How Some CEOs and Boards Keep CFOs on Rotation


The turnover of the chief financial officer (CFO) is growing. For CEOs and corporate boards, this is an embarrassing trend. Once considered just a member of the management team, CFOs today are undoubtedly among a company’s most valuable employees. A good CFO brings forward-looking strategy, advanced modeling, high-level financial experience and can also exercise strong leadership skills, especially in the absence of the CEO or COO (Chief Operating Officer).

It is unclear exactly why CFOs are multiplying at an increased rate. In 2019, 14% of CFOs transferred to S&P 500 companies. In 2020, the percentage increased slightly to 15%, then rose again to 18% in 2021. At almost 20%, this means that one in five CEOs will see their CFO working less than five years in their workplace. Such rapid turnover is costly, especially for a position that is so integral to the business.

Spencer Stuart is an international recruitment agency. They have been successful in reducing CFO turnover by encouraging companies to expand CFO responsibilities. Although it may seem counterintuitive (more work?), CFOs are generally inferior to CEOs and COOs when it comes to the chain of command. Notable companies such as AbbVie, Newell Brands and Walker & Dunlop have gone so far as to “reappoint” their chief financial officers as presidents. Others simply promoted CFO to COO. The change of title is not without drawbacks. Spencer Stuart warns that such a drastic decision (from a vocabulary point of view) must be well explained and timely by the Council.

As of June 29, executive search firm Russell Reynolds reported that 6% of CFOs at S&P 500 companies had additional presidential or operational responsibilities added to their plate. Compare that with just 1.4% of CFOs having additional responsibilities in 2020 and it’s clear that change is afoot.

The average tenure of CFOs (five years) has not changed much in recent years. What has changed is the number of CFOs leaving before the five-year mark. However, the additional responsibilities do not come free. A financial manager at Newell Brands, glue makers Elmer’s, Sharpie and Rubbermaid raised their chief financial officer’s salary by $65,000 after taking on the added responsibilities. At $900,000 a year, Newell found that was enough to keep from being poached by headhunters, the shared concern of any business.

A potential recession will put strong pressure on the retention of CFOs. Only 8% of CEOs of S&P 500 and Fortune 500 companies came from the CFO seat in 2021. But that percentage is growing. A well-paid and secure CFO is another protection against CEO departure if the person has the skills to lead the company.


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