Why Tomorrow’s CEOs Are Today’s CFOs

When looking to fill an open CEO position, companies are increasingly likely to choose a chief financial officer. In fact, 29% of CEOs hired post-pandemic were CFOs, demonstrating how this role’s duties have shifted to be more comprehensive. Tipalti’s Chen Amit covers the core skills successful CFOs need to hone to be the well-rounded, strategic leaders their ever-evolving role demands.

Gone are the days when chief financial officers were viewed as the head bean counter or the keeper of the corporate wallet. As a longtime CEO, I’ve seen how the CFO’s role has evolved in recent years: These executives now guide corporate strategy, inform key decisions (especially during economic crises, such as the one sparked by COVID-19), and work in close conjunction with the entire C-suite.

This explains why so many current CEOs are former CFOs. As many as 29% of the CEOs hired post-pandemic used to be CFOs, and companies are increasingly seeing these roles as complementary, making it a natural progression for a finance leader to take the chief executive’s reins.

Beyond their financial aptitude, CFOs tend to be tenacious, intellectually curious people who actively seek answers. They understand the importance of strategy, technology, and people to succeed in today’s and tomorrow’s economy. Plus, CFOs know how to turn abundant amounts of data into profound insights for decision-making. For all these reasons, we should expect to see the CFO’s role become a launchpad for future CEOs.

What Puts CFOs in the Spotlight?

Of course, executives wear many hats. But even by that standard, the CFO has wide-ranging responsibilities. CFOs are involved in finance and strategy as well as making decisions on cutting-edge technology (such as big data analytics and automation). They must abide by sweeping regulations, maintain strict standards for governance and oversight, and build a dependable yet scalable tech stack. In many ways, the CFO’s role is a microcosm of the modern enterprise itself. It’s no wonder the CFO is a natural fit for all-encompassing leadership roles.

Currently, CFOs have an especially critical role within the executive ranks. A 2018 Accenture report showed that 81% of CFOs believe one of their core responsibilities is value creation, and 77% consider it their duty to lead organizational transformation. Someone has to drive change and encourage innovation within the C-suite — and at many companies, that person is the CFO.

While some CFOs aspire to the CEO role, others simply want to maximize their impact in their own organization. In both cases, they’ll need to bring financial, technological, and practical skills to the table. They’ll also need to become great leaders. The most effective CFOs — and the ones most likely to become CEOs — are the ones who see themselves as leaders and take a proactive role within the C-suite.

Key Leadership Skills for Effective CFOs

Most people aren’t born great leaders. Instead, they cultivate key skills with time and practice. That means any CFO can mold him or herself into someone that a team (and a company) can rally behind. Great financial leaders embody many of the following qualities:

1. Pragmatic: When the pandemic hit, CFOs faced enormous pressureto ensure stability. Doing so required bold thinking, but it was just as important to remain pragmatic and not jump toward exciting (yet impractical) solutions. Great leaders don’t let ambition or desperation cloud their understanding of what’s realistic; they’re focused on real, impactful solutions, such as replacing inefficient, error-filled manual processes with automated alternatives.
2. Communicative: Great leaders communicate with their teams clearly, consistently, and comprehensively. They keep everyone informed about what’s happening, why it’s happening, and how all of that affects the future of the finance department (or the entire company). Communication will be especially important as companies implement emerging tools such as automation, which often create worries about replacing workers. It’s up to the CFO to keep morale up and buy-in high by communicating how automation benefits everyone’s day-to-day role.
   Likewise, the best leaders understand that success comes from their team, not themselves. In turn, they also prioritize collaboration: They find opportunities to work with stakeholders inside and outside the finance department. They also facilitate collaboration within the finance department by implementing tech-driven tools and building a culture that values teamwork.
3. Entrepreneurial: Similarly to CEOs, CFOs should think outside the box about how to create or capture value. They can’t play a passive role or commit to endeavors that have little value. Instead, they need to adopt an entrepreneurial mindset that believes there’s a better, more efficient, and perhaps more effective way to do things.
   Take data-driven decision-making as an example: Of course, CFOs are very numbers-driven, meaning their entrepreneurial spirit and innovation come from a deep analysis and understanding of the numbers and where business processes can improve. In turn, hyperautomation has been a critical enabler of this information for savvy CFOs. With increased data, they can match their forecasts with what’s actually occurring.
4. Resilient: 2020 proved that the unthinkable could happen in an instant, and great leaders are learning from that lesson, making their organization more resilient to whatever form the next big disruption takes. They’re looking for potential failure points and mapping out scenarios so that the finance department never gets caught off-guard again. From this point forward, great leaders will be forward-thinking and make business continuity a top priority.

Whether or not a CFO is interested in a CEO role doesn’t matter. Take it from a current CEO: Today, each and every CFO must be a strong leader in order to become a highly effective executive.

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