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Cynthia Jamison
Partner
Tatum LLC

Hanging On to Your CFO

More than 2,300 CFOs left their position last year, and average tenure in now down to 28 months. What you should do if you don’t want your company to join these stats.

By Cynthia Jamison

Once regarded as an attractive career destination and prestigious management position, the luster of being a chief financial officer has faded: The risks and stresses inherent in the job have escalated –- far outweighing the associated rewards and benefits.

The demands placed on a CFO today are greater than ever. Aside from navigating complex business conditions and meeting stringent regulatory requirements, CFOs must recruit and mentor staff and appease skittish investors, all the while providing daily financial leadership and strategic vision to the CEO.

Coupled with the growing demands of shareholders and boards that need insight, information, and counsel, it is not surprising that an unprecedented amount of CFOs are jumping ship. According to Liberum Research, more than 2,300 CFOs left their positions in 2007, and the average tenure is now down to 28 months.

The many reasons CFOs are leaving and an in-depth exploration of what can be done is beyond the initial scope of this article; however, below are a few (of many) suggestions to help audit committees and boards manage through this difficult period.

1. Ensure that your CFO has adequate resources.

A survey of senior finance professionals conducted by CFO Research services revealed that 86 percent of respondents believe that the breadth of the finance function’s responsibility had increased at their companies over the last five years, but only 43 percent reported an increase in resources such as funding and staff.

Boards and CEOs need to be aware of the pressures placed on the CFO, and offer support and enhanced resources. The role of CFO is no longer a job for one person. Rather, it is the management of a finance function — the “CFO Suite” — which is comprised of external advisors, enhanced systems, specialized staff and, of course, the CFO.

Ensuring these resources can be tricky, indeed, as recruiting, hiring, training, and retaining internal resources has never been harder and mandates a more creative approach than it has historically warranted. From a director’s perspective, however, effective CFO support is good risk management and stewardship of company assets

2. Encourage “soft skill” development for your CFO, especially when building peer relationships and enhancing management skills.

It is not uncommon for the CFO to be viewed by others within the organization as a “bean counter” who enjoys nothing more than cutting budgets. The natural tendency of most CFOs is to be very task-oriented, with high levels of skepticism and low levels of empathy. Typically, CFOs are not as well versed in the art of effective communication — either they assume executives around them know and understand more than they do, or they deliver their messages in an abrupt or dismissive manner.

Coupled with internal and external pressures, this combination can be toxic.

An effective CFO needs to transition from skeptical to open-minded, from compliant to independent, and from risk-averse to risk-minimizing. Working with your CFO to institute a core set of interpersonal skills such as open-mindedness and collaboration through company training and educational programs can often ensure tenures longer than 28 months (as well as higher morale all around).

3. Think of your CFO as similar to your general counsel in terms of support needed.

Managing a function — not just a job — requires a highly sophisticated management model, and often adjustments from every aspect of the business, most importantly from the board, CEO, and CFO. Amidst the increasing responsibilities required of the CFO, many companies and their boards are turning to alternative approaches to accomplish the unique challenges of any business.

One such model is the general counsel model, which engages individuals with substantial expertise in a specific area to be “flexed” in and out according to business need.

In these situations, a specialist with a comprehensive understanding can help a capable CFO through the learning curve, or simply take one task off of their plate so that they can focus on other areas more fully. This enables the company to add more breadth and depth in the finance function on an as-needed basis, without adding to permanent G&A expense.

Effective management and support of the finance function may also include investment in internal resources, and/or new infrastructure or systems — as well as engaging external resources as needed to address important issues and assist with critical initiatives. Advocacy for these resources is critical, and support from the audit committee chairman should be offered whenever possible.

Cynthia Jamison is a partner and national director of CFO Services for Tatum LLC, the largest executive services firm in the United States. Over the course of her 25-year career, she has served as CFO of seven companies, both public and private. She currently sits on the board of directors of Tractor Supply Co. and B&G Foods Inc. and is chairman of the audit committee for both companies. She is also on the nominating committee for Tractor Supply and the compensation committee for B&G Foods. She can be contacted at cjamison@tatumllc.com.