CFO turnover hits record high

Financial Week reports that “according to a study to be released [in October] by executive recruiter Crist Kolder Associates, roughly half of the CFOs at Fortune 500 and S&P 500 companies stay in their posts for less than three years.” This equates to the average tenure of an NFL running back. Before you get too impressed, the article goes on to say that “the study found the average tenure for CFOs at all big companies slipped to under five years, about a year less than in 2006.”

Since I don’t have access to the study, I can’t reconcile these two claims and don’t understand the distinction between Fortune 500/S&P 500 and “all big companies”. I can think of two potential explanations. Perhaps CFOs at the 500 largest public companies have shorter tenures than other large public and private companies. Alternately, there could be a marked difference between the average and the median value of CFO tenure, suggesting that some CFOs have lasted a very long time and others only briefly.  If anyone at Crist Kolder is reading this, please send me the study or drop me an email with the explanation.

In searching for an answer online, I found that there isn’t much consistency to CFO tenure figures. Most articles claimed a number in range of 3-5 years, often saying it was down from 7-10 years in the late 90’s. This article quoted a Liberum Research report that the average CFO tenure in 2007 was only 28 months. Amazingly, the same article claims that more than 2,300 CFOs left their jobs in 2007.

By way of comparison, the average tenure for a CIO is 4 years and 5 months (source CIO magazine) and for a CEO is 6 years (source Strategy+Business).

Regardless of the actual average tenure, it’s interesting to note that a McKinsey & Co. study (Bertil E. Chappuis, Aimee Kim, and Paul J. Roche, “Starting up as CFO,” McKinsey Quarterly, March 2008) showed many CFOs are spending not enough time on business strategy and perhaps too much time on internal financial operations — especially early on in their tenure.  This disconnect might help explain some CFOs short tenure.

Note to CFOs everywhere: You may want to consider the difference between strategy and planning.