CFOs in CEO Roles: Balancing Financial Acumen with Empathy

The increasing appointment of Chief Financial Officers (CFOs) to Chief Executive Officer (CEO) roles signals a shift in the competencies prioritized for navigating today’s complex geo-economic landscape. While this trend underscores the high value placed on financial acumen and strategic insight, it also raises concerns about whether CFOs possess the broader leadership and interpersonal skills needed to effectively address organizational challenges for sustainable business success.

Data from Live Data Technologies reveals a significant increase in the percentage of CEOs who were formerly CFOs, rising from 3.58% in 2018 to 4.56% in 2023. Early indicators from 2024 suggest this trend may continue, with 4.93% of new CEOs in the first two months of the year having held CFO roles. This upward trajectory indicates a growing preference for leaders with strong financial acumen, particularly as companies navigate turbulent macroeconomic conditions and high inflation.

According to McKinsey, the current economic turbulence is shaped by several factors: geopolitical tensions, advancements in artificial intelligence (AI), and the 2024 US elections. Geopolitical unrest introduces uncertainty in global markets, disrupting trade and investment through increased restrictions, writes the Economic Observatory. Similarly, the rapid pace of AI development presents both opportunities for innovation and concerns about workforce displacement.

The political landscape surrounding the 2024 US elections may affect investor confidence due to potential policy changes related to trade. Coupled with persistent inflation, which reduces consumer purchasing power and increases operational costs, businesses face significant pressure to adapt swiftly to these complex challenges.

In response, companies are increasingly turning to CFOs for top leadership roles. Recent examples include Rite Aid’s selection of CFO Matt Schroeder as CEO following the company’s emergence from bankruptcy and DuPont’s choice of CFO Lori Koch to rebuild investor trust and restore operational discipline, as reported by Fortune. These examples reflect the evolving role of CFOs from traditional back-office functions to strategic leadership positions. Experts agree that this evolving CFO role suits today’s complex landscape. 

Alyse Bodine, Global Managing Partner of the Financial Officers Practice, Heidrick & Struggles, notes that successful CFOs often have experience in operational, commercial, and strategic areas, enhancing their candidacy for higher executive roles. Shawn Cole, President of Cowen Partners, adds, “CFOs have become real strategic partners, and I would call them ‘truth-tellers’,” as they provide objective, transparent insights that guide realistic and accountable decision-making at the executive level.

While CFOs are valued for their financial and operational expertise, questions remain about whether they possess the broader leadership qualities essential for organizational success. Soft skills like empathy are not just advantageous but fundamental to effective leadership, as they help build trust, inspire teams, and foster a positive workplace culture, notes LinkedIn.  A recent survey conducted by EY revealed that 82% of private company respondents agree that CFOs must move beyond technical left-brain skills and develop competencies in people-oriented right-brain areas for an effective workplace. 

Empathy, typically associated with the right side of the brain, enables leaders to genuinely understand and respond to the perspectives, challenges, and needs of their employees. It is an essential foundation for people skills, which encompass a range of interpersonal abilities, including active listening, effective communication, and motivational support. While empathy provides the emotional insight necessary to relate to employees, people skills translate that understanding into actionable behaviors—such as inspiring confidence, building trust, and fostering collaboration, writes Leader Navigation.