Vice Chairman, CEO and Board Services
The C-Suite Horse Race: The Best Roles for Becoming CEOs
The examples are becoming almost commonplace — the new CEO of a major bank’s wealth management firm had been the Chief Marketing Officer. Two Chief Human Resources Officers were tapped to run separate Fortune 500 firms. And now comes news of the incoming CEO of Twitter, who was previously the Chief Technology Officer.
Welcome to a reshuffling of the CEO deck. With the pandemic easing to some degree, CEOs have been leaving their top posts at a fast clip — at about twice the rate seen in the first half of 2021 compared with the six months prior. But while many of their replacements will still come from the ranks of onetime Chief Financial Officers or others with P&L accountability, experts say other skill sets are turning the C-Suite and other leading roles into a new horse race for the top spot.
“I think that CEO jobs are going to go to individuals who exhibit an exceptional level of EQ,” says Alan Guarino, vice chairman of the Board and CEO Services practice at Korn Ferry. Guarino says that emotional-intelligence skills are more important than specific functional or technical knowledge and can be found in a variety of executives. “Board members are finally understanding that empathy and focus on a purpose-driven culture are key differentiators for a company’s success,” he says.
To be sure, more firms will still look to those in development roles to groom future CEOs. The C-Suite role thought to most commonly lead to CEO positions — CFO — does not usually lead there directly: a Korn Ferry survey shows that only 13% of CEOs in the global Forbes 2000 came directly from a CFO seat. “It’s hard to move from a strictly functional role, no matter how impactful, to the top spot,” says Jane Stevenson, vice chair and global leader of the CEO Succession practice at Korn Ferry. She says that most CEOs will continue to be selected from executives running businesses within the organization or its operating units, usually those with some type of P&L accountability. “More than ever, the ability to work across and beyond a particular function is pivotal, as well as the ability to think both inside and outside the company about opportunities and impacts.”
Linda Hyman, executive vice president for Global Human Resources at Korn Ferry, says companies will periodically reach into their C-Suites for top leadership. “It very much depends on the drivers of a particular business,” she says. Technology companies, for example, are typically driven by the need to strategically define the future of technology, an expertise to which CTOs lend themselves. Craig Stephenson, managing director of the CIO and CTO practice at Korn Ferry, says that CTOs commonly oversee products, data, the cloud, software, and information security, which are huge swaths of a tech organization. This makes the elevation of some CTOs to CEOs sensible in some circumstance. “In a year or two, I could see other industries also embracing this, now that most companies now describe themselves as ‘tech companies’,” Stephenson says.
But globally these will still be exceptions. “CTOs are generally not as close to the customer and not as aware of trends in the industry and in the markets,” says Bradford Frank, senior client partner in the Technology practice at Korn Ferry.
Stephenson suggests that CTOs can often benefit from skill building in both customer-facing and market orientations, including those whose activities involve clients and customers, P&L responsibility, and more awareness of marketing. “Those skill sets stand out as likely requiring some refinement, and if CTOs find themselves in the role of CEO, perhaps further development.”
In the meantime, CHROs and CMOs are watching their stars rise on boards of directors, where they are increasingly popular members. “As their value-added is more exposed to investors and boards and chairs, they’ll have an increasing ability to go to the CEO suite,” says Frank. “They make great board members.”