The average CFO of a large company is 53 years old, male, was promoted from within, holds one board seat outside the company, was educated at Penn State (or another public university) and majored in accounting, has an MBA, and if they spent time as an auditor, it was likely to have been at PwC or EY.
That’s the level of absurdity one can reach analyzing CFO profile data. But the annual Crist Kolder Associates Volatility report is still a very useful trove of information about the finance chiefs at a group of more than 650 companies drawn from among the Fortune 500 and S&P 500.
While CFO turnover is often the headline number, it generally stays within a tight range of 15% to 20%, both in executive search firm Crist Kolder’s survey and in studies from search firms like Russell Reynolds.
More interestingly, for both sitting CFOs and aspiring CFOs, were two other facts from 2022:
1. The percentage of female CFOs hit an all-time high of 16%, up from 6.3% in 2004 (when Crist Kolder first started tracking the data). The number of women CFOs has nearly doubled over the last 10 years. But that’s still less than 1 in 5 CFOs. Gender diversity in the CEO and chief operating officer (COO) positions is lower. About 8% of chief executives in Crist Kolder’s group of companies had female CEOs.
2. Overall, nearly 8% of sitting CEOs were promoted from a CFO chair, the highest percentage in the last 10 years. The pathway from CFO to CEO was most common in financial services this year. Nearly 26% of sitting CEOs in the financial industry came directly from a CFO chair.
Two other interesting data points concerned CFOs hired from outside companies, and the average time CFOs stayed in one job.
External hiring of CFOs has been declining since the pandemic year of 2020. A little over one-third of CFOs (34.7%) were external hires in 2022, compared with 38.5% last year. (See chart, below.) The historical average is 38%. External hiring has been below the long-term average only seven times in 18 years.
Companies may be getting better at succession planning and grooming future CFOs, which, among other things, helps when an executive’s departure is abrupt (as occurred at AIG this week). But boards of directors may also want their top executives to be productive immediately. If hired from outside the industry, a CFO can take longer to learn the business in addition to having to master organizational quirks and culture.
Another possible factor: the job market is tight, and it can be easier (and more cost-effective) to find a good candidate internally. Historically, though, there isn’t a tight correlation between a low unemployment rate and fewer external CFO hires.
Of sitting CFOs in 2022 that were hired as external candidates, 23% were a CFO at their previous company and 2% were a divisional CFO.
Internal promotions to CFO most often (18% of the time) came from people holding the title of VP, SVP, or EVP of finance, or some kind of FP&A leadership title. About 13% were previously controllers or chief accounting officers, and about 8% were treasurers, levels in line with past years.
Some CFOs get a reputation for job hopping, which is not recommended. But even averaged out, the tenures of CFOs can seem short. In 2022, the average job tenure of CFOs for the companies tracked by Crist Kolder was 4.9 years, up only tenths of a percentage point.
Because CFO moves are so high profile now — generating stories from many media outlets when they occur — it may seem like finance chiefs are constantly playing musical chairs. But employees of U.S. companies actually have shorter tenures. At the median, according to data from the Bureau of Labor Statistics, U.S. male employee tenure measured in January 2022 was 4.3 years; for women, it was 3.8 years.
Services and consumer sector CFOs had the shortest stays on average in 2022 — a little more than four years, while CFOs in financial services had tenures of 5.7 years on average. (See chart, above.)
In other findings from the Crist Kolder report: