Do CFOs really rule the world? - People & Management: Financial Recruitment - Motorola appoints David Devonshire chief financial officer

CommunicationsWeek International, April 1, 2002

When Motorola Inc., of Schaumberg, Illinois, appointed David Devonshire to the position of chief financial officer, effective 8 April, the question on many people's lips was, why did it take so long?

Devonshire's predecessor, Carl Koenemann, who stepped down last November, announced his intention to retire eighteen months ago. And given that Motorola has been undergoing a major restructuring, which included laying off over 42,000 people and attempts to realign its core business, prolonging the search for a new CEO might seem ill-advised.

For one thing, these kinds of delays can send out the wrong kind of signals to investors. "[Eighteen months] seems an inordinate amount of time," says Keith Bachman, a San Francisco-based analyst at ABN Arnro. "[The market] doesn't like uncertainty, and waiting that long embedded a high level of that."

But Sean Arnold, a London-based vice president at executive search firm Korn/Ferry, the agency that connected Devonshire to the CEO position at Motorola, defends the length of time it takes to fill critical roles at the most senior levels of a company.

"Searches of that magnitude involve a very small number of qualified candidates, and the need to attract them is paramount in good times as well as bad," he says. "If anything, clients say it is more important to get the appointment right than to get it quick."

Arnold adds that a company like Motorola has a "robust enough" executive team to cover the CEO gap.

Increased selectivity

But with an increasing number of telecoms concerns left trying to extricate themselves from the quicksand, candidates themselves are pushing the bar to seek out suitable employees.

"Are they approaching jobs with wariness? That's certainly true in general terms," says Keith Mackay a partner at executive search firm Odgers Ray & Berndtson, in London. "Candidates are conducting due diligence much more so than would have been done two years ago...There are firms that have unworkable debt burdens, for example, so there are occasions in which it is extremely hard to find talent to fill those roles, in particular in CEO positions."

Telecoms in general has become an employers' market, with over 400,000 people laid off since the beginning of 2001, but according to some experts the balance of power is different for those looking for jobs at the highest levels of telecoms finance.

"There are more assignments in [telecoms finance] because companies are looking for people with new kinds of skills," says Arnold at Korn/Ferry. "From that point of view, CFOs run the world."

That could mean companies look not just externally for the right candidates, but also across vertical sectors. A recent report from recruitment company TMP Worldwide, of London, notes that the telecoms sector has one of the highest rates of recruiting from outside the company for senior positions, with telecoms companies in France and the United Kingdom respectively recruiting 34% and 26% of executive staff externally.

In the area of telecoms finance, recruiters agree that the focus in the past 12 months has shifted from those who may be able to take a company through an initial public offering to those who possess what Arnold at Korn/Ferry calls "a mature set of financial skills--those devoted to unpleasant things like slimming down and reassessing the cost base and debt profile."

This means in some instances companies are looking outside the telecoms industry to fill those jobs, according to Mackay at Odgers, who highlights Devonshire's past experience as the CEO of manufacturing conglomerate Ingersoll-Rand Co.

"I'm not surprised they appointed someone from outside," says Mackay. "It's a sign of the prevailing mood of finding seasoned people who have conducted activity in other areas."

But Arnold at Korn/Ferry points out that CFOs have, for years, come from outside the telecoms industry, citing as one example the 1997 appointment of Robert Lerwill as executive director in charge of finance at Cable & Wireless. He had come from marketing organization WPP Group plc.

In any event, Motorola's appointment has gone down well with observers. "I applaud Motorola," says Bachman at ABN Amro. "What investors in Motorola want right now is change...Whether they're good at disposing assets is certainly one vector, but they're also looking for big management changes right now. Bringing in an outsider is definitely the right move."

Even so, some experts do not think there are longer-term conclusions to be drawn from Motorola's example.

"The problem is that the job market is still quiet," says Fiona Vickers, the Telecommunications, Media and Technology practice leader at TMP. "Companies are getting rid of people...So many have gone down that it's hard to look for a recruiting trend."