A few years into his tenure in treasury at PepsiCo, Arun Nayar realized that to rise higher, he would need to supplement his financial expertise with operational know-how. To get that experience, he persuaded the company’s leaders to give him a lateral role overseeing finance in the global operations division, an area he knew nothing about.
“When I went into those meetings, it was a different language,” he recalls. “That was my steepest learning curve. It put me in the deep water, and I had to swim or drown.” Not only was the stint instrumental in fulfilling his ambition to become a CFO, but it inspired him to form the No Fear Club, through which he mentors other finance professionals.
The courage to take career risks is necessary for anyone who aspires to lead the finance function at a major company today. CFOs must possess experience and skills that go well beyond traditional expertise in budgeting, planning, and risk mitigation. CFOs now serve as board advisers and CEO consiglieri on organizational priorities and strategy, as performance challengers and innovation champions, as leaders of major investments and transactions, and as convenors of cross-enterprise initiatives.
In today’s volatile business environment, CFOs must also weigh the potential impact of geopolitical tensions, technological advances, macroeconomic disruptions, and climate risks. “The job is hard, so you have to have a passion for it,” says Karen McLoughlin, former CFO of Cognizant Technology Solutions. And with the number of functions reporting to the CFO steadily increasing, that passion must go beyond finance to raising the performance of the entire organization.
The timing to seek the CFO office couldn’t be more fortuitous. Decade-high CFO turnover in the United States and Europe has left large corporations scrambling to fill the role. Almost a third of FTSE 100 companies appointed new CFOs last year1 and one-fifth of leading US consumer and financial-services companies did likewise, reports executive search firm Crist|Kolder Associates. What’s more, two-thirds of the new CFOs at S&P 500 companies and more than half of those in Europe were first-time finance leaders—a record high.
To understand how executives can become high-potential candidates for the role, we interviewed eight former CFOs about their finance careers. Not only does their experience cover a broad range of industries and geographies, but all are now corporate board directors involved in hiring CFOs. Our goal—modeled on our colleagues’ work on the CEO journey—was to investigate how to succeed at every stage of the CFO life cycle: preparing for the role, making a strong start as a CFO,2 raising the finance function’s performance in midtenure, and realizing leadership ambitions after transitioning out of the CFO role.
The interviews, combined with our research and experience serving CFOs, suggest that CFO hopefuls should embrace the following five priorities: formulating a unique vision for the role, finding the right set of sponsors, bolstering skills in the areas that matter most to the organization, taking professional risks to broaden experience, and seeking opportunities to engage with the board.
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Formulate a distinctive vision for the CFO role
The CFO’s job has two core dimensions: overseeing the finance function and ensuring the high performance of the organization as a whole. Financial professionals who hope to become CFOs thus need to have a view of how they would realize both parts of their mandate. You should be able to articulate how you would build on the work of your predecessor and what would differentiate you from other candidates.
To gain this perspective, experts recommend developing an independent, outside-in view of the company—its assets, its industry position, and its opportunities and risks. Chris Kreidler, the former CFO of Sysco Corporation and C&S Wholesale Grocers, suggests asking yourself what you think the company’s valuation should be, then figuring out what the market is missing about the company’s vision. What would a potential long-term investor want the leadership to do (or stop doing)? Are your costs higher than your peers’? Should some assets be divested? Can you spot patterns that leadership may be missing?
It’s important that your thesis cover how you would allocate resources toward new growth opportunities. Candidates who understand the key business drivers, industry dynamics, and value creation trends that will matter most for the company’s next phase will have an edge over rivals. If sustainability and technological robustness will be essential to the company’s future, can you demonstrate your understanding of those areas? Can you analyze operational and commercial KPIs to assess the organization’s vulnerabilities and opportunities? Many companies struggle with growth and renewal today, so individuals who see how disciplined innovation and investment can raise performance will defy the traditional (and outdated) image of the CFO as “Mr. or Ms. No.”
Since the relationship between the CFO and CEO is critical to successful corporate leadership, you should also consider how you would complement the chief executive. If the CEO is the visionary, the CFO should be a master of execution, suggests Marjorie Lao, the former CFO of LEGO Group and Tandberg (now part of Cisco). In such a case, the candidate would ideally have operational experience, “covering more than just finance but driving the linkages across different departments.”
Find diverse sponsors with organizational clout
Most of the former CFOs we spoke with found mentors and sponsors essential to their rise. “At every step, there are at least a dozen other folks who are equally competent, and often more competent, than you are, and only one can get the big break,” says Nayar, who had several sponsors before becoming the CFO of Tyco International. To get the right guidance, however, you need to actively seek out individuals who will not only encourage you and highlight your blind spots but whose opinion carries weight in the organization.
McLoughlin considers herself fortunate that her CFO predecessor at Cognizant, as well as the company’s CEO, gave her opportunities to branch out to fill her experience gaps. “They both had a knack for seeing when I was starting to get bored, and they would appear in my office suddenly and ask, ‘How about we think of doing this?’”
Lao found her mentors’ faith in her potential to be critical for raising her own ambition. Her mentor at Tandberg told her, “You may not tick all the boxes [of a CFO skillset], but I know you have the capacity and willingness to learn.” Her experience taught her the importance of seeking mentors and sponsors who care about you as a person, not just about your trajectory in the company.
When, six months into a new role, she had difficulty adjusting and wondered if she had made the right move, her mentor not only reassured her that she was ready for the position but also offered to make introductions to other companies if she chose to leave. Kreidler had a similar mentoring approach: as Sysco CFO, he oversaw 163 divisional, market, and regional CFOs and viewed his role as preparing them “to be CFOs somewhere, even if not at Sysco. If you can find a mentor or a boss that has this mentality, that will help.”
Often, the best mentors aren’t direct managers but instead are individuals in the organization with whom you can openly discuss your aspirations. Seeking out sponsors outside finance—a business unit leader, for example, or the chief technology officer—can also present opportunities to build experience beyond the function and more deeply understand the organization’s challenges.
Kreidler recommends finding a sponsor in the area that matters most to the company’s performance. At Sysco it was operations, he says, while at PepsiCo, where he spent 11 years in the Yum! Brands group, sponsorship from within the brand organizations (Pizza Hut, Taco Bell, and KFC) was the biggest boon. “Every opportunity you have to work with a more senior person or one who runs a different part of the organization is a job interview,” says Kreidler.
In some cases, an external mentor, such as an executive coach, can provide the needed guidance. Axel Strotbek, former CFO of Audi AG, was in his early 30s when he held his first leadership role. He is grateful to a former boss for connecting him with a coach who helped him “reflect on myself, set my personal goals, and develop plans for the years to come.”
It’s also important to seek the right sponsor for each stage of the journey. Nayar always thought of his career in five- to six-year tranches, at the end of which he set a new ambition. “That helped me figure out who would be the right sponsor to help me get to that level.”
Strengthen skills most critical to the enterprise now
CFO backgrounds tend to fall into three categories, several interviewees point out: accounting experts (who may be former controllers), capital markets professionals (often with investment banking backgrounds), and those with operational experience in helping business teams propel performance. While few individuals possess deep knowledge of all three, a CFO has to be conversant in each one. “No CFO checks every box,” says Kreidler. Candidates should try to “check as many as they can, but focus on the big, important boxes, the ones that matter most to that organization,” he says—both within finance and beyond.
Just as with CEOs, the success of CFOs often rests on whether they possess the attributes the enterprise needs at a given time. It’s critical, therefore, for CFO hopefuls to assess their strengths and weaknesses against the company’s strategic needs for the coming three to five years, says Nayar. After an accounting scandal rocked Tyco in 2002, the immediate priority was to stabilize the company’s finances, he says. “When I came on board a few years later, the goal was to bring in strong controls so nothing that had happened in the past would ever happen again.”
What skills do finance leaders need today? They need to have strategic know-how and understand the key drivers of the business: financial, operational, and commercial. “The CFO can’t just sit in their office anymore,” says McLoughlin. “They have to be able to coordinate across the business, across functions, and get people to collaborate.” Critically, CFOs are responsible for the human element of the modern finance function—leading groups of professionals comprising a range of talent profiles. Warwick Bray, former CFO of Telstra, puts it bluntly: “People leadership is central to the CFO role now more than ever.”
Those are all table stakes. Beyond that, CFO skills and experience in two areas are particularly prized today: technology and sustainability. The rapid digitization of finance functions and corporate operations in general makes tech savvy critical. Hiring committees grill CFO candidates about their knowledge of digital transformation, cybersecurity, and generative AI.
“Today, technologies support finance in a much broader way than they did ten years ago,” says Strotbek. “The more the CFO can standardize data and processes in the finance organization, the faster and more efficient the function is in supporting decision makers.” Beyond technology’s operational benefits, the CFO should understand its potential impact on the company’s sector and business model.
Sustainability, both in the sense of climate considerations and broader corporate values, is another high priority for finance leaders. CFO hopefuls should understand the effects these issues have on financial reporting and what vulnerabilities and opportunities they present for the enterprise. “You don’t necessarily need to lead those functions, but you need to have good relationships with the people who do,” says McLoughlin, “and understand the role that finance plays across the spectrum of these topics, because there is no tolerance for missteps.” Candidates also need to be mindful of companies’ commitments to inclusion and diversity and should demonstrate a track record of paying close attention to inclusion issues, as well as recruiting and supporting diverse teams within the finance function.
If there was one area our interviewees most emphasized developing, it’s external stakeholder management. Several mentioned the sudden elevation into the public spotlight as something for which they were insufficiently prepared. As a CFO, you become the point person not only for shareholders but also for sell-side analysts, investment bankers, and the press, says Christopher Halmy, former CFO of Ally Financial. “The CFO has to be able to communicate the strategy and the results and build relationships in that external environment.” To be able to “tell the story behind the numbers,” as Bray puts it, you need to cultivate the necessary presence, communication style, and persuasion skills—then find opportunities to demonstrate them to the CEO and the board.
Before McLoughlin became CFO, she attended a few investor meetings, but she wishes she had had more exposure on that front because “you have to hit the ground running the day that you’re announced as CFO,” she says. “You’re the one selling the company to investors, but you’re ‘selling’ with the knowledge that there may be a heavy price to pay if you do or say the wrong thing.”
Lead an initiative that really matters
One of the best ways to demonstrate readiness for the CFO role is to successfully steer an initiative that creates significant value for the enterprise, particularly if it involves collaboration with business units. “If you’re to be promoted from within,” says McLoughlin, “you have to build relationships and trust with the business teams, because you want their support. You want them to be comfortable that you have the knowledge and ability to help them do their jobs.”
The CEO and the CFO are typically the only ones who have visibility across functional or divisional lines, Lao points out, which makes a track record of partnering with other departments a differentiator for a CFO candidate. “The CFO has overall responsibility for driving operating linkages across the whole business,” she says. “To do that, you need to have credibility and demonstrated ability to work with each business or functional leader.”
Ultimately, CFO hopefuls need to be known for something. “You have to do a few things that lead everybody to say, ‘We are much better today than we were yesterday,’” says Nayar. When he was Tyco’s treasurer during the financial crisis, for example, the company received three credit rating upgrades. “A number of board members came to me when we got an upgrade [to say] they felt it was unique that we were able to find our way through this storm and come out strong,” he says.
In Lao’s case, her proving ground at Tandberg was M&A: she led a significant acquisition that gave the company an important competitive edge. Halmy made his reputation transforming the treasury function at General Motors Acceptance Corporation (GMAC) before it became Ally and implementing data-driven technology to power decisions. That success led company leaders to tap him to help prepare the organization for an IPO. As a CFO prospect, “that gave me the leg up from the board’s perspective.”
Making a major bet at a pivotal point in your career takes guts, of course. For Strotbek, assuming the role of Volkswagen’s CFO in China at the age of 40 was a risky move. “I had close ties to the headquarters, but once you’re out there, you’re pretty alone.” During his tenure in China, he focused largely on growth: when he started in 2004, Volkswagen’s market share had dropped from 50 to 15 percent in the wake of a competitor influx following China’s joining the WTO, says Strotbek. “We had to reinvent ourselves, both operationally and in terms of product technology.” He must have done something right because three years later, he was appointed CFO of Audi, Volkswagen’s premium brand. The experience led him to later send potential CFO successors to China so they, too, could learn from the challenges the market presented.
Find opportunities to engage with the CEO and the board
Let’s face it: to have a shot at the CFO job, you need to be on the CEO’s and the board’s radar. Leading a financial planning and analysis (FP&A) team is one of the better finance positions to get that visibility because it’s closely aligned to the business, says McLoughlin. “It’s got some finance and some strategy to it,” she says. “You might have mini-CFOs in your FP&A group and oftentimes they are controlling the budgets.”
Consequently, it’s natural for the FP&A head to lead the budget presentation to the board. One of the boards McLoughlin sits on regularly invites finance executives to its meetings. “At every meeting, we include someone who is at least one, if not two, layers down from the CFO so they get exposure to us, and we get exposure to them.”
Having a specialized set of skills can make you the go-to person for company leaders on specific issues. For example, Bray’s experience in investment banking honed his understanding of valuation and investment returns. During his time leading Telstra’s mobile business, he was often invited to board and investor meetings to discuss the economic influences and returns on capital in that unit. That exposure made him a known quantity when the board was looking for a new CFO.
Since the CFO role is to be both an ally of the CEO and a source of sober second thought, developing the chief executive’s trust is invaluable to a CFO hopeful. Halmy credits his CEO’s confidence in his judgment with giving him an advantage as a candidate. “The CEO said, ‘That’s the guy I trust to do this.’” The reason for that trust, Halmy believes, lays partly in his willingness to candidly share his thoughts with the top boss. Says Halmy, “The CFO needs to be the person who can tell the CEO ‘No,’ and there are few such people.”
Do you have what it takes to be a CFO? The answer may be “Not yet.” But by rounding out your experience, daring to make big career bets, and building support within the organization, you can develop the credentials and relationships needed to become a strong candidate. Invest in realizing your own potential, and the confidence to go after the job will follow. As Nayar points out, “The biggest drawback to our ambitions is us—our lack of belief in ourselves.”
