How does life in the executive suite differ from the TV reality show “Survivor”? In the corporate world, when a CEO gets voted off the island, or even ships out voluntarily, the CFO typically gets dumped, too. Indeed, Heidrick & Struggles International Inc. calculates that more than 70 percent of new CEOs replace their finance- department head. “The CEO and CFO, being the two value-creators for the company, are really joined at the hip,” says J. Rucker McCarty, a partner who heads the search firm’s CFO practice.
So the real corporate survivors are those rare CFOs who last through a change at the top. And with 118 CEOs having departed in August alone–nearly four times the August 1999 total, according to outplacement firm Challenger, Gray & Christmas Inc.–there are no immunity icons for finance chiefs. There are, however, some strategies.
One, experts say, may be to explain how your retention will help smooth the new CEO’s entrance. “A lot of times people react with fear and uncertainty [to the threat of replacement], instead of focusing on how they can add value to the transition,” says Robert Pasick, a University of Michigan Business School psychology professor who coaches executives. In some cases, new chief executives “are not going to clean house right away, because they need someone to help in the transition–which gives you a chance to make a good impression.”
Being An Ally
Key to making that impression is asking direct questions about the new chief’s expectations–then listening for the answers. Martin E. Welch III, CFO of Kmart Corp. since 1995, took this approach when former CVS Corp. president Chuck Conaway was introduced as CEO by the Troy, Michigan, company. The 52-year-old Welch had prepared an “insiders only” briefing book before his first meeting with Conaway, 40. But he withheld his ideas for a remedial financial strategy until he heard out the new CEO. “You can’t assume you know what he wants,” says Welch. “He had something in mind, and he was trying to gather data around those ideas.”
Conaway wanted to convince Wall Street he could stem the tide of Kmart’s losses (a $448 million net loss in the second quarter alone), and Welch was able to come across as a useful ally in that effort. By mid-August, several executives, including treasurer Michael Viola, had left. But Welch remained a key player.
Figuring out how much to say in the first few meetings with the new boss is obviously not an exact science. But some finance chiefs suggest getting a list of issues on the table right away to keep business from stalling. “You’ve got to keep the momentum going,” says J. Andy Hilbert, who had been CFO at Boston-based Liberty Financial Cos. when CEO Ken Leibler abruptly quit in January.
Leibler’s successor, Gary Countryman, was an old-timer at Liberty, having founded the firm in 1985 and served as its chairman since 1995. But he was new to Hilbert. Consequently, the CFO walked into his first meeting with a list of the 15 most pressing business issues to work through. “You’ve got to push for quick decisions from the new CEO, to either affirm or delay proposed or approved projects,” he says. Countryman was receptive to the ideas.
The one thing CFOs don’t want to do, says Alex McKenna, president of McKenna International, an executive coaching and counseling service, “is try to impose their agenda on the new CEO; by doing that, you pose a distinct threat. The big thing is to be patient, and strategic in the way you present your ideas.”
Still, news of a change at the top leads to understandable trepidation on the part of the CFO. Michigan’s Pasick tells of a manufacturing industry finance chief in Detroit who was convinced that the new CEO was about to name a former colleague to replace him. Pasick says he coached the fearful CFO to see the value of his own expertise, and to demonstrate it. When the dust had settled, the incumbent CFO was retained and the CEO’s former colleague was given a different assignment.
In such situations, “there’s always a lot of uncertainty out in the ranks, and you can lose focus pretty easily,” says Welch. “You may not be completely confident yourself, but you shouldn’t let that show.” What you do need to show, he says, is what you can accomplish. At Kmart, he says, one of Conaway’s “number-one questions is, ‘What’s broken?’” At the time he was being interviewed, Welch’s answer was, “Not finance.” And he convinced Conaway of that by pointing to Kmart’s effective finance training programs, among other things, as illustration.
Finally, if you’re still on the island, be open to significant changes ahead. Indeed, it’s likely to be a whole new job. “I think the worst thing you can do is be defensive about the old way,” asserts Welch, who says the pace at Kmart is “far faster” now because of Conaway. “Obviously, the board has brought this person on for a reason,” he says. And if you disagree about the need for change, “you may as well move on right away.”