Doublespeak

Are companies becoming more candid about the reasons for parting ways with poorly performing finance chiefs?

Hiring a CFO is a lot like looking for a place to live. A house described as “cozy” is often small, and a place with “character” is just rundown. By the same token, the reasons that executives leave their companies usually belie the “spend more time with family” or “personal reasons” boilerplate.

As executive turnover increases, companies find that they are not ending up with the executive they thought they had hired. Part of the reason, according to Phil Sheridan, UK managing director of recruitment firm Robert Half, is that it’s next to impossible to get a straightforward reference from former employers. “Legal sensitivities around giving a more full reference may compromise the detail that prospective employers can get,” he notes. What’s more, the wide range of skills companies now demand from CFOs is shrinking the pool of suitable talent, Sheridan notes, making employers more inclined to accept many candidates at face value.

But are recent grumblings to the business press a sign that companies are becoming more candid about their former finance chiefs? In August, Rüdiger Günther left German chip maker Infineon after just three months on the job. An anonymous insider told Financial Times Deutschland that Günther was pushed out because of his “authoritarian management style.” Infineon’s statement claimed that the CFO and the company reached a “mutual agreement to terminate his contract,” but yet more anonymous insiders told reporters that Günther had refused to resign and was looking into filing a lawsuit.

Meanwhile, UK electronics retailer Jessops announced that Ian Harris, finance director for 10 months, resigned in September after negotiating a new financing facility. Some observers, including an analyst at Seymour Pierce, went on record as saying it looked as though he was forced out. Jessops also stated that it was looking for a CFO “with a different skill set.”

At Boliden, a Swedish mining group, the CEO at the time, Jan Johansson, gave a remarkably frank assessment of former CFO Staffan Bennerdt’s abilities to Thomson Financial News in August. “I have had talks with him about the requirements,” Johansson said, “but he hasn’t managed to measure up to them.”

Johansson’s candour remains the exception to the rule. But that could change as companies strive to read between the lines when vetting candidates, to avoid ending up with a CFO they can’t work with.

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