CFO skillsets changing ... again: with CFO turnover still near record levels, Financial Executives Research Foundation (FERF) asked some in the executive search business to discuss the trends and what they are looking for in senior financial executive recruits.

• Author: Sinnett, William M.
• Position: CFO COMP & TRENDS

The CFO role has been in flux in recent years, shifting from "bean counter" to business partner, to internal-control policeman. Trends show the CFO role changing again--this time to business partner and technology partner.

The market for hiring CFOs is very robust right now, reports Michele C. Heid, managing partner who heads financial officer searches for executive search firm Heidrick & Struggles. One reason for the strong demand, she says, is CFO turnover, with the average tenure being less than three years. Consider, says Heid, "About half of all current CFOs got their new job within the last 18 months."

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Crist Associates, an executive search boutique, has been tracking the movement at the CEO, COO and CFO levels of public companies for the past four years. Crist Vice President Scott Simmons says that when a CEO is hired from the outside, a new CFO is named within a year over 50 percent of the time; when a CEO is hired from the inside, a new CFO is named within a year over 40 percent of the time.

These statistics are based on a sample of 658 companies listed in either the 2006 Fortune 500 or S & P 500. What makes these statistics even more compelling is that today's CEOs retain their positions an average of just over six years, the Crist research finds.

Liberum Research also tracks CFO turnover. Although turnover during the first quarter of 2007 was down from the same period in 2006, it is still quite high. The firm's statistics show that CFO turnover during the last quarter of 2005 and the first three quarters of 2006 was very high, and slowed during the last two quarters.

Liberum Senior Vice President Richard Jacovitz explains that the rise and decline in CFO turnover among larger companies is related to Sarbanes-Oxley compliance. "Over the past several years, when large companies had to install new systems and document and test internal controls to ensure compliance with Sarbanes-Oxley Section 404, the CFO role reverted to the old 'bean counter' role," he says. That role was very stressful, and involved less of the strategic planning through which CFOs added value during the 1990s.

Now that most large companies are fully compliant with Sarbanes-Oxley, relieving CFOs of a lot of stress, they can once again function more as strategic partners, Jacovitz says.

Heid concurs that some of the many reasons for CFO turnover over the past several years have been compliance-related and include Sarbanes-Oxley violations...