CFOs often aspire to become CEOs but not all of those who do go on to be successful.
Indeed a CFO can already be considered to hold significant sway over the success of a company financially and, for shareholders at least, may justifiably be regarded as the second-in-command to the CEO.
However, the strong relationship that a successful CFO usually has with the board, coupled with a unique understanding of the company’s finances, technology and strategic plan, could well place them in a unique position to take over overall leadership, should the opportunity arise.
However, as logical as the transition from CFO to CEO may seem on paper, in reality, the path is not as common as you may at first think.
In 2015 headhunting firm Korn Ferry analysed the Global Forbes 2000 and found that only 13% of sitting CEOs had moved into that role after previously serving as the CFO.
This surprising statistic is perhaps best explained by looking at the other challenges that exist when planning to make the transition from CFO to CEO.
In addition to the apparent new level of responsibility which comes with being the person at the top, there is also a whole new set of skills which are essential to becoming a successful CEO.
Be Ready to Change Your Mindset
If you aspire to move from a CFO to a CEO, it’s worth speaking to executive coaches who can offer professional advice as to whether the move is the right one for you.
You will more than likely need to be prepared to make quite an adjustment to your mindset.
It is common as a finance person always to be thinking about the environment in terms of shorter, fiscal periods such as quarters, half-year and annual, compared with the longer term, strategic and visionary thinking expected of a CEO.
Equally, it may be fair to assume that an experienced CFO will have adopted a rule-driven approach to work, in no small part due to the nature of statutory financial reporting requirements, auditing and accounting standards.
While these are important skills to have, (they are clearly essential for any CFO), they could be seen as restrictive for a CEO who may need to be able to adopt a more creative approach to doing business.
CFOs who enjoy working in a risk-averse environment may not be suited to making the transition to a CEO unless they are prepared to embrace the challenge of taking risks and being placed in the spotlight for both internal and external scrutiny.
With the CEO often described as the vision of a company and the CFO as its conscience, it is clear to see how the two different approaches need to work together in tandem to ensure a company’s success.
Both skillsets are essential for their particular roles but do bear in mind these differences if you are thinking about making the transition from CFO to CEO.
Preparing to Make the Switch From CFO to CEO
If you know that you want to make the switch from CFO to CEO, early preparation is vital.
Some executive coaches suggest timing is vital and warn against establishing yourself too firmly as a capable and reliable CFO who is viewed as indispensable in that position.
You need to be a good and respected CFO, but the key is not to become pigeon-holed as a competent finance person.
If you have your sights set on becoming a CEO, you need to think strategically and calculate your moves well in advance.
To be seen by others as someone who has CEO potential, CFOs need to be able to demonstrate interest and skills across all aspects of an organisation, not just limited to finance.
This means taking an active interest in performance, sales and back-office functions.
Showing a willingness to network outside of the company and take an active interest in external factors such as competition are all key indicators that a CFO has the full skill set required to make the transition to become a CEO successfully.
The ability to listen, socialise and comfortably ‘walk the floors’ across all departments are among other essential skills, as is being commercially aware and being able to identify with and lead sales and marketing teams.
Becoming a CEO requires a breadth of skills that any aspiring CEO needs to be able to demonstrate.
Questions CFOs Aspiring to be CEOs Should Ask Themselves
As a successful CFO aiming for that higher position, there are a few key questions you should ask yourself to identify areas upon which you may need to focus on improving your current skill set.
Here are a few that are worth considering, and answering honestly:
- What is my real motivation for becoming a CEO? Do I feel that I should make this progression or do I truly desire to fulfil my potential because I am capable of much more?
- Am I inspired by visionary plans and challenging goals?
- Am I comfortable thinking creatively to offer solutions?
- Am I at ease with making decisions based on limited facts and taking well-judged business risks?
- Do I have a good understanding of the different functions across the business and the challenges they face?
- Am I happy to lead from the front, build relationships and shoulder extra responsibility?
- Do I feel restricted by what I currently do today?
If your honest answer to these questions is a resounding ‘yes’, then the chances are that you already have a mindset which is well on the way to matching that required of a CEO.
If you answered ‘no’ to any of the above, it might suggest areas in which you may choose to invest in improving your skills before embarking on the transition process.
Common Skills CFOs Need to Develop Before Progressing to CEO
In addition to demonstrating the mindset and skills discussed earlier, any CFO aspiring to become a CEO should ensure that they pay attention to the development of their skills in the following areas:
- Creative thinking
- Strategic thinking
- Business risk analysis (separate from financial risk analysis)
- Presentation skills
- Negotiation skills
- Team-building skills
This list is by no means exhaustive but serves to give some indication as to the areas that any aspiring CEO must develop before making the progression.
The Korn Ferry study of 2015 revealed that while the solid understanding of a company’s finances may place a CFO in an excellent position to assume the role of CEO, there are still questions as to how well a ‘finance person’ can function as the first-in-command, citing the importance of so-called people skills such as the ability to manage conflict, drive growth and develop strategy.
Being risk-averse is often something considered synonymous with accountants, and it is, therefore, a skill which CFOs often need to work hard to develop to progress to CEO.
CFO Left and CEO Right Brain Theory
There is a school of thought which suggests that CFOs often possess skills which use the left-hand side of their brain, which are equally crucial for CEOs. These are:
- Driving growth
- Managing crisis
- Financial acumen
- Strategic skills
However, those looking to make the jump to become CEOs must also be able to demonstrate skills from the right-hand side of their brain, such as:
- Social and people skills
- Creative thinking
- Learning agility
Of all the skills, it is this final one, which is perhaps the most important.
Learning agility – the ability to know what to do when you don’t know what to do is the essential skill for any leader and one that is important in many aspects of life, not just in making the career progression to a CEO.
If you are a CFO with career ambitions to become CEO one day, it is vital that you:
- Be prepared to change your mindset
- Prepare to make the switch.
- Ask yourself some critical questions about your current skill set, and answer them honestly
- Pay attention to the acquisition of common skills required of a CEO
- Develop “right-hand brain” skills
The ICAEW has reported that nearly a fifth (18%) of CEO’s at the UK’s biggest business have an accountancy qualification. If you take on board the above advice, you could join them.