Grooming a successor, even if you have a rising star in mind, is not just a matter of prepping one person, say finance specialists. It’s better to think in terms of a bench — a group of people who could step into new jobs as you shuffle your top staff.  

“If you decide to promote your second-in-command to take your job, who takes her job?” says Jack McCullough, president of the CFO Leadership Council. “Let’s say you promote your vice president of finance to your CFO slot. Can the controller be promoted to vice president of finance? Why or why not? If the controller is promoted, who takes that person’s job?”

“If you’re doing promotion from within,” McCullough added, “there may be several people affected by your retirement.” 

CFO Leadership Council Chicago Area Director John Gimpert said there are a host of questions to be answered when you start grooming a successor. 

• What are the highest risk areas for the candidate — that is, what trouble areas await the person once they assume the top finance job?
• How can they be educated on what could go wrong and how can they monitor what’s happening with those trouble areas?
• How robust are their skills compared to the trouble areas and where is development needed?
• Where do their skills need to be raised since no CFO has all the functional skills?

Gimpert, who has 34 years under his belt as one-time head of finance transformation at Deloitte and worked extensively with Fortune 500 CFOs, said it’s important to recognize that what a company wants and needs in a CFO might be different than when you, as the outgoing CFO, were hired.

“Many CFOs are replaced because they no longer fit — bring the right capabilities — with the company's directions,” he said. “For example, capabilities might include M&A, international growth, undertaking organizational or business model redesign. It can be a big mistake moving a person up because they are the best you have vs. getting the best person for where the company is headed.”

Broad experience

If the prospective CFO is the controller, McCullough said, have that person work outside finance and accounting for three to six months.

“This does two things,” he said. “First, the learning is obvious. How much can a controller learn by working in sales operations for six months? When they get the CFO job, they will have a much deeper appreciation for sales. Second, it helps nurture cross-functional relationships. It will make them better CFOs, even if it doesn’t make them better controllers.”

He warned against neglecting the successor’s soft skills. 

“I know a million CFOs and I cannot tell you one who is in the job because of their technical expertise,” he said. “A million controllers have technical expertise. Have them develop their emotional IQ — the public speaking and their overall executive presence. Nobody wants a pure accountant on the executive team.”

If you’re grooming from within, McCullough said, have that person participate in, and not just observe, board of directors meetings. Let that person present the financial results at company meetings. 

“Have her sit in on the executive meetings, instead of you,” he said.

In choosing who to groom, it’s important to realize being a CFO is not about tasks; it’s about being someone with vision and strategy who can prepare the company for the future — and the future might be 10 minutes from now, said Jeff Kuhn, administrative partner and co-founder of FLG Partners, a CFO consulting firm.

“You need someone with a strategic muscle in their brain and sometimes it doesn’t work,” said Kuhn, who has served as CFO for software company Planetweb and for Diablo Research Company, a wireless technology design services firm.

A good candidate to groom also needs maturity, smarts and eloquence to present the firm to investors, analysts and others, he said.

“You’re looking for someone much more than a person with green eyeshades to reign over accounting,” he said.

“It’s the most cross-functional role in the company,” said McCullough. “Being a first-time CFO is like drinking from a fire hydrant, on roller skates, on a sheet of ice.”

In the end, realize while grooming might help your firm and the people involved to thrive more than they would have without your effort, the singular goal could well not happen.

“Most companies do not have a succession plan because they will hire an outsider for the top role,” said McCullough, who has surveyed CFOs on how they got their job. Only 12% were promoted to it, and even among those that were promoted, some didn’t work out. 

If you do succeed in getting a protégé to be the next you, give that person space to own the job. 

“Know when to step out of the way,” McCullough said. “It’s great you’ve orchestrated the transition. The last thing the new CFO needs is the old boss looking over her shoulder, second-guessing her decisions. Be available to ask questions, but learn not to give unsolicited advice.”