How to transition from CFO to CEO
The increasingly important role of CFO can be a stepping stone to CEO - but what’s required to make the leap?
- About 13% of CFOs move on to become CEOs, but only 9% of women hold CFO roles now.
- CFOs who aspire to the top job need to seek a broader perspective, build communication skills, think strategically and become people leaders.
- Since the GFC, the role of CFO has become one of the most important in an organisation.
Business leader Ming Long FCA never thought she would transition from CFO to CEO.
“I wasn’t even thinking that it would be a possibility," she says.
But through mentorship channels at Investa Property Group, she took the plunge. It was a make or break scenario at the height of the GFC and within five years, she turned the company around.
Long went on to become the group executive fund manager of the $2.5 billion Invest Office Fund and is a now non-executive director on several leading boards, including CAANZ. A female leader of Asian heritage, she had no role models.
(Pictured: Ming Long, non-executive director on Diversity Council Australia Ltd, AMP Capital,Chartered Accountants Australia and New Zealand.)
“If you are a CFO, there is often no expectation that you will have personal aspirations to step up to the CEO role. [People] think ‘that must be good enough for her’, beyond that, it’s a job for the boys.”
Since the GFC, Long sees that the role of CFO has become one of the most important positions in an organisation. But while it can seem a logical progression from CFO to CEO, it is harder to achieve in practice.
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A Korn Ferry analysis of sitting CEOs in the global Forbes 2000 in 2015 reveals that only 13% moved into that position from being CFO. For women, shattering the glass ceiling is harder still.
Chief Executive Women (CEW) reveals this year in an inaugural ASX200 Senior Executive Census that the number of women in CFO roles is only 9%. The census measures the number of executive women in ASX200 executive leadership teams and also highlights the proportion of women in ‘line’ roles and ‘functional’ roles.
Kathryn Fagg, CEW President, finds this figure really disappointing. “It’s what surprises people the most from the census. It’s hard to understand, given that women have been graduating from commerce degrees and going into very prestigious accounting roles for the last couple of decades. It’s an area where we haven’t made anywhere near the progress we expected to.”
(Pictured: Kathryn Fagg, CEW President)
While the census categorises the CFO as a functional — rather than a line — role, Fagg views the CFO role as “quite often a stepping stone to a CEO role”.
Long believes the disappointing statistics reflect stereotypes that women have to battle against. “You are fighting on multiple fronts. There’s the conscious and unconscious biases and people will stereotype you if they see you just as a numbers person.” In short, hiring a female CFO is seen as “a risky appointment”.
It’s a challenge going from being one of the crowd to up on the front podium.
CA John Stevenson, currently CFO at livestock exporter Wellard Limited, has experienced both sides of the fence, working as a CEO and CFO across Asia and in a raft of industries.
“Taking risks is not something accountants normally do. That was something I had to learn,” he says. To successfully make the leap to CEO, you need to “use intuition, gut feel and merge that with your financial background”, he says.
The step up can be daunting. The first time Stevenson gave a speech as CEO, he had to deliver it in Indonesian.
(Pictured: John Stevenson, CFO at livestock exporter Wellard Limited)
“I was working in the motor vehicle distribution business and I had to open this showroom. One of the big issues was when I had this large number of people looking at me for direction — it was quite scary.”
Like Long, Stevenson benefitted from strong mentorship from the former MD in his company, who became the chairman. Still, he admits, it was a challenge going from being one of the crowd to up on the front podium.
So what’s required to make the leap?
It’s more about mind-set than skill set, says Stevenson. “As you move up the chain, senior executives have this belief that you need to talk more. The reality is, you should be listening more.”
The so-called softer skills that you can learn include “making sure that you communicate with people, looking people in the eye, shaking hands… I probably spend more than two-thirds of my time communicating with stakeholders — shareholders, employees, banks. You also need to have that leap of faith to execute. The best decisions are never shown or written out for you."
For Long, it’s all about broadening reach. “I think the CFOs today need to be people leaders… You are an enabler, you are a critical part of the formulation of strategy for the organisation, how that communicates to the board, to your shareholders, to your staff internally.”
While CA Lenka Psar McCabe has had quite a different experience in her elevation from CFO to CEO at the Perth Radiological Clinic, she believes that everyone can be taught — if they want to learn.
(Pictured: Lenka Psar McCabe, CEO at the Perth Radiological Clinic)
In her 22 years at the clinic, McCabe has seen it grow from $10 to $100 million turnover and believes there are many opportunities for female accountants to help small businesses grow.
“Small businesses are the backbone of our economy and women can progress within them. Internally, find out what skills are needed.”
Having already worked at Ernst and Young, McCabe started interpreting data and make predictive decisions for the company before she was promoted.
Once in the job, she took an MBA to help her learn more about marketing and strategy. Now she uses her finance background to enable her to “make the numbers meaningful for her operations team so they can make better decisions” and combines that with a strategic leadership style.
Kathryn Fagg, who sits on the board of the Reserve Bank of Australia, among other prominent boards of ASX-listed companies, agrees that for a CFO to advance, he or she needs to have “a broad perspective of what the CEO role is both strategically and in terms of performance orientation.”
And what can companies do to fill the pipeline for future female CFOs?
“I would go to the talent pool in the finance function fairly early on in their careers — both in corporate finance roles but also in the business partnerships finance roles,” says Fagg.
“[What we need is] to have deep talent in terms of both genders, so people can aspire to the most senior financial roles and also have the opportunity to go and run the big businesses or to become the CEO. That’s why we particularly highlighted the CFO role. It’s one that CEW believes can make a difference and shift the dial.”
CA Lenka Psar McCabe and CA John Stevenson will be panel members at the CA ANZ discussion on Transition from CFO to CEO in Perth on September 28, held as part of the regular CFO Circle Lunch series.