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Survey: CFO Turnover Will Soar in 2007

A poll of finance-chief temps predicts that the rate of CFO churn will top last year's record.
Helen ShawFebruary 26, 2007

Turnover among finance chiefs will reach a record high in 2007, according to a report by executive services firm Tatum.

A January 2007 survey of 163 Tatum consultants, each with at least a dozen years of C-suite level experience, found that 93 percent expect even more finance chiefs to step down this year. Tatum bases its projection on a study done by Liberum Research. In 2006, there were a record 2,302 job changes by CFOs, according to Liberum, an independent research firm. The reasons for the turnover were internal changes, 389; joining, 836; leaving 118; promotion, 451; resigned or retired, 497; and terminations, 11.

Thirty-seven percent of the Tatum consultants cited compliance and governance issues–including pressures related to the Sarbanes-Oxley Act–as the main reasons for turnover. Unreasonable board and stakeholder expectations, named by 30 percent of the consultants, came in as the second major cause for finance chief turnover in 2006.

Thirteen percent of the Tatum respondents noted the lack of a work/life balance as a reason for resigning. Twelve percent said a finance chief’s skills did not meet company needs, and 7 percent mentioned inadequate technology to support financial reporting and other business needs.

“The perfect storm of regulatory environment and unprecedented demands from internal stakeholders and external market pressures have made executives understandably pessimistic about CFO tenures in the near future,” said Richard D’Amaro, Tatum’s chair and chief executive officer.

Similar reasons for turnover were revealed in a survey of 191 companies across all industries conducted by Right Management, an employment consulting firm. That survey indicated that half of CFOs left their positions for another job offer. The other reasons for leaving included a mismatch between the finance chief and the firm’s culture (23 percent); a stressful job and/or work environment (22 percent); and a lack of current knowledge related to Sarbanes-Oxley (5 percent).

“Many chief financial officers had the same ‘cultural fit’ problems that are a leading cause of executive failure,” commented Doug Matthews, president and chief operating officer of Right Management.

The Tatum survey asked what changes would be the most effective at lowering finance chief turnover. About 27 percent of Tatum consultants responded that more resources, such as specialized staff to oversee compliance work and work with board members, would help, and 25 percent suggested deregulation and more relaxed compliance and governance standards would do the trick.

Further, 23 percent said that more support from board members would reduce finance chief turnover; 14 percent suggested better professional development programs; and 11 percent named improved alignment between technology infrastructure and business demands.

While the prospects for more turnover remain high, D’Amaro saus, the churn of financial leaders can be lowered through supplying CFOs with improved resources.

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