Here’s a conundrum: 83 percent of CFOs have not named a successor, yet nearly half of CFOs are promoted from within. So why don’t more companies systematically develop their in-house finance talent? According to a survey by Robert Half Management Resources, CFOs say they don’t plan for a successor, because they don’t plan to leave. That’s a curious explanation, given that average tenure in the CFO post now runs just three to five years.
The more likely reasons, as senior writer Kate O’Sullivan explains in “Who’s Next?“, are more complex. First, it inevitably raises the prospect of one’s own departure, not generally a comfortable subject. It is also time-consuming — a major negative for the chronically time-deprived. It requires regular communication of the most awkward kind: tough evaluations and explanations of why you might not quite be CFO material. What’s more, true succession planning requires candidates to rotate through various functions and departments, transitions that can be difficult for the candidate, the department in which she succeeded, and the new department in which she might struggle to duplicate her success.
Nonetheless, these are constructive disruptions: activities that, while stressful, also stimulate learning, growth, and cohesion in a workforce. With CFO tenure as brief as it is, and the competition for talent so fierce, companies will do far better with these programs than without them.
The disruptions posed by the Pension Protection Act, on the other hand, can safely be labeled unconstructive, if necessary. As reported in our new 20/20 Views section, companies that offer pensions face increased liability as a result of the legislation. Contributing editor Russ Banham lays out options for companies coping with the demands of the new rules.