Over the past decade, there has been a notable shift in the corporate world as more Chief Financial Officers (CFOs) have transitioned into the role of Chief Executive Officers (CEOs). This trend reflects the evolving demands of the CEO position, which now requires not only financial acumen but also strong strategic and leadership skills. By 2024, 7.1% of CEOs in Fortune 500 and S&P 500 companies were former CFOs, a significant increase from 5.3% in 2013. This rise underscores the growing need for executives who can navigate economic uncertainties with fiscal responsibility, suggesting that CFOs are often seen as safe bets to steer companies through turbulent times.
However, the journey from CFO to CEO is not without its challenges. While CFOs bring a deep understanding of financial management, the skills that make them excel in finance may not seamlessly translate to the broader responsibilities of a CEO. The role of a CEO requires visionary leadership, the ability to thrive in ambiguity, and a tolerance for risk—all qualities that may not be as refined in a CFO. Jeff Herzog, president of executive recruitment firm FPC National, points out that CFOs are often accustomed to making decisions based on clear financial data, whereas CEOs must frequently navigate the “gray areas” of business, where decisions are less black and white. This shift can be daunting for CFOs who are used to relying on numbers rather than intuition or strategic foresight.
One of the primary hurdles CFOs face when transitioning to the CEO role is broadening their skill set beyond finance. While they may excel in managing budgets, cutting costs, and ensuring financial discipline, they often lack experience in driving innovation, building company culture, and inspiring talent. Hardik Sheth, who leads BCG’s Center for CFO Excellence in North America, warns that a CFO’s financial expertise can sometimes become a liability in the CEO role. An over-reliance on data and quantitative analysis may lead to blind spots in areas like vision, talent development, and fostering a positive company culture. Joanna Starek, chief commercial officer at leadership consultancy RHR International, adds that many CFOs overestimate their readiness for the top role simply because they’ve worked closely with the CEO. “They sit so close to the CEO that they feel like they know what they need to do to drive the success of the company,” she says, “but they haven’t necessarily shouldered the burden of growth.” Watching and learning from the CEO isn’t enough; successful transitions require CFOs to have already taken on strategic, operational, and interpersonal responsibilities before ascending to the CEO role.
Another critical factor in the success of a CFO-turned-CEO is the development of soft skills, which are often overlooked in the finance-centric career path. Kathy Pattillo, managing partner at Boyden, emphasizes that qualities like being an attentive listener and having an engaging personality are essential for thriving as a CEO. These traits, she notes, can’t be learned in a classroom—they must be cultivated over time. CFOs who fail to broaden their business acumen and communication skills early in their careers may struggle to adapt to the more expansive demands of the CEO role. For instance, a CFO who excels at cutting costs but lacks the ability to connect with employees or inspire confidence in stakeholders may find it difficult to lead effectively.
The industry in which a CFO operates can also play a significant role in determining their success as a CEO. CFOs who transition to the top role are more common in industries like finance, energy, consumer goods, and services, where numbers-driven decision-making is highly valued. However, in sectors like technology and healthcare, where innovation and risk-taking are paramount, CFOs are less likely to be promoted to the CEO position. Bob Swan, Intel’s former CFO-turned-CEO, exemplifies the challenges of transitioning from finance to the top role in an innovation-driven industry. While Swan was praised for his financial expertise, he struggled to drive innovation and respond to market shifts, leading to Intel’s declining performance during his tenure. This case highlights the importance of industry-specific considerations and the limitations of relying solely on financial acumen in industries where visionary leadership is critical.
Ultimately, the transition from CFO to CEO is complex and multifaceted. While some CFOs excel in the top role, others find the leap too great, often due to a lack of preparation in areas beyond finance. The key to success lies in a combination of financial discipline, strategic vision, and leadership skills—a rare blend that not all CFOs possess. As the role of the CEO continues to evolve, companies must carefully consider whether a CFO’s expertise aligns with the broader demands of the position and whether they have the necessary tools to bridge the gap between finance and leadership. By fostering well-rounded development and recognizing the limitations of a purely financial focus, organizations can better equip their CFOs to thrive in the CEO role and drive long-term success.
