The unstoppable rise of the CFO

As we delve deeper into our CFO Playbook findings, journalist Justin Cash looks at why more and more finance heads are moving up to take charge of strategy in our latest guest blog.

 When Andrew Griffith took over as Sky’s chief financial officer in 2008, he probably couldn’t have imagined that his career path would have taken him to the top of government.

 Just over a decade later, he would go on to become City minister, and then shadow business secretary,

 But CFOs being touted for such prominent strategic positions is hardly an accident these days. More and more are being seen as the natural successors to leadership roles like chief executive officer.

“At a time when strong alpha individuals aren’t necessarily seen as a good thing, the lower ego and more collegiate leadership style of many CFOs is more valued around the boardroom or shareholder table,” Griffith tells me.

Executive search firm Heidrick & Struggles estimates that the proportion of FTSE CEOs who were CFOs beforehand now sits at around a third, 12% higher than tfive years previous.  On top of this trend, 37% of CFOs are being asked to do more high-level business strategy than they were five years ago, according to Pleo’s report.

It appears to be a global trend too: just over 8% of Fortune 500 CEO vacancies went to CFOs in 2023, more than at any point for at least a decade.

That’s a far cry from the early 2010s, when papers ran headlines such as “Why do so few CFOs become CEOs?”. McKinsey conducted an informal poll in 2006, and just as many respondents “vehemently opposed” the idea of a CFO moving to CEO as supported it.

CFOs are piling on the responsibility for everything from corporate strategy to sustainability and cybersecurity to HR, moving up their food chain as a result of their unique position in the business hierarchy.

“In many ways the CFO role draws on a broader range of skills helping to lead in more volatile times: the classic ‘vision thing’ for sure, but also being able to scenario plan, pivot or restructure fast and bringing a senior leadership team together in a crisis through an objective assessment of the situation,” Griffith says.

From fund houses and wealth managers to banks and fintechs, recent history is littered with examples of finance wonks taking the top management job: Richard Oldfield at Schroders, Andrew Croft at St James’s Place and Persimmon chief financial officer Jason Windsor taking over at Abrdn are just a few recent examples that spring to mind.

Just last month, Vodafone’s Luka Mucic needed only two years in the job before being poached to run Bochum-based real estate company Vonovia.

“Typically the board thinks of what the strategy for the company should be over the coming period and then finds the right skill set to navigate the company through the next phase,” says Sanjiv Somani, the former CEO of international consumer banking at JPMorgan.

“Sometimes it's about addressing risk-related issues. Now with the uncertainty and reducing interest rates (which reduces income for banks) it's about costs, so a CFO with a background in cost management is a good choice.”

The recent Pleo report shows how geopolitical and macroeconomic headwinds are also pushing CFOs to step up to the plate and thrusting them into the spotlight.

More than half of the financial decision-makers polled for the CFO Playbook said they expected 2025 to be tougher than 2024. Cost pressures are everywhere, and there is a growing need to make key financial decisions even quicker. CFOs are also taking a central role in adopting new technology at top corporations - 72% of the business leaders said real-time financial tools are more important than ever.

Somani added that CFOs are often a “known quantity” given they talk to the board and regulators about key issues like capital and liquidity regularly.

“The image of the supposed team approach where everyone sits on beanbags and spitballs ideas and everything works out in the end is stuff of Hollywood,” says Duncan Mackay, a veteran City recruiter.

“The real golden candidate is one that comes from a finance background but who has managed people and operations whilst also understanding tech - they would most likely be the right candidate for a CEO.”

Such new responsibilities for finance heads bring them into greater contact with other teams across organisations, particularly in technology; 68% of CFOs rate the value of AI as high or very high,  Pleo’s report shows.

 CFOs must now “go beyond data analysis, budget forecasting and problem-solving,” Pleo’s CEO Jeppe Rindom says.

Some organisations like the CFO Centre have even talked up the prospect of “fractional twinning” - bringing in additional finance experts on a flexible basis to essentially double up on the role as its demands grow.

That also shows that taking the CFO role seriously is a commercial opportunity.

Spanish-founded business planning software platform Abacum recently raised $60m in a Series B funding round to “enable [finance teams] to be strategic drivers within their business”.

If current trends continue, don’t be surprised if you see more firms try to join the party and more CFOs being tapped up to run organisations.