Do CFOs Become Good CEOs?

Making the leap.


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Last updated: January 13th, 2023

Digital age leadership

Last updated: January 13th, 2023

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There’s quite some controversy around the question of whether CFOs make good CEOs. Those against the idea generally point out that the two roles require distinct personalities and skill sets – with CEOs needing to be sales-orientated, optimistic and comfortable with ambiguity, while CFOs are traditionally numbers-oriented, highly analytical, and cautious.

Is this a valid argument or an outdated and must-be-dispensed-with stereotype?

(Related Article: Future Of Work In Australia).

I regularly work with CFOs who have their sights set on the CEO role and most recognise that being a CEO requires a different skill set. Having said that, most also see it as a bridgeable gap and one that makes sense, given the business acumen they’ve earned as a senior executive.

What’s clear is that a blanket statement like “CFOs make bad CEOs” – or vice versa – lacks the detailed analysis that’s required in understanding such a complex issue.

Case-by-case evaluation is required and the decision will ultimately depend on the individual and the company in question, on personality and background in relief with the current strategy, target market, company culture and so on.

Having said that, there are a number of specific areas which a CFO who aspires to be a CEO needs to have covered in order to be considered for the top job.

(Related: How To Write A CFO Resume).

1. Your Ability To Influence Others.

Stepping from CFO to CEO requires proactive development of leadership skills.

Chief amongst these are communication skills that enable you to get things done through others – what CEO of executive recruitment firm Korn Ferry, Gary Burnison, calls ‘people agility’.

At its root, effective leadership comes down to the act of empowering others to fulfil on your strategy.

Effective CEOs are set apart by the clarity with which they communicate vision, values and culture, influencing and inspiring employees in pursuit of a common purpose.

(Related Article: How World-Class Executives Facilitate Employee Engagement).

These skills are ones that CFOs have often had less opportunity to develop and tend to be the most notable gap CEO hopefuls must traverse.

2. Your Diversity Of Experience.

The CEO role is characterised by the breadth of responsibility across Marketing, IT, Legal, Sales, Finance, HR and Operations.

CFOs who can’t offer proven exposure to each of these business units may struggle to make the transition.

As the CFO role continues to expand – moving beyond the ‘number-crunching’ mandate of a decade ago and seeing the CFO become a credible business partner with wide-reaching strategic impetus – CFOs are increasingly well placed to step into the top job.

Nonetheless, a straight move from CFO to CEO is unlikely without a conscious effort to expand your exposure to different business functions, geographies, teams and challenges.

The breadth of experience is critical to demonstrating the credibility to lead the entire business to success which means aspiring CEOs with finance backgrounds should seek out opportunities to gain this experience, considering lateral, international and functional moves wherever possible.

(See Also: Top-Rated Resume Service For Management Professionals).

3. Your Ability To Make The Final Call.

One of the biggest differences between CFO and CEO is what CFO turned CEO Charles Gregory calls the “decision-making authority” that the position entails.

Cal Stuart, CFO-then-CEO of Aquion Water Treatment Products concurs: “there is a natural tendency in financial roles to do a lot of analysis and present multiple solutions to a problem, but when you’re CEO, you’ve got to make the call”.

While the CFO is often focussed on making data-informed decisions, which often tend towards the black-and-white, aspiring CEOs need to be comfortable operating in a more ambiguous environment.

(Related Article: Strategic Leadership Principles).

CEO hopefuls should proactively cultivate a holistic understanding of the business during their tenure as CFO, talking to function heads and pushing to understand decision-making factors beyond finance.

Be relentless in building multi-dimensional business acumen, because CFOs need to prove they can be relied on for sound judgement, even in the absence of financial fact.

4. Your Team.

A strong team will give you space to become less of a ‘doer’, distancing yourself from day-to-day financial management and becoming an externally facing strategic partner, which is crucial to developing skills required for the top job.

Surround yourself with exceptional people, not only because this stands as direct testimony to your ability to build and lead a high-performing team, but because you need someone who fits the bill to take your job if you’re hoping to move up internally.

“If as CFO you’re absolutely integral to the smooth running of your department, the board may baulk at removing you from your current role”, points out Dave Way, MD of accountancy & finance recruiter Narks Sattin.

Succession planning can be a very concrete obstacle to aspiring CEOs, and one that can easily be overcome by mentoring a worthy successor.

Good advice at all levels, but never more so than at C-suite – don’t be afraid to surround yourself with people better than you.

As CEO you’re expected to put the company at the forefront of your decision-making  – if you engage in petty leadership struggles and feel threatened by top talent, the CEO job probably isn’t for you.

(Related: How TO Write A CEO Resume).

5. Your Partnership With The CEO.

A great CFO, and one who could well be on for the top spot in due course, is one who partners with – not solely works under – the CEO.

Building relationships with stakeholders, being an active and credible voice to the Board and proactively engaging with employees across the business are responsibilities you should seek out as CFO – and the CEO you work with is critical in determining how much exposure you see.

(Related Article: Transformational vs Transactional Leadership).

Seek out a CEO who will act as a mentor, and one who isn’t fearful of your ambitions on their job. Not only does the CEO often hold considerable sway in determining their successor, but s/he is also the single best source of insight into the demands and challenges of the role.

Irrespective of whether you move up internally or externally, a thriving working partnership with the CEO is critical in getting the exposure and advice needed to take on the role yourself.

Key Point To Remember:

Whether CFOs make great CEOs is an age-old debate, and one that depends on a huge amount on the individual factors involved.

Saying that, while only 16% of CEOs in Australia ASX 100 companies were formerly CFOs, we can expect to see that figure rise as the CFO role continues to expand in scope.

Indeed, in the more mature UK and US markets finance is the most common background for CEOs, in large part due to the increasingly strategic CFO remit.

The move might not yet be a common one, but aspiring CFOs should take heart.

By diversifying your experience, refining your commercial acumen and honing your leadership skills, you can be the prime candidate for the top job.

– Irene

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