Why is accountancy a good path?
A recent report by Financial Director reported that over 25% of FTSE 100 CEO’s are qualified chartered accountants. And more than half have a Financial background. That leads us at Rymer Associates to question why this was the case and what skills a history in accountancy can offer a potential CEO.
What does a CEO do?
In a nutshell, a CEO has the responsibility of aligning the goals of the board with the capital and management of the business. This ensures everyone is pulling in the same direction.
Does working in accountancy set you up to become a good CEO?
Apparently so, if current CEO’s are anything to go by. But why? Why not marketing or sales? I think it boils down to 2 main points.
- Understanding financial information and what it means. This might be an obvious one, but it makes a difference to shareholders who are mainly concerned with long-term share price growth. As we mentioned, a CEO has responsibility for allocation of capital and, ultimately, the annual accounts. The latter being one of the drivers of share price. If they can anticipate any potential issues they can take action to avoid a drop in share price. Thus keeping the shareholders happy. They would usually monitor this using management accounts. This important as they can help identify any potential problems before they occur. Reviewing the business financials on a monthly basis can help identify negative trends. Giving the business a chance to rectify them before they become a problem. Most monthly reviews are with management, this gives the CEO a chance to review each department’s performance and improve performance.
- Being a great leader isn’t enough. Many people will be used to seeing memes on Facebook or Linked in on the difference between a leader and a boss. We’ve all seen or read about how great leaders lead from the front etc etc. But this forgets that being a great leader is not enough to become a great CEO. Traditionally people in sales, marketing or even HR are people orientated, but this could result in people pleasing, which might not be in the best interests of long-term goals. It could be argued that people from a background of accounting are used to working with the facts. Profits or Losses can not be disputed. A company is either profitable or not. Maybe an accountant can look at the figures for what they are and not get distracted by relationships.
I maybe bias, but I believe becoming an accountant can provide many benefits for a wannabe CEO. Whether it be financial understanding, business acumen or stakeholder relationships. As an accountant, I deal with all these issues and more! Either that or I fancy myself as a CEO!
About the Author
Sam Boothroyd is the founder of Rymer Associates Online Accountants. a national accountancy firm set up to brings accountancy services to businesses from the comfort of their office.