CFOs who aspire to their bosses’ job need to take an inventory of the useful traits they have already acquired—such as quick-fire analytical skills and leadership-strength formality—and those attributes where they remain deficient.
That suggestion is among the findings of a recent study conducted by Russell Reynolds Associates, the global recruitment firm. The report, Inside the Mind of the CFO, holds particular interest for ambitious financial executives of service firms, who may be concerned, for instance, that they are too detailed-oriented and not adept at conveying a broader strategic vision.
To conduct the study, the firm tapped into its massive database, comparing the characteristics of 129 CFOs with its broader base of executives, including CEOs, using 60 different psychological measurements derived from leadership assessments. While it may not be surprising that CFOs are more data-oriented than others in top management, it turns out that the number-crunching mindset contributes to making finance executives unemotional and analytical decision-makers. Their penchant for acting quickly and decisively corresponds with the skills that CEOs need.
CFO-turned-CEO Dennis Arriola agrees that the logic-laden orientation that suits finance executives takes on new dimensions in the top job. “The CFO is looked upon as somebody with keen analytical skills, and you don’t lose those in the role of CEO,” says Arriola, president and CEO of SoCalGas, the country’s largest distributor of natural gas. “You broaden that skill, and apply it to other areas, like marketing. As a CFO, you grow up thinking about identifying and measuring risks. In the CEO position, you are also focused on the return aspect.”
The 54-year-old Arriola, who was named CEO in 2014, first joined the company as treasurer in 1994. After serving in a variety of positions for Sempra Energy, SoCal’s parent company, he became senior vice president and CFO of both SoCalGas and another Sempra unit in 2006. In 2008, he left to take a position as EVP and CFO of a publicly traded solar-panel manufacturer.
His four years in the solar industry were hardly luminous: his employer, SunPower Corp., faced intense margin pressure from Chinese competitors. “That forced us to rethink how we would compete in the future,” says Arriola, who left as part of a restructuring, returning in 2012 to SoCalGas as president and COO. “Having the experience of being CFO at two different companies, in two different industries, really does prepare you for broader responsibilities. In the finance role, you are there to defend, protect and mitigate risks. The skill set and mindset you develop are helpful as you make the transition to CEO.”
The stint at SunPower “made me more forward-looking,” he adds. “That has really helped me in the CEO role where I’m thinking about growth, and solving all kinds of problems—financial and operational—so that the business can grow and thrive. Having been a CFO, you understand that you can’t get where you want without taking some risk.”