Careers

CFO to CEO: 6 Tips to Prepare for the Top Spot

Finance chiefs are in a better position than ever to make the jump to CEO.
Sandra BeckwithMay 10, 2022
CFO to CEO: 6 Tips to Prepare for the Top Spot
Photo: Getty Images

When Peloton Interactive and Hertz recently named former CFOs to the CEO position, they were keeping up with a trend. According to the Crist|Kolder Associates Volatility 2021 Report, 7.9% of the chief executive officers appointed in 2021 came from the CFO seat – up from 5.6% in 2012. 

But unlike some finance chiefs who move into the top spot, both Peloton CEO Barry McCarthy and Hertz’s new leader, Stephen Scherr, were outside hires. That was counter to trend. In 2021, less than one-quarter (22%) of CEOs were external hires. According to a 2017 McKinsey & Company data set, 90% of CFOs who became CEOs were promoted from within. Their deep knowledge of the organization and its operation gives them an advantage that outsiders lack. 

We spoke to a recruiter and three CFOs-turned-CEOs promoted internally to understand better how chief financial officers interested in leading from the largest corner office can position and prepare themselves for the role. Here is their advice.

1. Broaden Your Experience

  Jim Lawson

“When pursuing a career in finance, you have a greater chance of becoming CEO if you a step out of finance and take an operator role,” said Jim Lawson, managing director and co-global leader of the financial officers’ practice at Russell Reynolds Associates.

David Meniane, CEO of CarParts.com, made sure he had operations experience. Before being appointed chief executive in April 2022, he took on a dual chief financial officer/chief operations officer job when he joined the omnichannel retailer in 2019. “We have a very complex business that has a lot of moving parts. I’ve been deep in operations for three years and know the business better than anyone,” Meniane said. 

Meniane recommended this strategy to other CFOs hoping to advance. “Look for opportunities to get exposed to different business areas by meeting people, traveling, and being involved in the day-to-day operations,” he said. 

  Laura Francis

Laura Francis, CEO of medical device company SI-BONE, also added the chief operations officer title while serving as the firm’s CFO, but she took another pivotal step to gain broader experience: Francis joined the board of an outside company. 

“I had gotten quite a bit of operating and general management experience before stepping into the CEO role, but I wouldn’t underplay that I was sitting on a public company board for two years before being promoted to CEO. It gives you that broad, high-level view,” Francis said.  

2. Consider the Context

You may be well-qualified for the chief executive officer role but you have to bring the skills needed for the current situation. Otherwise, you won’t be the top candidate, warns Rob Painter, CEO of industrial technology provider Trimble and a 16-year veteran of the company. He said he was elevated from finance chief to CEO because he was the right person in the right place at the right time. 

  Rob Painter

“Leadership is situational, so it’s important to understand the company’s current context. Is it steady as she goes or a turnaround situation? Are there big technology shifts happening or go-to-market shifts? Does the company need a major transformation? Context is important because that’s when you map the skills and experiences you need to be CEO, being intentional about the path you want to take,” Painter said.

Long-tenured CFOs move into the CEO role more often. But some also benefit from specific triggers, such as an unexpected CEO exit or a sudden need for financial rigor to drive stability. 

3. Plan for It

Organizational succession planning combined with professional development for CEO candidates helps the CFO prepare. Lawson recommends implementing a development plan for internal candidates. The plan should include guidance from a leadership coach, a former chief executive officer, and a CEO who was a chief financial officer. 

At Trimble, Painter and other internal candidates were on development paths as part of the firm’s succession plan. He worked in corporate development, general management, and as vice president of the building construction software segment before being named CFO in 2016. He was appointed finance chief because then-CEO Steven Berglund knew Painter needed finance experience. 

“Being named CFO was a gift. We’re a public company, and I got to understand the capital markets and capital allocation, an even broader cross-section of the business, board dynamics, and governance. You get that as a CFO but not as an operator, so that was an important experience,” Painter said. 

  David Meniane

At SI-BONE, adding chief operation officer responsibilities was part of the company’s succession planning for Francis. She already had her eye on the CEO position. “Becoming COO was a definite sign to both public markets and employees that the next step was likely to be CEO,” she said.

Planning for the next career step is key. But Meniane cautions CFOs to stay focused on the job they have. “Too many executives are distracted by what’s next. I’ve always been focused on doing my best in my current role,” he said. 

4. Become a Better Leader

A leadership style that works with a finance team might not work with other departments, cautions Russell Reynolds’ Lawson. “The CEO needs to develop a different leadership approach for different [kinds] of people,” he said. 

Understanding this, Francis welcomed — and heard — advice from colleagues. “When a couple of people suggested there were ways to motivate and inspire people that would require a change in communication, I asked them to help me do that,” she said.  

“If you don’t index high on leadership [skills], you need to work to improve that,” added Painter. 

5. Focus on Self-Awareness

Mindful that she doesn’t have all the answers — and shouldn’t be expected to — Francis continually creates connections so she has an internal and external network to tap. “Besides creating the mission, vision, value, and strategy for the company, one of the most important things I did during my first 12 months as CEO was build relationships,” she said.

Ask yourself where you have gaps and how you need to grow as a leader. And if you don’t think you have gaps, you’re not the right person for the job, because you do have them.
— Rob Painter, CEO, Trimble

Painter advises CFOs to consider why they want to become CEO and what they need to learn to make that a reality. “Ask yourself where you have gaps and how you need to grow as a leader. And if you don’t think you have gaps, you’re not the right person for the job because you do have them,” he said.

6. Loosen Up

CFOs are often more cautious and conservative than their C-Suite peers; it can work against them as CEO candidates. That’s why Lawson often recommends an attitude adjustment. He says that candidates can elevate themselves from the financial day-to-day and gain credibility with the board and investors by being more forward-thinking, optimistic, and strategic.  

“When being assessed and under the lens, you have to demonstrate optimism. You have to make that pivot from being a cynical gatekeeper to leaning in and getting away from being linear and risk-averse,” he said.

Show your passion, too. That’s a word both Francis and Painter used when describing their path to the CEO position. “I do what I do because I’m passionate about helping our patients and supporting our surgeons, employees, and investors,” said Francis.

You have to make that pivot from being a cynical gatekeeper to leaning in and getting away from being linear and risk-averse.
— Jim Lawson, managing director, Russell Reynolds 

For Painter, it’s all about the company. “I’m a true believer in Trimble and what we do. It’s profoundly meaningful for me to do more with Trimble because of that,” he said. 

Meniane is excited about the potential to impact the highly competitive auto parts industry. “There’s a huge opportunity to disrupt the space, and being the guy to lead that disruption is exciting,” he said. 

And what if a CFO has done all this, been appointed CEO, and things don’t go well?

“When CFOs ask me what happens if it doesn’t work out, I tell them if they have a world-class CFO reputation, there’s an opportunity to become CFO again. We always need strong CFOs,” Lawson said.