10 Tips to Prepare for Going from CFO to CEO
10 Tips to Prepare for Going from CFO to CEO
Taking the next step up the career ladder can be daunting. When you reach the position of CFO, you may think you’re at the pinnacle of your career. Today’s CFO has another step on the career ladder to travel – becoming CEO.
The changing role of CFO means these senior financial professionals are expertly placed to step into the shoes of a CEO. Almost 8% of CFO appointments in 2021 were internal promotions of the existing CFO.
While the trend points towards internal progressions, companies like Hertz and Peloton are recruiting external CFOs for the CEO seat.
CFOs are increasingly taking on a strategic and operational role within organisations, making them ideal candidates for CEOs. What’s the path for making the jump from CFO to CEO?
At FD Capital, we work with CFOs every day you have the potential to reach the top of the career ladder. We’re sharing our top 10 tips to prepare for transitioning from the role of CFO to CEO.
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Context Matters
One thing to consider when preparing to go from CFO to CEO is the context. No two CEO positions are the same. Every CEO role will require its own skills. The cliché of being “the right person at the right time” is true. If you’re preparing for an internal promotion, consider your company’s current context and what it needs.
If you’re looking for an external opportunity, consider the type of situation you’d thrive in. Every company is at a different stage of its life cycle – from preparing an IPO to launching a new product.
Decide what challenges you want to help companies work through – whether it’s adapting to changing technology or getting ready to go public. Identifying the context will allow you to build your skills and experience accordingly.
If you’re aiming for an internal promotion, identify what challenges face your company in the next 5-10 years. Most internal promotions are of long-term CFOs replacing exiting CEOs because they have the skills and experience to step straight into their shoes. If a CEO unexpectedly exits, a well-positioned CFO can be there waiting in the wings.
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Expand Your Experience
Anyone who has made the change from CFO to CEO will tell you that experience matters. You want to expand your experience outside of traditional finance fields. Operations and strategy are two key responsibilities that a modern CFO will need to tackle to become a successful CEO.
Today’s CFO positions are increasingly taking on an operational role, allowing you to understand how every aspect of the business works. Whether you’re aiming for an internal or external promotion, you can prepare for becoming a CEO by expanding your experience.
Use your current CFO position as a way to get experience in other aspects of the business. Take advantage of opportunities to travel, network, and expose yourself to new opportunities.
If your company doesn’t have a Chief Operations Officer, speak to your current CFO about taking on these responsibilities. Another aspect to consider is general management. Prepare for becoming a CEO by expanding your experience to streamline the transition
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Leadership
Today’s CFOs are increasingly taking on a leadership role within their organisation. You’re not only responsible for the finance department, but you’re also expected to promote your company’s vision. When you transition to CEO, you’ll be the number one in the company.
The leadership style that you had as CFO may not work as CEO, especially when dealing with other departments. You’ll be engaging with every stakeholder throughout your company, from venture capitalists to customers and employees. Prepare for your transition to CEO by expanding your leadership skills.
Don’t just look inward when building your leadership skills. A true leader knows that they need to help and support of those around them. Speak to your colleagues and network for advice. Engage with others in your company and identify areas where you can communicate better and have a greater understanding of how your company works.
You shouldn’t wait until you become CEO to start working on your leadership skills. As CEO you’ll be the leader of the c-suite team and expected to rally the troops. Take lessons from your current CEO and watch how they engage with others in your company.
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Plan Your Transition
As a financial professional, you’ll know planning is everything. You want to start planning your transition from CFO to CEO, whether it’s an internal or external promotion.
Succession planning within internal structures isn’t enough to prepare you. Professional development is just as important. Part of your planning should be to build a strong support network. Your current CEO is an ideal person to learn from. Consider working with a professional coach if you need extra support.
Start planning your development path early, ensuring that you incorporate areas of personal development, such as general management and communication. Look for blind spots in your CV and create an actionable plan to fill the gaps.
You’ll already have most of the skills and experience that a CEO needs as CFO. Your development plan should focus on giving you the operational experience you might be lacking. If you’re planning to work for a public company, you’ll need to understand the cross-section of the company and the board dynamics that come from a public company. Governance is another area you may not be as familiar with.
Many CFOs who are interested in becoming CEOs seek out the addition of Chief Operation Officer to their job title. Speak to your current company about taking on these responsibilities or internally ask about incorporating them into your succession planning.
While planning your transition is important, don’t take your eyes completely off the job at hand. CFOs can fall foul of focusing too much on the future at the expense of their current performance. You won’t be able to secure a CEO position without excelling in your current position.
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Build Internal Relationships
Start building internal relationships within your organisation. You don’t need to be looking to go up the career ladder within your own company to benefit from these relationships. The relationships that you form with your colleagues and stakeholders will always pay dividends.
Focusing on your internal relationships can also help you understand more about different areas of your company and to improve your efficiency. Building internal relationships will also help you when you become CEO. You’ll meet people from all walks of life and need to build relationships with others.
These relationships will be vital to the success of your company and your effectiveness as CEO. Aim to build a team around you that can support your company’s goals and your long-term ambitions.
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Self-Awareness
It’s easy to assume that becoming CEO is the next natural progression in your career. Don’t overlook the importance of self-awareness. Build relationships and don’t close yourself off to those outside your c-suite team.
Start by deciding why you want to be a CEO and how you can achieve your goal. Self-awareness also means identifying and understanding your weaknesses. Being able to identify the gaps in your CV and experience can make you a better leader and a more suitable CEO.
Everyone has gaps and weaknesses. If you can’t think of any, you might not be the right person to become a CEO. Every successful CEO knows that they’re not the smartest person in the room. Humility is one of the most admired traits of any leader. You want to keep this mindset in mind when planning your transition from CFO to CEO. You might be interested in CFO Headhunters.
People management is one area where CFOs can struggle when becoming CEOs. Keep a people-focused approach to your work and engage with those around you. One of the most important roles of a CEO is to ensure that you have the right team in place around you. Don’t look at your own position through rose-tinted glasses. Be honest about your weaknesses and find those who can help you.
Self-awareness also means being approachable. One of the worst mistakes you can make as a CEO is to put yourself on a pedestal. You should project an approachable personality that makes your colleagues feel like they can drop into your office with any concerns or ideas they have.
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Drop Your Shoulders
Catch your breath. Preparing to move from CFO to CEO can be overwhelming. Most CFOs are used to being conservative and cautious. It’s easy to find yourself sitting on edge. Instead, take a different approach. Your board and colleagues will find you more approachable if you present an optimistic and forward-thinking personality.
This approachable personality doesn’t mean you can’t be strategic in your thinking. Being optimistic can help you build personal relationships and gain credibility. Finding yourself under the lens as a CEO can be unnerving. You don’t want to come across as tense or unapproachable.
CFOs can naturally be cynical. Make a pivot towards a more optimistic outlook. Drop your shoulders and get used to being less risk averse. A CEO needs to be passionate about their work and prepared to take risks.
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Examine Your Motivations
Why are you the company’s CEO? That’s one of the first questions you’ll face during your first week on the job. Before you start planning your move from CFO to CEO, you need to uncover what your motivations are.
Why do you want to become a CEO? While you may take home a larger pay packet and increased presence, being a CEO isn’t easy. Identifying why you want to be a CEO can help you decide what type of company and position is right for you.
You may want to help a small company scale itself and perhaps go public. Maybe you want the challenge of restricting a household brand to prepare it for its next chapter? Your purpose for being a CEO should align with your overall career goals and personal mission.
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Build Your Communication Skills
Communication will make or break your career. As CEO, you’ll have to communicate your company’s vision to the world. You’ll be the face of your brand and responsible for promoting it. A successful CEO will also know how to communicate with their employees and colleagues.
Having strong communication skills is crucial. Failing to listen to your colleagues can be disastrous. You should always be working on your communication skills but they will never be more important than when you’re transitioning from CFO to CEO. Make time to communicate with those around you, even if it means taking extra time to do so.
Your first days as CEO should be spent communicating your vision, objectives, and goals for the company. You should be establishing expectations and forming the vital relationships that will determine the success of your company.
Today’s CFOs are better placed to do this than their predecessors as the responsibilities of CFOs have expanded beyond the finance department. Use your time as CFO to build a foundation that you can work on when you make it to the top step of the ladder.
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Find a Mentor
While transitioning from CFO to CEO isn’t easy, there are people around you to help. You should always have mentors in your career. You’ll need support as you take the next step in your career. It’s a common misconception that mentors are only for those in the early stages of their careers.
Look within your network for a mentor. Ideally, your mentor should be someone who is familiar with the role of CEO or who may have made the transition from CFO to CEO themselves.
Having a mentor is vital at this stage of your career. Your mentor will help you identify any weaknesses or areas that you should work on. They can give you access to their network and insights that will give you an edge over the competition.
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