-learning service sponsored by the Financial Executives-International
and the Institute of Management Accountants. The series reaches over 950
companies.
He is also the author of The Conference Board Research Report, New

Directions in Internal Auditing. He was also lead author of the COSO
(“Treadway Commision”) sponsored Study, Guidance on Internal Control.
The Wall Street Journal referred to Jonathan as “an authority on corporate
internal controls.”
Jon has served as visiting professor of accounting at Columbia University’s

School of Business and taught in their MBA and executive MBA programs.
Jon is also tenured professor of accounting at Fairleigh Dickinson University
in New Jersey.
His firm, Schiff Consulting Group, is the developer of FinanceAchieve™ the

first intranet-based skills management and decision support program
designed specifically for CFO community transformation.
For more information, go to www.schiffconsulting.com or call (845) 371-0700.

Schiffreport

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TOP TALENT DEVELOPMENT

IN THE FINANCE FUNCTION

Prepared By Jonathan B. Schiff

Distributed by CFO Research Services

Acknowledgements and Dedication 3

Distribution is courtesy of CFO Research Services, a unit of CFO Publishing

Copyright © Schiff Consulting Group, which is solely responsible for its

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

I am also grateful to the non-FDTI member companies that participated in

I also want to express my thanks to the Financial Executives-International

On a personal note, I dedicate this work to my wife, Bryna.

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

1. Recently companies have realized that in order to achieve a higher level of

2. There is a sharper focus on succession planning within the corporate

3. Although leadership development issues pertaining to executives with

4. In a broader sense, the definition of management talent is under review at

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

HOW WE GOT STARTED

Exhibit 1: Finance Development & Training Institute Member Companies

Building on that valuable initial exchange of practices and issues, the

© 2003 SCHIFF CONSULTING GROUP MAY 2003

2. Most of the companies participating in this study have moved finance

4. Company culture has significant impact on the nature of CFO Leadership

5. Some of the most effective CFO Leadership Development practices include

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

7. People responsible for finance leadership development have a varied back-

8. For many organizations a structured focus on CFO Leadership Development

9. In the contemporary business setting, there is a critical need to restore

© 2003 SCHIFF CONSULTING GROUP MAY 2003

PARTICIPATING COMPANY PROFILES

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

The focus on top finance development stems from an emerging challenge to

© 2003 SCHIFF CONSULTING GROUP MAY 2003

Vision Critical Success Factors

We believe people should be able to work in a continuous

We use 6 Sigma to ensure our internal processes and

Recently, business management leadership has stepped forward and over a

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

There are three perspectives considered whenever there’s a job movement or

Company A has always moved people about in the accounting function in a

At Company A, “potential” is dependent on whether an employee may

Performance ratings are based on objectives and behavior. Objectives are

© 2003 SCHIFF CONSULTING GROUP MAY 2003

Often organizational leaders begin to focus on succession planning issues

Identification & Selection

Company B-Talent Development Definitions:

A new element in Company B’s development process is the Finance

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

One drawback of this approach is that individuals who develop strong

■ The balance between financial or accounting technical knowledge and

Exhibit B-1 Company B’s Identification & Assessment Guidelines

Learning Capacity Execution Capacity

© 2003 SCHIFF CONSULTING GROUP MAY 2003

The Company’s vision for Finance is to be a “full partner in business decisions

The Company’s leadership competencies for Finance include:

Each of these competencies is defined with four levels of behaviors that

As a supplemental tool, the Company employs an externally provided tool

Identification and Selection

MAY 2003 © 2003 SCHIFF CONSULTING GROUP

Performance reviews are conducted annually, and yield quartile rankings

Extent of participation in stock options is a further indication of employee

As part of the performance review process, development needs for each