CFOs move into the line of succession for the top job

Chief financial officers (CFOs) are becoming increasingly influential and are seen more as strategic partners than simply owners of a company’s financial charter. CFOs’ constant shift towards company strategy and governance, forecasting and analysis, as well as digital transformation, ensures that they often interact with the board of directors on crucial business decisions.

The focus on sustainability has also made their roles more critical, increasingly placing them in a prime position to transition to the top CEO role when the company needs to determine succession plans.

Gulpreet Kaur Chawla, Partner, TRANSEARCH India, tells ET Digital why this trend is happening and what CFOs need to do to be prepared to face more challenges. Edited excerpts from the interaction:

Are you seeing a growing trend where CFOs are replacing CEOs in the top role?
We are witnessing an emerging trend where CFOs are moving into CEO roles. CFOs compete alongside sales and marketing executives for C-level positions based on the market scenario, industry demands or organizational needs.

How is this changing the positioning of CFOs internally?

Companies are prioritizing CFOs over functional heads, especially those with larger offices. This trend underscores the growing importance of finance. Over the past year, leaders have increasingly emphasized cost structure, and CFOs have been instrumental in shaping balance sheets, particularly at startups, laying a solid foundation for growth.

What are some of the critical roles and sectors where CFOs are gaining more importance?
CFOs are crucial hires for private equity firms and scale-up companies due to their ability to work closely with stakeholders, their strategic acumen, and their commitment to high governance standards. CFOs play a leading role in IPOs and fundraising, leveraging their networks and influence within the financial community – something especially vital in startups.As every company finds itself at some stage in the digital transformation journey, how do CFOs align themselves to lead this type of strategic change?
CFOs are increasingly familiar with digital technologies and adapting to digital transformation, which plays a pivotal role in improving business operations and driving automation, adding immense value to organizations.

In terms of skills, as CFOs prepare to make the transition, they need to imbue themselves with the best leadership qualities to lead through ambiguity, enable tight stakeholder management, and build the right teams for sustained scale.