In the past decade, more CFOs have switched to CEO roles as the position evolves to include larger strategic and leadership responsibilities. This trend reflects a growing demand for managers who can navigate economic volatility with financial discipline.
In the first half of 2024, 7.1% of CEOs came to Fortune 500 and S&P 500 companies from a CFO role, an increase of 5.3% in 2013.
But although many Fortune 500 CEOs have financial backgrounds, the transition is not always seamless because the CFO skills do not always match leadership, the vision and the risk tolerance that is needed to be an effective CEO.
“Historically, CFOs are calculated to be black -white and by the figures, while in reality a CEO is the one to navigate by the gray,” says Jeff Herzog, president of Executive recruitment agency FPC National. Successful CEOs can thrive in ambiguity and ability that often comes naturally for people with broad, cross-functional experience instead of a scary financial focus.
Hardik Sheth, which leads BCG’s Center for CFO Excellence in North America, warns that the financial discipline of a CFO can become liability in a CEO roll. A transmission of figures and quantitative thinking can create blind spots in areas such as vision, talent and corporate culture.
Joanna Startek, Chief Commercial Officer at Leadership Consultancy RHR International, reflects this concern and notes that many CFOs assume that they are ready for the top role, simply because they work closely with the CEO.
“I have seen many CFOs overestimate their willingness,” says Startek. “They are so close to the CEO that they feel that they know what to do to stimulate the success of the company, but they have not necessarily included the growth load.”
Looking and learning from the CEO is not enough. Those who successfully switch from finance chefs to the Corier Office have already taken on strategy, P&L management and operational responsibilities and at the same time improve strong interpersonal skills. CFOs who are unable to cultivate a well -completed business background and effective communication skills earlier in their career often struggle to broaden their expertise with retroactive effect.
Kathy Pattillo, managing partner at Boyden, emphasizes that soft skills – such as an attentive listener and have a fascinating personality – are among the most critical properties of CFOs that thrive like CEOs.
“There are many financial leaders who just don’t have that personality, and you can’t go to school and learn it.”
The role of the CFO as a cost photo instead of a growth motor also offers challenges for those who enter the CEO position. In fact, CFO’s CEOs are on average slower to stimulate top growth compared to those with other backgrounds. Research by Spencer Stuart showed that only 8% of CFOs-made CEOs lead their companies to top-quartiel achievements, while “Leapfrog” promoted CEOs from two or more levels to the lower and CEOs of division have a considerably higher chance of Outper formation.
