Making it from CFO to CEO

Rich Brady knew he wanted to become a CEO from an early age. When he was a teenager, he read an article that said military service was good preparation for leadership positions. It prompted him to join the Marine Corps, he told CFO Brew, where he spent nearly 30 years.

But Brady wasn’t only a Marine before he became the CEO of the Military Entrance Processing Command, and, later, of the American Society of Military Comptrollers—a title he holds today. He was also a CFO with the Marine Corps Installations Command.

CFO-to-CEO moves have become more common among large companies in recent years. According to Crist Kolder’s latest Volatility Report, 8.4% of CEOs at Fortune 500 and S&P 500 companies were promoted directly from CFO roles in 2023. That percentage has climbed from 5.8% in 2013.

CFOs make good candidates for the top spot because of their broad reach, Ankur Agrawal, a partner at McKinsey who hosts its Finance Academy for CFOs, told CFO Brew. “In finance, you see everything in the company,” he said. “You get to have a 360-degree view of performance…That gives you an opportunity to demonstrate your leadership in a multifunctional way.”

The growth in CFOs-turned-CEOs is “a function of…economic and market conditions” as well as “the skills and competencies that the CFO brings to the table,” Brady said. In turbulent times, he said, “boards of directors want to [have] a steady hand at the wheel” and “somebody who’s really in touch with the finance and accounting of a company.”

Brady, who is also the global chair of the Institute of Management Accountants (IMA), and Agrawal shared their advice for CFOs who aspire to CEO roles (and you don’t necessarily have to join the military).

Have a vision that goes beyond finance: Brady said he believes his bid for his current CEO role was successful in part because he was able to present the board and search committee with a vision for the organization that “was not entirely focused on finance,” he said. Instead, he spoke about how the organization could change its governance structure, business model, and processes “to provide more value for our members,” he said.

Though profit and loss are key, he said, CFOs who want to transition to new roles have “got to have a compelling vision and strategy for the future.”

Consider an interim role: Around 45% of sitting large-company CEOs were promoted from COO and president roles, the Crist Kolder study found. Taking a leadership role outside finance might be beneficial to aspiring CEOs, Brady said. “Anything in operations is helpful because you get to see things from a different perspective,” he noted. “Instead of being a resource provider, you are a resource requestor.” CEOs need to have that broader picture, he said.

Likewise, Agrawal recommends working on your cross-functional leadership, perhaps by taking rotations in areas like operations.

“Get your ambition and aspiration noticed…by raising your hand to say, ‘Look, I’m willing to try different things,’” he said.

Build your team: To be able to branch out, though, it helps to have a talented team under you. “I tell CFO clients of mine, ‘You should have three or four people who can step into your role any day.’” Agrawal said. Having people you can rely on “makes it easier for you to spend time in other aspects of the business,” he said.

Cultivate grit: It takes resilience to weather change and volatility, Brady said. One of the most important attributes of a CEO is the ability to “bounce back every day.” “Walk into that office with a smile on your face and be that cheerleader, that coach that your employees want you to be,” he said.

Increase your risk tolerance: Finance professionals “tend to be a bit fiscally conservative and risk averse,” Brady said. They tend to take comfort in the factual—numbers and data. CEOs, though, have to be comfortable with ambiguity: “There are going to be times when you’re making decisions with some uncertainty and some additional risk,” he said.

Be prepared for change: Agility is also key. As CEO, “you bounce around between a lot of different issues throughout the day,” Brady said: finance one hour, legal the next, new products the third. “You’ve got to be adept at shifting very quickly,” he said, pointing out that part of a CEO’s job is being able to connect these disparate pieces “to the larger vision.”

Polish your people skills: Realize that the CEO role often requires more in terms of people management, Agrawal said. “Inspiring [and] vision-setting become a big part of your role,” he said.

Brady agrees. As CEO, “you’ve got a broader constituency that you’re communicating with,” he said, adding that to advance your vision for the organization, “you have to develop a stronger, more broad-based communication method.”

The best teacher: Brady said while that he read and took courses to prepare himself for the CEO role, ultimately, “experience is the best training ground.”

“Getting in those roles and taking leadership positions when you’re given the opportunity to do so,” he said, “is very important.”