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Why more CFOs are becoming CEOs

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A common refrain in the City of London is that finance directors make the best boardroom chairs. They are seen to have smaller egos (at least compared with some table-thumping chief executives), an attention to detail, an understanding of risk management and an intense focus on the bottom line. 

But these days chief financial officers are also increasingly tapped for the chief executive role — from Margherita Della Valle at Vodafone to Murray Auchincloss at BP who both got the top job at a time of upheaval at their companies. As ever, when a crisis hits, call the numbers guy or gal. 

About a third of FTSE 100 CEOs have previously served as CFOs, data from executive search firm Heidrick & Struggles shows, up from 21 per cent in 2019. This compares with 19 per cent in markets tracked globally by the firm. About 15 per cent of current FTSE 100 CEOs were CFOs immediately prior to becoming CEO, versus the global average of 8 per cent. Marc Ronchetti at Halma and Chris O’Shea at Centrica are other more recent examples. 

“If America is run by lawyers then the UK is run by accountants,” said one headhunter. The impact of Brexit, political dysfunction and a more difficult economic environment have reinforced a prioritisation of risk management. 

But it is no longer just a UK phenomenon. Of the 674 companies featured in the Fortune 500 and S&P 500, 8.4 per cent of vacant CEO positions were filled by CFOs in 2023 — the highest percentage dating back to 2013, the first year of available data for the annual report by Crist Kolder Associates. In 2013, the level was 5.8 per cent.

This is partly driven by the ever-expanding role of the CFO beyond the finance function. Over the past decade in particular, the role of the traditional bean counter has expanded to take in more responsibilities in everything from corporate strategy and deal activity to sustainability and data analytics. 

“They are the architects of business resilience and growth,” said consultants at headhunter Egon Zehnder in a new report. In its survey of nearly 600 CFOs, 82 per cent said their role had significantly grown in the past five years. As their visibility and prominence has grown, 60 per cent said they had ambitions to take on the CEO role. 

If they already deputise for the CEO both internally and externally, why not go for the top job? Several chairs have said to me if their CEO was hit by a bus, it would be the CFOs who would step in. “Without a shadow of a doubt,” said one. 

This is particularly true of companies in the financial services sector and those corporations that have something like a debt restructuring or major deal activity on the agenda that requires a number cruncher front and centre. Crucially, CFOs are a known entity to the board, investors and the wider company. Board directors say companies seeking to hire new finance chiefs are doing so with the view that these candidates may one day fill the top job. 

At a time of huge economic and geopolitical uncertainty, someone who is considered a safe pair of hands is surely no bad thing. “Everyone is guarding their reputations like never before,” said Mark Freebairn at Odgers Berndtson. “CFOs are taking the top job more and more and will dominate chair appointments too. This says a lot about the future development of business leaders.” As well as its current CFO, British Land has a former finance director as chair, CEO and head of audit on the board.

But while this makes sense on paper, does it work? Research shows that CEOs promoted from the CFO job do not drive top-line revenue growth as quickly as those from other backgrounds, particularly in the first few years.

Spencer Stuart, another headhunter, said only 8 per cent of CFOs-turned-CEOs steered their organisations to the top quartile of performance, looking at factors including revenue growth. While some have broader experience than CFOs of yesteryear, many maintain a cash-preservation mindset over a drive to pursue new opportunities. They sometimes also have to work harder at building relationships with divisional chiefs after butting heads with them when in their finance role over allocation of funding. 

“Some really struggle. For much of their career everything came down to the numbers. But at CEO level there are a bunch of intangibles such as how you might get along with your chief marketing officer or your head of HR,” said Ty Wiggins, a coach to CFOs who take the top job. “Some have to learn to develop that CEO mindset and grow an organisation.” 

Getting the top job is more likely in 2024 for a CFO, but success in the role isn’t guaranteed.


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