Job Hunting

The Exit Ramp from Perdition

Doing the right thing may be the right thing for a CFO to do. But it doesn't necessarily make it easy for a finance chief to find work.
Marie LeoneAugust 14, 2002

In a court of law, past bad acts don’t hold much water because they unfairly prejudice a jury. In a job interview, past good acts, apparently don’t hold much water, either.

Witness ex-CFO Philip Varley, a finance and accounting veteran. Over a 22-year career, Varley worked as an auditor for Ernst & Young, a divisional CFO for a Fortune 100 company, and finance chief for three Internet startups. He says his exit from the world of corporate finance in October 2001 was triggered by bouts with two unethical CEOs, and one long — and frustrating — job search.

According to Varley, one CEO that he worked for demanded that he recognize 100 percent of annual subscription revenue in the month a contract was signed, rather than over 12 months as prescribed by U.S. accounting principles. In a run-in with another CEO, Varley says the chief executive insisted that he report revenue projections that were 300 percent greater than achievable, ostensibly to boost the company’s valuation in the eyes of a potential buyer. In both cases, Varley said no, then resigned.

With the go-go economy at its peak, Varley quickly joined a third startup as CFO. That company depended on high long-distance phone rates. When the telecom phone wars broke out, the company collapsed, and Varley began a systematic liquidation of assets. During the sell-off, executive search firms were hot on Varley, calling him regularly to inform of him of new job openings. Varley says he didn’t want to make the jump until the liquidation was complete.

As it turns out, it was a bad move. Varley did schedule an appointment with a prospective employer. In fact, the interview took place a mere three days after Varley’s last day at the failed telco.

But according to the finance veteran, the minute the interviewer realized that Varley was out of a job, he quickly ended the interview. Furthermore, Varley says the company and the search firm refused to return his phone calls. The former CFO says he went from being a sought-after financial executive making $150,000 a year to an unemployed untouchable within the span of 20 minutes.


Eventually, Varley quit hunting for CFOs jobs and started his own charter air business near Denver. Although now a CEO, he remains a member of the Financial Executives Institute. It gives him a chance to offer advice to CFOs who are still fighting earnings-management pressure from CEOs.

That pressure is relatively widespread. According to an exclusive survey published by CFO magazine, 17 percent of CFOs working at large companies said they felt pressure over the past five years to misrepresent company financial results. Who turned the screws on them? CEOs, said the respondents.

As Varley discovered, however, leaving a bad situation can be a career-derailer. Michael P. Kelly, managing director of The Directorship Search Group in New York (the firm is not involved with Varley), confirms that it is more difficult to place a CFO who is unemployed.

In fact, the recent raft of accounting scandals has made it tough for unemployed financial executives to find work. Often, prospective employers assume an out-of-work CFO was let go because of incompetence, or worse, shady deeds. Ironically, some finance executives are actually out of work because they refuse to commit such dark acts.

During the go-go days of the new economy, there was a shortage of qualified CFOs. Today, the tables have turned. There are plenty of financial executives to choose from, and a blemish on a C.V., no matter how small, makes it difficult to place a candidate. “Company executives just refuse to take those kinds of risks,” remarks Kelly.

What kind of blemish turns into a career wart? Having worked at a company that’s been the subject of an SEC or Department of Justice investigation is a real red flag for employers. One finance department staffer at Enron Corp., for example, wrote a memo noting that her years of hard work at the company would be for naught once the company’s accounting practices came to light.

Recruitment experts also note that finance executives who’ve worked at companies that have restated earnings because of accounting irregularities could have trouble landing work. They also say former Arthur Andersen partners will have some difficulty lining up employment. Although Kelly stresses that ex-Andersen partners will eventually get hired, he says they will be severely scrutinized by potential employers. Asks Kelly: “How can a company possibly put out a press release in this atmosphere that says their new CFO is a former Andersen partner?”

Understanding Which ERP Modules Your Business Needs – And When