So, you want to be the CEO? As CFO and second-in-command, you might consider that a natural progression. But don’t assume that your close working relationship with your boss means you’re deeply familiar with all of a chief executive’s job requirements. Even CFOs with a good sense of that need a plan for bridging the divide.
The good news is that a top priority in both roles is creating shareholder returns. “I firmly believe that,” says Erik Olsson, a former CFO at Milwaukee Tool and then RSC Holdings, where he rose from finance chief to chief operating officer to chief executive. “As a CEO, you need to understand the financial numbers, where returns are coming from and what drives the desired result. A strong CFO has a leg up on others in the company in that regard.”
Charlie Leichtweis, who’s held CFO posts at Rustoleum and Blythe Wholesale Group, also has COO experience, at Blythe. In 2007 he became CEO of Testor Corp., the model-paint company. The certified public accountant says he didn’t necessarily aspire to be a chief executive but rather simply never stopped learning the inner workings of more and more aspects of business.
Leichtweis’s and Olsson’s experiences highlight a shrinking gap between the CFO and CEO roles, as finance chiefs are increasingly asked to conceptualize organizational strategy, help the CEO assess risk and be a partner in driving growth. Yet there remain significant challenges for CFOs in taking on the CEO role.
New CEOs who responded to a BPI Group survey were surprised by the amount of work and responsibility the role required, how their new title affected perceptions of them, the challenges of managing competing constituents, the lack of independence and how lonely the job was. They felt least prepared for the intensity and speed of the job, working with the board, politics, and the impact of the recent econonmic crisis. They were most confident in their readiness for strategy and marketing decisions, leading and driving change, engaging and motivating people, getting things done, problem-solving and decision-making.
Olsson says the biggest adjustment he had to make as CEO was becoming a people-oriented leader. “As a CEO, you should spend at least a third of your time on people and talent development,” he says. “That’s very different from what many CFOs do and takes some time to get used to. Secondly, it is lonelier at the top for sure, and the work is never final. As the CFO you get closure every month, quarter and year – once the books are closed, you can put them away. For the CEO, it just rolls on, one period into the next.”
Leichtweis has similar views. “Being analytically minded, I tended to think in terms of processes and results versus relationships,” he says. “The most difficult adjustment for me was taking the time to listen longer, getting to know the motivations of different personality types. I needed to approach results conversations from a relationship point of view. With that approach I was able to build more trust and get more done.”
Do You Actually Want to Be CEO?
If you’re considering a CFO-CEO transition, take the time to get a very strong sense of what the role requires and be honest with yourself about how you measure up. Career risk comes when your skill set is not a good fit for a role. In our experience, most CFOs who successfully transition to CEO first spend time as a chief operating, as both Leichtweis and Olsson did. It not only broadens your horizons and gives you a better picture of how the whole business operates, but it lets you practice greater decision-making responsibility in partnership with the CEO.
Being ready for the CEO’s chair is not just about your skill set and experience. It’s also about whether the role meets your own needs in a meaningful way, so that you can sustain your energy and performance level in the most demanding job in business.
BPI’s survey found that CEOs’ needs are much like most people’s: They want to have influence in their work but also a work/life balance, to lead, learn and achieve, and to have relationships, challenges, health and both teamwork and independence.
But when asked what the CEO role actually offers, they cite the ability to demonstrate leadership, have influence and impact, experience challenge, have significant achievements and achieve wealth. The job usually does not allow its practitioners much in the way of work/life balance, independence, health or relationships, not to mention job security.
Understanding the true requirements of the role, and addressing the gap between what the role offers and what you need, is an often-overlooked part of the transition process. While the rewards are significant, there is a price to pay to in becoming a CEO. Which of your needs are you willing to sacrifice?
What’s Your Plan?
If you do aspire to take on the CEO role with eyes wide open, start by building a plan that focuses on learning and gaining exposure to all functions of the business. Says Olsson, “I always spent a lot of time with operations, connecting activities with the numbers and understanding what actually drives results. I also moved a lot, took roles in different businesses and countries and made one lateral move to get specific experience. If you are going to lead other leaders, you have to be able to credibly discuss and deeply understand their functions.”
Look for opportunities to move into operations where you can experience decision-making and P&L responsibility, and then aim for a COO role where you can be mentored by a successful CEO. Demonstrate your readiness for that role by taking on projects that allow you to showcase team-building and communication skills, focus, discipline and strategic vision.
While you’re building your business acumen, don’t neglect the importance of relationship-building. That’s what most CFOs are least prepared for. Leichtweis recommends focusing an equal amount of attention on relationships and results. “Learn how to listen longer,” he says. “Listening builds relationships and builds ownership.”
Mary Herrmann is managing director and Jay Scherer a senior advisor for BPI Group, a global management and human-resources consulting firm.