In the modern corporate structure increasingly focused on investment returns and stock holdings, it has become compelling to tap CFOs as possible candidates for the CEO position. CFOs have expertise in comprehensive financial analysis as well as many years of necessary leadership experience. The transition from being CFO to the CEO role is sought with challenges regarding the company vision, mentality, and interpersonal skills.
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The CFO responsibilities include managing the finances of the company through accurate financial records, investments, and management of stock market shares. They must focus on issues of capital structure and are relied upon by other executives, shareholders, and creditors. The CFO is critical to forecasting the economic strategy of a company for the purpose of improving profits. These individuals are logical and analytical in nature but lack some qualities necessary for a CEO.
The person in the leadership position of a company must be creative and comprehensive in their thinking, willing to pioneer innovative ideas. The financial background of CFO’s makes them very averse to risk, which CEOs face in major decision-making. Further, the complex degree of professional relationships is needed in the CEO role to understand all aspects of company operations, managing the process of communication with investors (Kosur, 2015).
The framework for a successful transition of the CFO to become the CEO can be developed internally within a company through leadership and mentorship opportunities. Companies undergo various stages of development and expansion, where a different type of CEO is needed. Cultivating the leadership potential in the CFO with the analytical skills and knowledge of the internal workings of an organization is a worthwhile investment.
The CFO can be involved in strategic planning and mentored for leadership roles. The key is to train broad critical thinking and to make the necessary connections. A CFO can have the skillset to create a financial report and calculate the risk of investments but rarely knows how to independently design a profitable long-term strategy based on the economic data (Kowalski & Campbell, 2000).
In recent years, the CFO is expected to participate in strategic planning alongside the CEO as well as to interact with the management board, a team-oriented approach that has proven extremely effective. This gives room for professional development and the formation of meaningful relationships and visions, the lack of which is criticized by stakeholders (Brewis, 1999).
CFOs who have been most successful in the CEO position have broadened their perspectives and self-education significantly over the years seeking experience in the operational capacity. Companies seek CEOs with strong emotional intelligence and flexibility to deal with “a broad range of issues and personalities” (Picker, 1989).
There are several challenges in the evolution of a CFO to the CEO position. It is crucial to overcoming the problem of perception and stereotypes associated with CFOs as strictly financially centered individuals without any leadership vision. The correct thing to do would be to bring financial expertise alongside a broad perspective. By developing a unique mindset and adaptable behavior, CFOs can attempt to abandon the organizational and reactive approach to management for more proactive leadership.
The transition encompasses personal challenges, including deep self-reflection and learning skills outside the person’s comfort zone. This means developing new connections and resources as a support base for governing the company (Finzi & Lipton, 2016). Overall, the many challenges presented often deter many CFOs from the professional growth to a CEO position.
Brewis, J. (1999). How a CFO can graduate to CEO. Corporate Finance, 175, 13.
Finzi, B., & Lipton, M. (2016). Five challenges CFOs must overcome to prepare for the corner office. Web.
Kosur, J. (2015). Here’s why CFOs almost never get promoted directly to CEO. Web.
Kowalski, R., & Campbell, M. (2000). Leadership skills help financial managers achieve career success. Healthcare Financial Management, 54(4), 50-52.
Picker, I. (1989). Do CFOs really make good CEOs? Institutional Investor, 23(9), 47-50.