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When the CEO loses his job, here's how to keep yours.
Kate O'Sullivan, CFO Magazine
January 1, 2005
To a finance chief, the arrival of a new CEO usually means one thing: time to polish the résumé. "It's almost automatic" that the CFO leaves when a new chief executive enters, says Charles B. Eldridge, head of the CFO practice at executive search firm Korn Ferry International. New CEOs are often hired to make a change, and when they come in, "probably the first position they look at is the CFO, even more so today in light of Sarbanes-Oxley," says Judith von Seldeneck, chairman and CEO of Diversified Search Inc., in Philadelphia.
Adds recruiter Walt Williams, a partner at executive search firm Battalia Winston International, "If the company is in trouble due to financial mistakes of some sort and you're brought in to improve credibility with Wall Street, you're likely to change the CFO." Even if there are no financial problems, many CEOs have long-standing relationships with finance executives they've worked with in the past, and they prefer to hire someone they know rather than learn to work with someone new.
Still, there are ways an incumbent CFO can prove he's worth getting to know--and worth keeping around. Here are four strategies for surviving a change at the top:
1. Demonstrate openness to the new CEO and his ideas. "If the legacy CFO is burned out and doesn't seem emotionally ready to be part of making major changes, the CEO might [look for a replacement]," says Williams. "But if the CFO is really energized by the opportunity to do things differently, the CEO is more likely to hold on to him."
David Sonksen, finance chief at Microsemi Corp., a semiconductor and components maker in Irvine, California, capitalized on such a situation. In 2000, the company's CEO of 25 years stepped down to make way for the promotion of James Peterson, Microsemi's current CEO, who had been running a business that the company had recently acquired. Sonksen welcomed his new boss with open arms. "I saw it as an opportunity to work with a CEO to change things I'd wanted to change for a number of years," says Sonksen. Having worked with Peterson during the acquisition, Sonksen had already established a good working relationship with him, and was able to demonstrate that they shared the same vision for the business. "We were both looking for a change," says Sonksen. "We wanted to reinvigorate the company, and we had similar goals."
2. Help the CEO develop confidence in you. "When you say something is going to happen a certain way, you make it happen that way, whether it's budgeting or setting sales targets," says Ed Schultz, a for-hire CFO with professional services firm Tatum Partners in New York. In the course of one tumultuous year at a construction staffing company with $100 million in annual revenues, Schultz worked with three different CEOs: one the company's entrepreneurial founder, the second from a large company, and the third a turnaround specialist. He addressed each CEO's needs immediately, demonstrating that he could prepare or find whatever financial data was required.
"Finding out what people need up front, whether it's a certain type of report or supplemental financial information, helps establish the relationship," Schultz says. Von Seldeneck suggests taking this advice a step further: "You can be prepared with a detailed briefing of all the key issues on Day 1, when the CEO arrives, so that he or she can see that you're anxious to be proactive," she says.
3. Research your new boss. Walt Williams says finance chiefs can figure out what the new CEO might be looking for by doing some old-fashioned legwork in advance. "Find out where they came from; talk to people at a former company," he advises. "Learn what the person's priorities are and what their hot buttons are." Such research can also help a CFO gauge how to best approach the new boss with ideas.
4. Pay attention to chemistry. Personal chemistry also plays a key role in surviving a change at the top. Although it can be hard to make two different personalities mesh, an incumbent finance chief can set the right tone. "Don't put your ego in the way," counsels Sonksen. Particularly when the CEO doesn't have a deep finance background, the CFO "wants to make sure the CEO looks good," says von Seldeneck. "Don't try to come off as too expert." She cites an example of a company with a longtime CFO who tried to tutor a new, much younger CEO on financial matters. "That situation deteriorated, and the CFO lost out," she says.
In some cases, the best attitude in the world won't help an incumbent CFO--his fate may already be decided. "Sometimes it's as simple as the new person coming in has a short time to make changes, and he brings in someone he's worked with before so he doesn't have to spend time getting to know a new person," says Williams. But in many situations, the CFO has a window of a few months to prove himself.
"You have to persuade the CEO to have confidence in you," says Schultz. "And you have to trust your own experience."