Is the CFO the Right Next CEO?

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min Article
August 16, 2022
10 min
Leadership StrategiesIndustry TrendsCareer AdviceLeadershipSuccessionConsumerEducationFinancial ServicesGovernmentHealthcareIndustrialNonprofitPrivate CapitalProfessional ServicesTechnologyVenture Capital and GrowthBoard and CEO AdvisoryFinancial OfficersExecutive SearchCEO SuccessionC-Suite SuccessionAssessment and BenchmarkingDevelopment and Transition
Executive Summary
Looking to create optionality in CEO succession planning – consider the CFO. Here, former CFOs share what it takes to transition to the CEO role.


The key to successful chief executive officer (CEO) succession planning is optionality. The board, incumbent CEO, and chief human resources officer want to identify and develop a pool of successor candidates so that when the time comes to transition CEOs, the board has the ability to pick the best person for the job among multiple qualified leaders.

One way to create optionality is to develop all of the senior executives who could potentially take on the CEO role. By doing so, the pool of potential internal succession candidates grows larger. Yet often overlooked in this process is the chief financial officer (CFO), despite the fact that high-performing CFOs often have a similar set of competencies and skills as high-performing CEOs.

We recently interviewed a group of CEOs who had previously held the CFO role to learn more about their transition, the performance gaps they needed to overcome, the biggest surprises and challenges they faced, and the advice they would offer to CFOs who are eyeing the corner office.


How CFOs and CEOs compare

The CFO may be perfectly positioned to step into the CEO role. In our analysis of Russell Reynolds Associates’ Leadership Span data, we found few differences between average CFO and CEO key competencies scores (Figure 1):

  1. CFOs scored higher on “Executing for results,” meaning they can balance risk-taking and reluctance better than CEOs. CFOs often showcase more awareness of organizational constraints and avoid pushing past barriers to exceed performance. Meanwhile, the lower CEO scores suggest on average, they are more likely to take risks and seize opportunities to exceed performance than CFOs.
  2. CFOs appear to be highly pragmatic thinkers, scoring slightly higher than CEOs. CFOs seem to apply their astute understanding of organizational capabilities to determine what innovations will work within the organization, reflecting their detail-orientation to make practical and data-centric decisions. Comparatively, CEOs may be more likely to prefer “outside of the box” thinking and are comfortable challenging the status quo.

Figure 1: When it comes to CEOs vs. CFOs, few competency-based differences exist


Source: RRA's Leadership Span TM Database (2022): CEO: n=1691; CFO: n=905

Despite the few differences between CFOs and CEOs, CFO transitions to CEO are relatively rare. Russell Reynolds’ analysis of S&P 500 CEOs shows that fewer than 20% of CEOs transitioned from or previously held a CFO role.1

Corie Barry, CEO of Best Buy and its former CFO suggested that companies “don’t overlook the CFO – they might have the most differentiated skillset to be successful as CEO.” Other CEOs we spoke with reiterated the sentiment and even went as far as to say that CFOs have the best potential for transitioning to the CEO role. They are closest to the top position both on the board and to the CEO, as well as one of the executives who most frequently communicates with external stakeholders.

The CEO role is a moving target – CFOs must stay nimble to hit it.

To CFOs aspiring to become CEOs, interviewees warn the role isn’t what it once was. An increasing lack of trust in our foundational institutions like government and religious institutions,2 along with such game-changers as climate change, a global pandemic and significant social unrest have many looking to the CEO for a response. No longer is the CEO mandate to command and control the enterprise — it is now a balancing act of creating culture, nurturing relationships, demonstrating business acumen, and working with myriad outside stakeholders.

Emphasizing the CEO’s immense role in today’s climate, Carol Tome, CEO of UPS and former CFO of Home Depot, said, “Anyone who is a CEO must look at their potential successor candidates and ask yourself, ‘Is this person a talent magnet and people leader?’”

Through these interviews, RRA identified the six key competencies that CFOs need to focus on to be successful in the CEO role, enabling them to navigate the complexity of today’s challenges (Figure 2).

Figure 2: Key Competencies of CFOs Transitioning to CEO

Foreign board members

CFOs must stay abreast of how the CEO role continues to evolve and also possess the self-awareness to understand whether these new competencies fall within their skillsets. To that end, while many interviewees said that CFOs are well-poised to transition to the CEO role, there was an asterisk next to that statement: CFOs have strong potential for the CEO role if they operate as business and people leaders. As a CFO, it can be easy to become siloed within one’s function.

Other common skill gaps a CFO might need to address include comfort with ambiguity, external stakeholder management, and a CEO mindset (which entails looking beyond horizon one opportunities, as well as people and leadership skills).

Anticipating the unforeseen: Recommendations to a CFO transitioning to CEO

Even with foresight and preparation, the CEO role comes with unpredictable challenges. After transitioning into the CEO role, former CFOs cited unique issues they faced and key recommendations for overcoming them.

1. Architect the Future

• Shift to the CEO mindset – Moving to horizon three requires a focus shift to what will bring long-term value for shareholders. “Run the company assuming we will all be here 10-15 years from now,” said Gerard Arpey, the former CEO of American Airlines. “Ask: did we do our job? Did we create wealth? Did we have the courage to make the right investment?”

• Build a trusted team – As Gerard Arpey also said, when you move into the CEO role, “you've heard the truth for the last time.” From now on, people will tell you what you want to hear. Be aware of this and foster psychological safety on your executive team, promoting open and honest communication.

Beyond your team, develop relationships with innovative thought leaders and seek their opinions as a pulse check. Christa Quarles, CEO of Corel said, “You need to have a great team around you, and the best thing about being a CEO is that you get to shape this essential group. The alchemy of the leadership team is everything.” 

• Let go of the CFO role – Be sure to not fall back into the CFO role! Don’t shy away from new challenges and uncomfortable situations, lean into the CEO mindset, and let go of the way you operated before. As Hans Erik Vestberg, CEO of Verizon Communications, noted, “The nightmare is that you move up to the CEO role and keep doing all the same internal work.”

Alberto Weisser, the former CEO of Bunge, suggests CEOs “hire a strong CFO replacement who will push back if you start to fall back into the CFO mindset.”

2. Influence Stakeholders

• Prepare for some solitude - Everything you say will be scrutinized, especially for women CEOs or those from underrepresented minority populations. Become cognizant and comfortable with it. Prioritize your CEO network — connecting with fellow CEOs who face the same problems, can share their point of view, and help combat isolation at the top — can be incredibly rewarding and essential for development.


• Develop new external relationships - An external switch has been flipped. You’re no longer standing behind the facts; you’re the organization’s persona. Work to develop external relationships and be cognizant of the fact that you are now representing your company.

• Lean on former CEO and Board support – Take as many opportunities as possible to learn from the incumbent CEO by shadowing them. Following succession, they should advocate for you and offer advice when needed. Develop relationships with each board member and work to understand how you can help each other.

3. Lead at Scale

• Understand the scope of your decision making - Your decisions now impact employees, shareholders, and customers. To improve your people and leadership skills, start interacting and building critical relationships with knowledge carriers, board members, and employees and figure out what you value and reward, as your actions have far-reaching ramifications.

• Ruthlessly prioritize – There will be 10 times the demands on your time as when you were CFO, so letting go of perfection and making decisions with imperfect data become critical. Lean on your support systems and team. “I thought I was good at managing my time, but there are so many people who want your time once you become the CEO,” said Bob Swan, the former CEO of Intel. “I made a pie chart of what is most important for the company, how I need to spend my time, and then ruthlessly prioritized around what is most important for the company.”

• Strive for work-life balance - The National Bureau of Economic Research’s March 2021 study “CEO Stress, Aging, and Death,” found that CEOs of large companies can age faster and die sooner than other CXOs due to the high-stress scenarios of the job.3 Recognize the impact of the job and find healthy ways of coping.

By focusing on these three areas Architect the Future, Influence Stakeholders, and Lead at Scale — ambitious CFOs can develop the skills and mindset necessary to successfully make the transition from overseeing the finances to overseeing the enterprise.



Thank You!

Our insights would not be possible without the generous time and input from our esteemed participants.

  • Gerard Arpey Former CEO, American Airlines
  • Corie Barry CEO, Best Buy
  • Mike Bless Former CEO, Century Aluminum
  • Kevin Clark CEO, Aptiv
  • Carol Tome CEO, UPS
  • Hans Erik Vestberg CEO, Verizon Communications
  • Christa Quarles CEO, Corel Corporation
  • Bob Swan Former CEO, Intel
  • Alberto Weisser Former CEO, Bunge



  1. Pitchbook and CapitalIQ S&P 500 CEO Analysis, Russell Reynolds Associates, 2022
  2. ‘Confidence in U.S. Institutions Down; Average at New Low’, Gallup 2022
  3. ‘CEO Stress, Aging, and Death’ National Bureau of Economic Research



Jenna Fisher co-leads the Global Financial Officers Practice at Russell Reynolds Associates. She is based in San Francisco.

Justus O’Brien co-leads the Board & CEO Advisory Partners Practice at Russell Reynolds Associates. He is based in New York.

Catherine Schroeder is a member of the Financial Officers Practice knowledge team at Russell Reynolds Associates. She is based in Toronto.