It was not too long ago that I sat at a breakfast meeting of the local Human Resource Managers Association. A managing partner of executive search firm Spencer Stuart was the keynote, speaker. I can’t remember what the speech was about, but I do remember one of the questions at the end: “Do you think it’s possible for a human resources professional to reach the top job (CEO)?” The speaker gave an inspiring answer along the lines of everything is possible.
Yes, everything is possible but there is one thing you cannot overlook. It is the one thing board members and shareholders will not overlook. If you want a top job or any management position for that matter, you must have evidence of taking care of the money and making it grow. Let’s call it “The Money Competency”.
At the end of the day, it is as uncommon for a VP of Human Resources to become CEO as it is for a VP of Human Resources to manage a profit and loss statement. If a VP of Human Resources gets to the CEO position, it is very likely that he or she had profit and loss responsibility somewhere in their not so distant past.
It is not the only thing, and it is part of a complex array of competencies required for the top jobs. However, in the end, it is one of the most important things and the one thing that can’t be overlooked.
It’s no coincidence that most CEOs come from the operations or the finance side of the business. They tend to have responsibility of managing a profit and loss statement with great understanding of what levers need to be pulled to achieve desired financial results.
Don’t expect someone to hand you profit and loss responsibility overnight. It is a competence that takes time to learn and master. Moreover, no, it is not about getting an MBA. There is much more to it than knowing how it is configured. It takes thorough understanding of the dynamics of the business, and it is an art and science that takes time and experience to master.
There are stories of Jack Welsh’s uncanny ability to zoom in, identify and question key numbers in financial and operating reports. He could spot, at a glance, irregularities or mistakes that many other of his senior managers had missed.
It is something that you will not learn overnight, and it is a responsibility that few will hand over to someone with no experience. Can it happen? Yes. However, it is better to learn how to get there and take progressive actions towards mastering the art and science of taking care of the money.
These are the key levels of “The Money Competence”:
- Responsibility for tracking and reporting a line item of a budget. This could be revenue, cost or expense.
- Responsibility for managing a budget including tracking and reporting.
- The responsibility for creating and managing a budget. This might include participation in a planning process to put together a broader budget.
- The responsibility of managing elements that drive a profit margin for a product line or service.
- Full responsibility for the profit and loss statement of a division, product line or component of the broader business profit and loss statement.
- Full responsibility for a business profit and loss statement.
Take these into consideration and put yourself in a position to progressively achieve these levels if you are interested in management jobs. Especially if you ever want to target the top job.
About Alder Koten
Alder Koten helps clients shape organizations through a combination of talent recruitment, advisory, and talent stewardship services. These services include recruiting board members, executive search, recruiting of professional & middle management talent, RPO & project recruitment, diversity and inclusion initiatives, coaching, and outplacement. Alder Koten recruiters and consultants perform work through offices in the United States, Mexico, and Colombia.