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For CFOs, There’s No Place Like Home

The turnover rate among CFOs remains low after the recession.
David McCannApril 15, 2012

The turnover rate among large-company CFOs ticked up slightly in 2011 but remained well below its 2008 peak, according to research by recruiting firm Heidrick & Struggles.

Turnover, which Heidrick defines as the number of positions that open up during the year, tends to be higher among finance chiefs when the economy is performing well. In 2008, before the market meltdown in the fall, the economy was humming along nicely in many respects, as private-equity firms and other investors pumped money into start-up ventures and growing existing businesses. Among Fortune 1,000 companies, turnover reached 18%.

The 2011 rate for those companies, 11.5%, was up only one percentage point from the previous year. Jeremy Hanson, global CFO practice leader for Heidrick, takes that as a sign of a still-struggling economy. Corporate boards yearn for certainty in down times and therefore are reluctant to make bold changes in key executive positions, he says.

That has changed over the past few months, but not markedly so. “We’ve seen private-equity firms go from an absolute deal halt to active fund-raising and investing,” Hanson says. “As a result we’ve seen an uptick in turnover, but nothing dramatic. People are still waiting for the next shoe to drop.”

While the change in the overall turnover rate from 2010 to 2011 was fairly flat, within specific sectors there were noticeable swings in both directions. In the financial-services industry the rate climbed from 12% to 17%, while tech-company turnover rose from 7% to 12%. Industries with lowered turnover included industrial companies (24%, down from 29%) and life sciences (3%, down from 9%). Turnover was highest for consumer companies, at 25%, up two points from the prior year.

There was another notable data point from Heidrick’s research: no fewer than 24 Fortune 1,000 finance chiefs moved to divisional operations roles. “Corporate boards are under high scrutiny these days, and increasingly they have more confidence in a CEO with a finance orientation, and so want their CFO to be a candidate for that job,” comments Hanson. “But to get there, the CFO needs direct exposure to other parts of the business.”

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