CFO succession planning doesn’t exist in a majority of companies. As a result, talented mid-level executives are left with considerable uncertainty about their opportunities for continued professional advancement. However, there is a way for aspiring CFO candidates to prosper and grow within this environment of uncertainty.
It’s very natural to want to be your company’s next CFO. After all, you’re smart. You’ve worked hard. Your college degrees and professional designations have provided you with the insight and skills required for success. And deep down, you know you deserve the promotion plus the recognition and rewards that go with it. As country music superstar Tim McGraw accurately sings, “Everybody wants to be the big dog, Wanna wag that big dog tail.”
But, to position yourself as the candidate of choice the next time a CFO position opens up (and they tend to open up rather frequently), you must do much more than shape the company’s balance sheet. You must understand the company’s business. You must understand the company’s politics. You must understand your own strengths and weaknesses. And last but not least, you absolutely must play a very active role in the long-term succession planning and candidate grooming process.
Here are the facts. The November 2007 issue of CFO magazine reports that your company’s current CFO is not planning his successor. And, on a more personal note, neither your company nor your CFO is actively grooming you to assume the duties of the CFO. This article is based on interviews with 1,400 CFOs who were asked, “Have you identified a successor for your position,” and the results were astonishing. A full 83% of respondents indicated that they have not identified a successor for the CFO role. And further, when asked, “If not, why not,” 74% of the respondents replied, “Not planning on leaving in the near future,” and 12% answered, “No qualified candidates currently working in the organization.”
Bottom line, only 17%, or less than one in five companies, have identified a successor for the CFO position. Their reasons may vary, but CFO turnover statistics indicate that companies would be wise to have a well defined CFO succession planning process in place. And that spells opportunity for you.
Although 74% of CFOs may not be planning to leave in the near future, the reality is that the average CFO tenure is less than five years, which is south of recent years when the average tenure was seven to twelve years. Regulatory liabilities and overall business pressures have driven CFO tenure downward simultaneously with the increased complexity of CFO recruitment. With the average executive tenure decreasing you can expect the number of internal promotions to decrease also, unless a real and robust succession planning process exists organizationally. Your career is in your hands.
Prior to evaluating your succession planning goals, answer this question, “Am I ready and capable to be the CFO of this or another organization?” Your ego and confidence will say yes. However, for greater clarity you should talk with mentors, cross-functional leaders and an executive recruiter you have developed a relationship with. They see you in comparison to the broader CFO ranks and will give you candid feedback to balance your self-perception with market demands. Once you are certain of your readiness to become CFO you can assess your company’s succession planning process.
With more than 225 executive searches behind me, I’ve identified three key areas that you can explore to help you better evaluate your personal CFO succession planning preparedness, as follows:
1. How long have the current CEO and CFO been in place and what was their previous tenure? CEOs turn over more frequently than CFOs and often, a new CEO will bring his or her own CFO. While it’s hard to predict CEO and CFO tenure, the best future predictor is past performance.
2. Does your CFO have a track record of successfully developing others into a CFO role, either internally or externally? The fact that your CFO has been there a while or looks to be settling in is not necessarily bad for your development. In fact, this can be positive situation as long as your CFO has experience developing leaders to the point they are recruited away.
3. Ask for a specific succession plan and the relative frequency and style of communication you can expect throughout the process. Lack of a plan or lack of interest to discuss a plan will give you flashing lights of caution. In addition, ask for a thorough annual or semi-annual evaluation relative to your capabilities, experiences and acumen from cross-functional leaders. These individuals will share breadth they see valuable to a successful CFO. If your company is committed to a succession planning process, these steps will be built into it and will be relatively easy to self-administer. On the other hand, if your company is not actively involved in a succession planning process, your efforts will typically be recognized and rewarded with an informal roadmap to success. Either way, you win!
It’s crystal clear that you are responsible for assessing your company’s succession planning and driving your career into the CFO suite. Answering the above questions will give you a better understanding as to whether you are in control of your career trajectory or whether others are planning the process with you.