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CFO’s Outpacing CEO’s Through The Corporate Revolving Door (Wall Street Journal)

3075553370_e168fa667b Cari Tuna wrote an interesting article for the Theory & Practice column of the Management section of today’s (December 1, 2008) Wall Street Journal titled Corporate Finance Chiefs Face New Pressures  . (free content)

CFO turnover hit a 13-year high in 2007, and accelerated earlier this year. Executive-search firm Crist|Kolder Associates says 19.5% of finance chiefs at Fortune 500 and S&P 500 companies left their posts last year, up from 14.1% a year earlier. By comparison, 13.2% of those companies changed chief executive officers last year.

In the first seven months of 2008, 70 CFOs departed these 659 companies, compared with 49 over the same period last year. The average CFO’s tenure is 4.8 years, down from 5.5 years a year ago. The average CEO stays in office for 6.2 years.

Chief financial officer is “the least secure job in corporate America,” says Gordon Grand, head of CFO recruiting at search firm Russell Reynolds Associates.

The article has a long list of companies that have have recently experienced turnover in this ever so important leadership position including Alcatel-Lucent SA, Ford, Proctor & Gamble, Sears, Oracle, Google, Walgreens, UAL and Allstate.

Recruiters and finance chiefs say CFOs are quitting or being ousted because the demands of the job are growing. CFOs were handed new responsibilities in 2002 by the Sarbanes-Oxley corporate-reform law. This year, many had to scramble to keep their companies afloat when credit markets dried up.

CFOs also handle outreach to investors and serve as strategic advisers to CEOs, but close ties to a CEO can make finance chiefs vulnerable when the top job changes hands. Some companies are eliminating the role of chief operating officer and giving CFOs more operational responsibilities.

The CFO “gets asked all of the hard questions,” Mr. Grand says. “When the numbers don’t work, the accountability is enormous.”

In challenging economic times like we are experiencing today, the CFO’s job will be harder than ever. Those companies that can preserve their C-level teams will most likely be in better position than those who experience turnover of financial leadership.

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About the author

Peter A. Mello, Founder/Editor Founder of Weekly Leader and Sea-Fever Consulting, LLC, a leadership development and strategic communications consultancy. Previously, CEO of an international nonprofit organization and COO of a national insurance/risk management services firm. Peter has been leading people and managing organizations for over 30 years, writes a leadership column for MarineNews magazine and blogs about maritime culture at Sea-Fever. Follow him on Twitter.

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