- A CFO and other top executives aiming to become CEO should show six leadership strengths: set a strategic direction, align the company with it, rally internal leaders, engage the board, connect with stakeholders and sharpen personal effectiveness, McKinsey found in interviews with 67 chief executives
- Nearly one out of three CEOs (30%) remain in the role less than three years, McKinsey consultants said in a podcast, noting an imperative for a prospective CEO to assess all her motivations and expectations for seeking the position and expect an all-consuming job that demands 24/7 intensity.
- “If you’re a CFO shooting for the CEO job, you may have an extra burden to show that you see a picture bigger than just the numbers, that you’re willing to take risks on new concepts with no precedent, and that you can motivate and engage colleagues through stories as well as facts,” McKinsey said in a report.
The CFO role is a common stepping stone to the CEO corner office. Last year 8.4% of CEOs at Fortune 500 and Standard & Poor’s 500 companies had jumped to their position from the CFO spot, an increase from 5.8% in 2013, according to Crist|Kolder Associates.
CFOs in the consumer and services industries are most likely to rise to the CEO level, while those in healthcare have the lowest odds of taking the top job, Crist|Kolder said in a study.
One out of four chief executives at financial services firms have served as CFO, according to a Crist|Kolder report cited by the Journal of Accountancy
CFOs and other executives seeking the CEO job, McKinsey said, should set four cornerstones for their ambition:
“Start by assessing your motivations and expectations,” McKinsey Partner Carolyn Dewar said. “Then, having researched all aspects of the role, if you still want it, why?”
The honeymoon period for a CEO quickly ends, Dewar said. Would-be CEOs should make sure they are not seeking the job for the validation that comes with winning the role, rather than for the challenge of holding the job for an extended period.
“If you want to lead, you have to be committed to serve,” former American Express CEO Ken Chenault told McKinsey.
Aon CEO Greg Case cautioned prospective chief executives about the potential impact on their families, McKinsey said. “You volunteer, but they’re conscripted.”
Second, a CFO seeking a company’s top job should aim to excel at her current role, McKinsey said.
“Do the job you’re doing like you’re going to do it for the rest of your life, because that means you’re going to invest in it and you’re going to make it better,” General Motors CEO Mary Barra told McKinsey.
CFOs aiming to become a CEO should take the long view from a high perch, McKinsey said.
Roughly 80% of successful CEOs were promoted from within their companies, but many of them think like they were hired from the outside, McKinsey Partner Vik Malhotra said.
“Can you get involved in cross-business or cross-industry initiatives that will elevate your view?” he said. “Are you building a perspective on the stakeholders from this higher balcony?”
A prospective CEO also needs to think big, Malhotra said. “No one was ever incremental in their attitude and perspective prior to becoming CEO.”
Third, humility is essential for an executive seeking the CEO seat, Dewar said.
“In your development path toward a CEO role, the first step should be to objectively assess your capabilities against what’s needed,” she said. “Given where the company is going, what skills does that CEO need, and are you a good fit for the profile?”
Finally, a CEO candidate should fully understand the selection process and who her audience will be, McKinsey said. Usually the board hires an executive search firm that will identify internal and external candidates.
“Sometimes you may worry about how your bold vision will resonate with the board or the current CEO because it questions some things the company pursued historically,” Malhotra said. “So you have to walk a fine line.”