CFOs can bring many skills to the role of CEO, especially during times of crisis and hardship. As McKinsey points out: “At a time when finance plays an ever-larger role in corporate strategy and many CFOs serve not only as key advisers to the CEO, but also as the point person for communicating with financial markets.”
While there is a noticeable difference between what a CFO and CEO do, many are up for the challenge and eager to take on the role of CEO. Indra Nooyi of PepsiCo. is an example of a CFO willing to do what it took to be a great CEO.
As the CEO Magazine explains, she visited grocery stores weekly to see how the product looked on the shelves and sent critiques back to her design and marketing teams. She even read IT textbooks in order to overhaul the company’s old technology system.
Nooyi gives a great example of what it often takes to go from CFO to CEO, but it takes more than that. Here are the many signs that your CFO may be ready to become the CEO.
They Can Do More Than Report the Numbers
The CFO’s job is to live and breathe the financials. As CEO, the job shifts from simply knowing those financials to becoming the company’s most powerful financial innovator. A successful CEO knows the markets and where future profits lie and then takes action as they see opportunities.
This is even more important if the CFO turned CEO is inheriting a less-than-ideal financial situation. McKinsey reports that the “endowment” a CEO inherits, like the current revenue base, debt, or past investments, “accounts for 30 percent of what enables a company to move from average to the top quintile of economic profit.” Factors including industry and geographic trends account for 25 percent,
A CFO is ready for the position of CEO when he/she is able to see the finances from a broader perspective and is ready to lead the leadership team to action. This allows them to problem-solve the financial issues they may be inheriting as they step into the CEO role.
They Have a Growing Network
As CEO, your connections need to spread outside of the financial world. Not only do you need to be connecting with other CEOs, company executives, board members, investors, vendors, and clients, but your job is to take it one step further. You need to turn valuable connections into partnerships that can benefit the company. Is your CFO doing this?
A 2018 study found that the CEO’s network is invaluable: “Networking with a heterogeneous group of people offers more diverse knowledge, new perspectives, and multiple problem-solving options.” A CFO moving into this role needs to have a strong base of connections and the desire to continue building trusting relationships. They need to also be willing to:
Make time for conferences that may take them away from home.
Take meetings with people from outside their networks.
Join communities and networks that put them in a position to develop valuable connections regularly.
Be honest, vulnerable, and work for win/win dealings with others, not just protect the company’s assets and income streams.
They Have a Strong Sense of Company Culture
The CEO seat is where company culture starts. If the leader lives and breathes the culture, so will everyone else. If the CFO already plays a significant role in company culture, connecting with employees, taking part in events, and regularly being seen and heard in the office, they’re one step closer to being ready for the CEO position. Here are a few key areas to consider in building a culture
Communication:It’s critical that the CFO be ready to not only carry the company messaging outside the four walls of the office—but within the office as well. Are they intentional about what they say? Do they represent the company values appropriately in their communications?
Collaboration:The CEO needs to be able to work with everyone and create an environment where teamwork happens across departments, functions, companies, and committees. A CFO is ready for the role of CEO when they’re already supporting and facilitating this collaboration.
Trust:CEOs need to do more than communicate. They need to be trustworthy. CFOs have a lot of opportunities to build that trust in their current role as the person who communicates with each department on issues such as budgets, results, variances, forecasts, and resource planning.
They’re Willing to Take Risks
Balancing risk versus reward scenarios is necessary as a CEO. Knowing when to take a leap into a new product line or protect the company from non-compliance is one of the most important parts of this role. Does your CFO excel in this skill and business judgment?
Even more importantly, the CEO needs to know how to optimize for greater results, think bigger than everyone else in the room, and lead the organization to take action. This means taking a wider look at the broader organization, not just the Finance Department.
A CFO is ready for the CEO position when they have the visionary power to see the future, take risks with intention, and recruit buy-in along the way.
Moving into the role of CEO is a big step. The CFO is primed to take over this position as someone with clarity of every aspect of the business: the financials. A great CEO needs to be able to lead, take risks, collaborate, connect and be the face and voice of the organization. When a CFO can do all these things, they are ready to step into this role.
Source: comharpartners.com