Over the past decade, More CFOs have adopted CEO roles as the position evolves to include greater strategic responsibilities and leadership. This trend reflects an increasing demand for executives who can navigate economic volatility with financial discipline.
In the first half of 2024, 7.1% of CEOs At fortune 500 and S&P 500, companies came from a CFO role, compared to 5.3% in 2013.
But while many CEOs of fortune 500 have financial history, the transition is not always transparent because the set of CFO skills does not always align itself with leadership, vision and risk tolerance necessary to be an effective CEO.
“Historically, financial directors are counted to be black and white and by figures, while in reality, a CEO is the one who must sail in gray,” explains Jeff Herzog, president of the executive recruitment company FPC National . The successful CEOs are able to thrive in ambiguity – an ability that is often more natural with those who have a broad and interfunctional experience rather than a close financial orientation.
Hhelik Sheth, who heads the CFO Center of Excellence in North America of BCG, warns that the financial discipline of a financial director can become a responsibility in the role of CEO. Excessive dependence on figures and quantitative thought can create dead angles in fields such as vision, talent and corporate culture.
Joanna Starek, commercial director of the leading rhr international leadership council, echoes this concern, noting that many financial directors assume that they are ready for the leading role simply because they have worked in close collaboration with the CEO.
“I saw a lot of financial directors overestimating their preparation,” says Starek. “They are so close to the CEO that they have the impression of knowing what they have to do to stimulate the success of the company, but they have not necessarily ensured the burden of growth as well.”
Looking and learning CEO is not enough. Those who have successfully passed finance chiefs at the local office have already taken the strategy, the management of the P&L and the operational responsibilities while perfecting solid interpersonal skills. Financial directors who do not cultivate well -balanced commercial training and effective communication skills in their careers often find it difficult to broaden their retroactive expertise.
Kathy Pattillo, partner of Boyden, stresses that general skills – as being an attentive listener and having a engaging personality – are among the most critical features of the CFOs which prospered as CEO.
“There are a lot of financial leaders who just don’t have this personality, and you can’t go to school and learn it.”
The role of the CFO as a cost cutter rather than as a growth engine also has challenges for those who enter the CEO position. In fact, CFOS become CEOs are, on averageSlower to stimulate high-level growth compared to those from other backgrounds. Spencer Stuart’s research has revealed that only 8% of CFOS CEOs that have become their companies to first -rate performance, while the CEOs of “Department” – these have favored two or more levels – and Divisional CEOs have much higher chances of outperformance.
