Few Companies Have an Adequate CFO Succession Plan
Four in five finance chiefs say there's not currently anyone in the company ready to take over the role, a survey reveals.
Let’s just say this is not the pinnacle of risk management: according to a new study, 80% of CFOs said there was no ready-now successor for their role at their companies.
And only 38% of finance chiefs said there was any comprehensive succession plan for replacing them, should the need arise.
But CFOs weren’t much different from their C-suite peers. In a Korn Ferry study of approximately 900 executives — CEOs, CFOs, chief technology officers, chief marketing officers, and chief human resources officers — 77% of the participants said there was no ready-now successor in waiting, and just 42% said there was a comprehensive succession plan.
“Often organizations are so busy trying to outpace the competition and provide value for customers and shareholders that they don’t take the time needed to plan for the future,” said John Petzold, senior client leader of Korn Ferry’s CXO optimization practice. “An exodus by a senior leader could be unplanned and swift, which could leave organizations vulnerable if a ready-now successor isn’t already identified and developed.”
The proportion of the 222 surveyed CFOs who didn’t feel they had a formal succession plan or a direct report ready to replace them now should raise concern, according to Bryan Proctor, leader of Korn Ferry’s global financial officers practice.
“It’s crucial for [finance] organizations to understand their talent balance sheet, have a pipeline of potential leaders, and develop a thoughtful strategy that provides transparency on potential CFO successors and offers the experiences necessary to fully prepare them,” Proctor said.
Some companies apparently settle for a less-than-optimal CFO, the research suggests. Despite the lack of readiness, 60% of newly appointed CFOs are sourced internally, according to Korn Ferry.
Other survey results relating to CFOs:
- 41% of the finance chiefs said working at a company going through a transition is the most valuable career experience.
- 65% of CFOs want to be a CEO during their career.
- However, only 23% said that CEO is the role they want next.
- Activities aimed at driving strategy account for nearly a third (32%) of CFOs’ time.