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CFO Turnover Up 50 Percent

Churn in the top finance slot is rapidly outpacing last year. The same study also shows that there were twice as many external CFO hires as internal promotions.

Stephen Taub
CFO.com | US

August 24, 2006

Finance chiefs are changing jobs at a much more rapid pace than they did last year at this time.

This year through July, there have been 1,444 changes in the top finance slot, according to Richard Jacovitz, SVP Director of Research at Liberum Research. This compares with just 963 through the first seven months of last year.

At the current pace, there will be nearly 2,500 CFO changes for the entire year. Last year, the total was 1,867.

Last month, there were 176 changes. That makes July one of the two least active months of this year. Yet the turnover was still more than double the 80 changes in July 2005. It was also more than the total in eight of the 12 months last year.

Liberum's methodology can appear to overstate total turnover — if a CFO leaves and is replaced, Liberum counts that as two changes. But such double counting helps reflect the fact that companies sometimes take a number of months to replace a CFO who resigns or is fired.

Liberum's study also examined how companies hire their CFOs. So far this year, 543 CFOs were hired from the outside while 276 were promoted from within the organization. This is roughly a 2-for-1 relationship.

Last year for the full year, 670 CFOs were recruited from outside, while 393 CFOs were promoted.

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