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Moving from CFO to CEO: 5 tips for the top job

Moving from CFO to CEO: 5 tips for the top job

  • Lateral hires support succession and a CFO is often uniquely placed to step up as CEO
  • Making the jump can minimise business disruption, retain business knowledge and leverage relationships
  • Team trust, an ability to influence and broad business knowledge can ready a CFO for the top job

In a dynamic talent market it’s more important than ever that a business is able to maximise their talent and to sure up succession particularly at the executive level.

Internal executive candidates are often uniquely placed to step up as CEO, often posing less risk of disruption to business continuity through their knowledge of the business.

CFOs have the added advantage of financial acumen to go alongside existing working relationships internally, as well as with clients, suppliers and other external stakeholders.

But CFOs are not automatically chief executives in waiting. To position themselves as the best candidate and to make the step up successful, CFOs need to develop a well-rounded understanding of the organisation.

So what does a prospective CEO need in order to make the transition from CFO to CEO successfully? Nick Warren, CFO of Scanlon Capital Group took the jump earlier in his career from CFO to CEO of Pitcher Partners client Latitude 37 and has his own insights from taking the journey firsthand.

Set the foundations

The CFO typically understands a business from a financial perspective but to be a successful CEO, they need knowledge beyond the dollars.

For Warren, building trust was a critical part of the transition: “Moving into the CEO role from CFO, building trust and understanding with the founder who was also the former CEO, was critical – they’re obviously so invested in the outcomes of their business.

“But the reality is that almost all key business elements connect to finance. Coming from a CFO background you have a good foundation to be a CEO from a business understanding perspective and can balance decisions that are operationally focussed, with financial considerations.”

Trust your team

When a CEO can rely on their team, it is easier to take a strategic perspective on the business.

Strong team relationships will help you to fill the CFO shoes left behind and cultivate a new generation of leaders by creating professional pathways for others in the business.

This transition was a gradual one for Warren, with his responsibilities and business knowledge growing over time: “I was not naïve in what I didn’t know, and I learned a lot from the experts around me.

“Surround yourself with people who are experts in their patch and lean on them to inform your decision. Ultimately, you’ll be accountable but their capability can support the business in achieving strategic goals.”

Become an influencer

Being a strong communicator is vital to motivate and guide teams, peers and key stakeholders, and it is critical to a smooth transition.

Trust and associated influence develop with time, and the longer-term relationships that can be leveraged through a lateral hire versus hiring an external candidate can place a CFO on the front foot in this regard.

Demonstrating the ability to leverage those existing relationships was key for Warren: “Someone brand new to the business doesn’t often work as well. If promoting from within you’re a known quantity to the team, the board and other stakeholders.

“While the way you engage might change to a degree, you’ll already have relationships which will give you a head start.”

Understand the business

Modern CFOs have their hands in nearly every aspect of the business, from financial projections to hiring and resource planning.

CEO hopefuls should cultivate a holistic understanding of the business during their tenure as CFO, talking to function heads and developing an understanding of decision-making factors beyond finance.

Gradually increasing involvement in parts of the business beyond finance helps provide a broad skill set that supports the strategic responsibilities of being CEO.

Warren said that was particularly valuable in a small or mid-size business: “In an SME, there’s the office function, legal, HR, and a breadth of other things you’ve got to pick up as well as finance. It was a gradual transition for me, and my responsibilities slowly grew to encompass more parts of the business.

“Experiencing what’s involved in those business functions first-hand offers foundational knowledge to help you as CEO, and that wholistic understanding helps to make strategically balanced decisions.”

Make the final call

The strategic buck stops with a CEO. Beyond presenting a singular goal or solution, successful CEOs should be able to present a range of solutions, weighing up the pros, cons and impacting factors and then make a call on the best way forward.

While the CFO is often focused on making black-and-white, data-informed decisions, aspiring CEOs need to be comfortable operating in a more strategically ambiguous environment.

For Warren, the ability to balance his financial expertise with the strategic ‘whole of business’ decision-making was instrumental in supporting his move to CEO, as well as progressing his career: “I’m proud of all the roles I’ve had, each experience gave me something beneficial for my next role.

“I eventually left my CEO role with Latitude, but the CEO of my next organisation hired me in part because he knew I could step into the CFO or CEO role of future businesses.

“My previous experience shows that I can step into a breadth of roles and make decisions appropriately, taking a strategic, holistic view beyond my finance background.”

This content is general commentary only and does not constitute advice. Before making any decision or taking any action in relation to the content, you should consult your professional advisor. To the maximum extent permitted by law, neither Pitcher Partners or its affiliated entities, nor any of our employees will be liable for any loss, damage, liability or claim whatsoever suffered or incurred arising directly or indirectly out of the use or reliance on the material contained in this content. Pitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities. Liability limited by a scheme approved under professional standards legislation.

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