Who’s a CFO?

Our February/March magazine cover story looks at the requisite competencies and skills for finance chiefs, but it leaves open the question of who gets hired as one. The annual Crist|Kolder Associates Volatility Report provides some clues.

The search firm collects annual data on the turnover of C-suite executives and the most common career paths and backgrounds of the people who hold the CFO position.

This year’s report tells us, for example, that Big Ten universities have produced the most finance chiefs for eight years running. (The Atlantic Coast Conference came in second in 2020.) Some other interesting facts for 2020:

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• 43% of CFOs were hired from outside the company, up from the historical average of 38.7%.
• Only 30% of CFOs have public accounting experience. 
• Of those promoted to CFO, 19% had a previous corporate finance position just prior. The second-most popular previous positions were corporate controller and chief accounting officer.
• C-suite promotions to CEO from CFO have fallen since 2016.
• The average tenure of a CFO is 4.86 years, with the shortest tenures occurring at services companies.
• The percentage of female CFOs has hovered around 12% for the past five years, but the percentage of ethnically and racially diverse CFOs has slowly risen (hitting 10% in 2020).
• More than 45% of CFOs who retired in 2020 hold a seat on an external public board.

The other takeaway is that CFO turnover is still high among the Fortune 500 and S&P 500 companies studied — the industrial and services sectors had the highest rates, both north of 17%. Why so high?

Part of that was probably the pandemic, but a contributing factor might be the high expectations boards and CEOs have for an incoming finance chief. For details on those expectations, see the story I mentioned, 10 Vital Roles for CFOs.