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CFO churn is exposing just how unprepared many companies are for a true succession crisis.
Earlier this week, Fortune reported on new research finding record CFO turnover — and how unprepared many companies are for this level of churn, with many lagging on succession planning.
To continue the conversation, Shawn Cole, president and founding partner of executive search firm Cowen Partners, shared with me what he’s been seeing.
“The CFO scramble is here,” Cole told me. From his vantage point, the succession crisis isn’t just about volume.
“Boards have no process for developing or identifying the next generation of CFOs,” he said. “CEO succession has infrastructure: committees, multiyear development programs, and succession scorecards. CFO succession is reactive. Most boards wait until retirement is announced, then scramble.”
He continued, “That’s colliding with a bigger problem: boards are discovering their internal CFO pipelines are completely empty.” For example, 10 years ago, they built finance leadership development around the skills CFOs needed then: controller backgrounds, deep accounting expertise, strong audit committee relationships, and FP&A rigor, he explained.
“The boards calling us now need CFOs who can lead technology transformation, manage geopolitical supply chain complexity, defend against activists, and navigate volatile capital markets,” Cole said. Those capabilities weren’t part of traditional finance career paths, and companies don’t have anyone internally who has been developed for that version of the role, he said.
Research continues to point to finance leaders as strategy leaders. For many, gone are the days when influential finance leaders spent most of their time on the core foundations of financial management. CFOs’ roles will continue to evolve, especially as they embrace advanced AI and cloud. One company that clearly prioritized CFO succession is fintech and trading platform Robinhood. Its CFO transition played out over seven years and included a powerful mentorship.
Cole is also finding that companies are going external for CFOs. But the external searches that used to take four to five months are now running seven to nine.
“Boards are competing for a small group of sitting CFOs who have the modern skill set and are willing to move,” Cole said. Compensation is rising faster than boards budgeted, and he’s seeing boards compromise on requirements they said were nonnegotiable six months into a search.
It seems that boards can no longer treat CFO succession as an afterthought; in this market, it’s fast becoming one of their most consequential strategic decisions.
Written by Sheryl Estrada for Fortune as “CFO pipelines are ‘completely empty’ says search firm expert” and republished with permission.
