Now Departing: CFOs

Twice the number of finance chiefs left their jobs in October as September. Why is this?
Lisa YoonNovember 6, 2002

According to the latest monthly survey tracking CEO and CFO turnover by outplacement firm Challenger, Gray & Christmas Inc., CFO departures in October doubled from the turnover in September. CEO churn, on the other hand, increased only 14 percent over the previous month.

What’s more, it appears top finance executives were out the door 33 percent faster than departing chief executives. The average tenure of October’s departing CEOs was about 10. years; CFOs only stuck around about seven years on average.

The number of CFOs departures in October (50 in all) is the highest total this year. In fact, you have to go back to June 2001 to find a month when more finance chiefs left their jobs (57).

How Startup CFO Grew Food Company 50% YoY

How Startup CFO Grew Food Company 50% YoY

This case study of JonnyPops’ success highlights the unusual financial and operational strategies that enabled rapid expansion into a crowded and highly competitive frozen treat market. 

There are a number of reasons for the upswing, says Challenger president John Challenger. Mostly, he says the CFO turnover stems from the increased scrutiny now given to corporate accounting. Many finance chiefs are under the microscope, says Challenger, and some may even be scapegoats for other problems at their companies.

(Editor’s note: To read more about the scapegoating of CFOs, see “The New Patsies.”)

Another reason is that companies may be finding that their CFOs aren’t up to snuff on some of the skills necessary for navigating a recession. In fact, says Challenger, some companies may even be looking to swap their oh-so-1990s finance chief for someone new — someone who “didn’t preside over the boom.”

Most of the finance chiefs that departed in October were in the services sector (12). Eight worked for financial services, eight in computer companies, six in other tech firms, four in consumer goods, and four in the health industry.

And why did these CFOs leave? To “pursue other opportunities” — what else? Twenty-two “resigned,” and 14 left for unspecified reasons. Six retired, another 4 went to work for other companies, and 3 took different positions in the same company.

For the glass-is-half-full types, however, the survey’s findings won’t come as bad news. After all, for those looking to enter the job market, more vacancies means more openings, particularly as companies tighten financial controls in a slumping economy. “In a recession,” explains Challenger, “the CFO role drives company strategy — more so than sales and marketing or business strategy.”

Not looking to pound the pavement just yet? Finance chiefs who want to keep their jobs can perhaps be heartened by the fact that CEO departures still beat CFO departures by a landslide: So far in 2002, 635 CEO departures have been recorded. That’s about 87 percent more than the 339 CFO departures tracked by Challenger.

CFOs on the Move

FleetBoston Financial named corporate controller Robert C. Lamb Jr. to the CFO post, replacing Eugene McQuade, who becomes president and COO January 1. Lamb joined the financial-services firm as controller in 1986 when it still went by its maiden name. Left in 2000 to become CFO of KPMG Consulting, now BearingPoint …