The past ten years More CFOs As positions evolved and evolved to include greater strategic and leadership responsibilities, they moved into CEO roles. This trend reflects the growing demand for executives who can navigate economic volatility through financial discipline.
First half of 2024, 7.1% of CEOs Fortune 500 and S&P 500 companies came from the role of CFOs from 5.3% in 2013.
However, many Fortune 500 CEOs have a financial background, but CFO skill sets don’t always align with the leadership, vision, and risk tolerance you need to become an effective CEO, so transitions are the is not necessarily seamless.
“Historically, CFOs are black and white, and are actually considered CEOs who have to navigate the grey,” said Jeff Herzog, president of executive renovation company FPC National. It’s there. A successful CEO can thrive with ambiguity. This is not a narrow economic focus, but a more natural ability to occur for people with experiences beyond a wide range of occupations.
Hardykschess, who leads the CFO Excellence Centre for BCG in North America, warns that CFO’s financial discipline could be responsible for the CEO’s role. Overreliance on numbers and quantitative thinking can create blind spots in areas such as vision, talent, and corporate culture.
Joanna Starek, Chief Commercial Officer of Leadership Consultant RHR International, reiterates this concern.
“We’ve seen a lot of CFOs overestimate their preparation,” Starek says. “They sit close to the CEO and feel they know what they need to do to drive the company’s success, but they don’t necessarily carry the burden of growth.”
It’s not enough to just watch and learn about CEOs. Those who have successfully moved from finance chief to corner office have already taken on strategic, P&L management and operational responsibilities while honing their already strong interpersonal skills. CFOs who don’t develop a balanced business background and effective communication skills early in their careers often struggle to retrospectively broaden their expertise.
Boyden’s managing partner Kathy Pattillo emphasizes that soft skills are one of the most important traits of CFOs, including being attentive listeners and having an attractive personality.
“There are a lot of financial leaders who don’t have that personality, but they can’t go to school and learn it.”
The role of CFOs as a cost cutter rather than a growth driver also poses challenges for those stepping into CEO positions. In fact, CEOs who have switched to CFOS are On averageslower to promote topline growth compared to those from other backgrounds. According to a Spencer Stuart survey, only 8% of CEOs who have turned CFOs lead companies to their best performance, while “Leapfrog” CEOs (CEOs promoted from two or more levels) and department CEOs are significantly more It turns out that there is a very high chance that it will rise to.
CFOs often have an analytical and risk aversive mindset. This is the assets of the Treasury Chief, but it can be a hindrance to the CEO’s role. “It’s not just about managing numbers. Charialkaya, global chairman of the board of directors at Stanton Chase, said: “The CFO, who struggles to break away from minimizing risk, has succeeded in the corner office. You may find it difficult to do.
Certainly, industry and company-specific needs shape how well CFOs are successful as CEOs. CFOS-Turned-CEO is Most common The finance, energy, consumer and services industries are led by a large number of companies. However, in industries where innovation and risk-taking is essential: technology and healthcare, This career path It’s not very common.
Former Intel CFO CEO Bob Swan exemplifies these challenges. He struggled while praising his financial expertise Promote innovation It will respond to the market shift of high-tech companies, and ultimately lead to a decline in Intel’s performance.
Of course, there is no single factor that determines whether a CFO will succeed or fail as a CEO. Still, without a deep understanding of business functions beyond finance, CEOs who turn to CFO risk important knowledge gaps that could limit their effectiveness.
This story was originally introduced Fortune.com
