Latest / Executive Careers with Fexingo: VP, C-Suite, and Senior Leadership Career Strategy / How Senior Leaders Use Lateral Hires for Growth
Transcript
- Lucas: There's a move I see senior leaders make that almost always looks wrong on paper, but often turns out to be the smartest career decision they ever made. I'm talking about the lateral hire — taking a role that isn't a promotion, isn't more pay, and sometimes even carries a smaller title. Luna: Right, the move that makes your peers whisper 'why did they take that?' while the person is quietly building something much bigger. Lucas: Exactly. And to make this concrete, I want to talk about a CFO of a Fortune 500 company — let's call her Sarah. She was CFO of a major industrial conglomerate, overseeing a $12 billion balance sheet. Then she took a role as divisional general manager of one of the company's mid-sized business units. On paper, she went from managing the whole company's finances to running a single division with maybe two thousand employees. Smaller revenue, smaller team, less visibility. Luna: And I'm guessing she didn't take a pay cut. Lucas: Actually, she did. Not dramatically — her base stayed about the same, but she lost some long-term incentive eligibility tied to the corporate CFO role. Her total comp probably dropped ten to fifteen percent that first year. But here's the thing: she structured the move so that her equity from the CFO role continued to vest, and she negotiated a retention package for the GM role that would catch up if she hit certain operational targets. Within 18 months she was back in the C-suite — this time as COO, a broader role than CFO. She used that divisional stint to prove she could run P&L, not just manage finance. Luna: So the lateral move was really a portfolio expansion. She added operating experience to her finance credentials. Lucas: Right. And that's the core thesis of this episode: a well-chosen lateral move can be the fastest way to close a gap in your leadership portfolio — a gap that would otherwise keep you from the next promotion. The CFO who never ran a business unit will almost never become CEO at a large company. So the lateral move becomes a prerequisite, not a detour. Luna: There's data on this. Korn Ferry did a study in 2025 — I actually pulled it before this episode — looking at the career trajectories of senior leaders who took at least one lateral move between age 45 and 55, versus those who only climbed straight up. Lucas: What'd they find? Luna: The lateral-move group earned about 40 percent more in total compensation over the subsequent decade. And they were also significantly more likely to attain a CEO or board chair role. The study controlled for company size and industry. So the move that looks like a step sideways actually compounds into much bigger outcomes. Lucas: Forty percent. That's massive. And it makes intuitive sense — the person who's seen the business from multiple angles is more valuable at the top. But here's the challenge: most senior leaders are conditioned to think of their career as a ladder. Every move should be up. So when a lateral opportunity appears, their instinct is to dismiss it. Luna: I think there's also a social cost. There's a 'prestige penalty' — your peers might assume you got demoted or that something went wrong. Even your board might wonder. Lucas: That's real. And you have to manage that narrative actively. Sarah — the CFO I mentioned — she didn't just quietly move. She sent a note to key board members and her leadership team explaining the move as a deliberate development step. She framed it as 'I need to understand the operating side to be more effective at the corporate level.' She controlled the story. Luna: Which is exactly what you have to do. If you don't frame it, others will frame it for you — and they'll probably guess wrong. Lucas: So let's get practical. How do you decide if a lateral move is worth it? I think there are three criteria. First: does it close a specific gap in your resume that is known to matter for the next role you want? If you're a CTO who wants to be CEO, you need to have had P&L responsibility. A lateral move to run a product division checks that box. Luna: Second: does it come with meaningful learning? Not just a different title, but genuinely new exposure — a new function, a new geography, a new customer segment. Lucas: Right. And third, and this is the one I think people miss most: does it increase the number of influential people who will vouch for you? A lateral move into a different part of the organization puts you in front of a new set of stakeholders. If you distinguish yourself there, you've doubled your internal sponsorship base. That's incredibly valuable. Luna: What about compensation? You mentioned Sarah took a small hit. Should a lateral move ever mean a significant pay cut? Lucas: I'd say no more than ten to fifteen percent, and only if it's temporary. If you're taking a thirty percent cut, you're probably making a mistake — unless the role comes with an equity grant that could appreciate dramatically, like moving to a pre ipo company. In that case, it's a different risk-reward calculation. Luna: And the equity cliff is a big factor. Many senior leaders have underwater options or unvested grants that they'd lose if they leave. A lateral move within the same company often lets you keep those. That's a hidden advantage. Lucas: Absolutely. That's actually the most common structure I see in successful lateral moves — they bundle the new role with a retention package that makes up for any short-term loss. And they ensure that the old equity continues to vest. You have to negotiate that. It doesn't happen automatically. Luna: I want to push back a little, though. Are there lateral moves that are traps? I've seen people take a 'special projects' or 'strategy' role that sounds great but has no real budget or authority. They end up doing PowerPoints for a year and then they're stuck. Lucas: That's the classic trap. The rule is: never take a lateral move that doesn't come with direct reports, a P&L, or a clear mandate to make decisions. If it's 'advise the CEO on innovation' with no budget, you're a glorified consultant. And once you're in a staff role, it's hard to get back to line management. So the criteria matter — if a lateral move doesn't pass the 'does this give me real operating responsibility?' test, it's probably not worth it. Luna: Yeah, and that's where the narrative piece comes back. When you're interviewing for the next role after the lateral move, you need to be able to say 'I went to run the Asia division because I knew the company needed someone who understood both finance and operations in that market.' Not 'I was asked to help out with a few things.' Lucas: Right. So let's talk about how to frame it in your bio, on LinkedIn, in conversations. You want to emphasize the intentionality. Say 'I chose to move laterally to gain P&L experience' — not 'I moved to a different role.' The word 'chose' is powerful. It signals agency. Luna: And if you're the person making the lateral move now, what's the first thing you do? Lucas: You set a time horizon. Tell yourself: I'm going to stay in this role for 18 to 24 months, and I'm going to accomplish three specific things that are visible and measurable. Then you tell your boss, your mentors, and your board contacts that timeline. That way, when you're ready to move again, no one can say you didn't commit. You've got a story of focused growth, not drift. Luna: I like that. It's disciplined. And honestly, if this conversation helped you think about your next move — or if you've ever taken a lateral leap yourself — I'd love to hear about it. And you know, if today was worth a coffee to you, there's a link: buy me a coffee dot com slash fexingo. It's a small way to keep this show ad-free and focused on real strategy. Lucas: Yeah. We don't do sponsors, we don't do ads — it's just us and the listeners who find this useful. So if that's you, that link is there. No pressure ever. Luna: Exactly. So back to the lateral move: I think there's one more nuance. The best lateral moves sometimes come from outside your company, not inside. Joining a smaller company as a senior leader can be a lateral move in title but a huge leap in scope. Lucas: That's a great point. Take a VP of Marketing at a Fortune 500 who becomes Chief Marketing Officer at a company one-tenth the size. The title goes up, but the company's brand recognition goes down. Is that a lateral move? I'd argue yes — it's trading scale for scope. You get to build a function from scratch, report to the CEO, and own the whole strategy. That experience can be more valuable than being one of ten VPs. Luna: And then two years later, you can go back to a larger company as a CMO or even a general manager. The smaller-company stint becomes a credential. Lucas: Exactly. So the lateral move doesn't have to be internal. It can be a deliberate step down in company size to step up in responsibility. The key is that you're growing, not just moving. If you're bored or plateaued, a lateral move can be exactly the reset you need. Luna: All right, so let's land this. If someone's listening and they're in a senior role, feeling like they're in a rut, what's one concrete action they can take this week? Lucas: Identify one gap in your leadership portfolio — something you'd need to have done before you could be considered for your dream role. Then look inside and outside your company for a role that fills that gap, even if it's lateral. Talk to three people who have made similar moves and ask them what they learned that they didn't expect. That's your starting point. Luna: And if you've already made a lateral move that changed your career, tell us your story. We might feature it in a future episode. Lucas: I think the biggest takeaway is this: the ladder is a myth. The most successful senior leaders I know have taken deliberate detours. They've gone sideways to go up later. Don't be afraid to take a step that looks wrong on paper if it builds the leader you want to become. Luna: Well said. That's it for this episode of Executive Careers with Fexingo. We'll be back next time with another real strategy for your career. Lucas: Thanks for being here.