In India, the transition from Chief Financial Officer (CFO) to Chief Executive Officer (CEO) is often seen as a natural progression in many industries worldwide. However, for Chartered Accountants (CAs), this path remains relatively less travelled. This paper explores why this is the case, examines the challenges CAs face in making this leap, and presents insights from industry leaders and data from trusted sources to shed light on this significant issue.

The Role of Chartered Accountants in Indian Corporates

Chartered Accountants play a crucial role in Indian companies, especially in the financial and regulatory domains. They are often the backbone of financial management, ensuring compliance, optimizing tax strategies, and guiding companies through complex financial landscapes. Traditionally, the role of a CFO is seen as the pinnacle of a CA's career. According to the Institute of Chartered Accountants of India (ICAI), over 70% of CAs in senior management positions occupy the CFO role or equivalent.

Despite their deep involvement in strategic financial decisions, CAs are less likely to ascend to the CEO position. A study by Egon Zehnder found that only 13% of CEOs in India have a CFO background, compared to 18 percent globally. This suggests a significant gap in the transition from finance to overall business leadership among Indian CAs.

The CEO often says it's lonely at the top but the value they bring in for the organization is often rare and can only be earned by being the one.

Challenges in the CFO to CEO Transition

Perceived Skill Gap: The role of a CFO, while critical, is often seen as being narrowly focused on finance, risk management, and compliance. In contrast, a CEO's role demands a broader skill set, encompassing areas like marketing, operations, human resources, and overall business strategy. A CEO needs to have a 360-degree view of the business, while a CFO typically has a 180-degree view. The shift from managing finances to managing the entire business is not an easy one.

Lack of Operational Experience: CEOs are expected to have hands-on experience in managing different aspects of the business, including operations, product development, and customer relations. While CAs, are typically more involved in financial reporting, audit, and compliance—areas that do not provide direct exposure to the operational challenges of running a business. It is not enough to be an expert in finance; one must also understand how the business functions on the ground.

Risk Aversion: Chartered Accountants are trained to be risk-averse, a trait that serves them well in financial management but can be a hindrance in the CEO role, which often requires taking calculated risks to drive growth. The conservative mindset limits a CA's ability to make bold decisions necessary for business expansion and innovation. N. R. Narayana Murthy once pointed out, "While caution is a virtue for a CFO, it can be a liability for a CEO. Leadership at the top requires not just managing risk, but also embracing it when the situation demands."

Stereotypes and Corporate Culture: There is a common perception that CAs are more suited for technical and compliance roles rather than leadership positions that require a visionary outlook. According to a survey by Spencer Stuart, only 5 percent of board members in India believe that a CA is the ideal candidate for a CEO role. This perception gap is a significant hurdle that CAs must overcome if they are to ascend to the top leadership position.

Lack of Leadership Exposure: While CFOs often lead large teams, the leadership style required for a CEO is different. CEOs need to inspire and motivate across all functions of a company, not just finance. They must drive a company’s vision, culture, and strategy, requiring a leadership approach that goes beyond managing a specific domain. For CAs, developing these broader leadership skills is essential, to be seen as viable candidates for the CEO role.

Case Studies of CAs Who Made the Leap

Despite the challenges, there are notable examples of Chartered Accountants who have successfully transitioned from CFO to CEO, serving as inspirations for others.

Naina Lal Kidwai

Naina Lal Kidwai, a Chartered Accountant by training, served as the Group General Manager and Country Head of HSBC India. Her career progression demonstrates that with the right skills and mindset, CAs can break the glass ceiling and reach the highest echelons of corporate leadership.

Keki Mistry

Keki Mistry, the Vice Chairman and CEO of HDFC Ltd, started his career as a CA and gradually moved up the ranks, eventually taking over as CEO. Mistry’s journey underscores the importance of gaining a deep understanding of various business functions and developing a broader perspective beyond finance.

The Way Forward

Broaden Your Skill Set: This involves pursuing additional education, such as MBA, or taking on cross-functional roles within their organization. Gaining exposure to different areas of the business, such as operations, marketing, and product development, can provide the necessary experience and insights to transition into a CEO role. 

Gain Operational Experience: Chartered Accountants should seek opportunities to work in operational roles or lead cross-functional projects that provide insights into the company’s day-to-day operations. This will help them to develop a holistic understanding of the business and prepare them for the challenges.

Develop Leadership Skills: This involves not only managing teams within the finance department but also taking on leadership roles in cross-functional initiatives. Building relationships, inspiring teams, and driving a company’s vision are essential leadership qualities that aspiring CEOs must cultivate.

Mukesh Ambani often says: "Leadership is about making others better as a result of your presence and making sure that impact lasts in your absence."

Build a Strong Professional Network: Aspiring CEOs should actively build their professional network, both within and outside their organization. Networking provides opportunities to learn from others, gain insights into different industries, and connect with mentors who can provide guidance and support. Remember your network is your net worth. Surround yourself with people who can push you, guide you, and open doors for you.

Challenge Perceptions and Stereotypes: This involves demonstrating their ability to think strategically, take risks, and lead beyond the finance function. By consistently showcasing their broader business acumen and leadership capabilities, CAs can challenge the perception that they are only suited for technical roles.

Conclusion

While the path from CFO to CEO is less trodden by Chartered Accountants in India, it is not an insurmountable one. With the evolving corporate landscape and the increasing complexity of business environments, the skills that CAs bring to the table are becoming more relevant. As more CAs take on the challenge of expanding their skill sets and embracing leadership roles, the number of CFOs transitioning to CEOs in India is likely to increase.

About the Author

Nitin Banthia, Finance Controller at Happay (a Cred Company), is a Chartered Accountant, MS Finance and CFA L3 candidate with 14+ years of experience in the Finance domain across sectors like Healthcare, Financial services, Retail, & AgTech. Outside work he likes to collect Stamps and Currency Notes & coins. A fitness enthusiast who cares for nature.