CFO Turnover Reaches Three-Year High
August 16, 2024 – CFO turnover can have significant implications for a company, as these executives play a critical role in managing financial strategies, reporting, risk management, and overall financial health. A total of 163 new CFOs were appointed in the first half of 2024, according to Russell Reynolds Associates’ Global CFO Turnover Index. After slower starts to the year in 2022 and 2023, the first half of the year saw increased levels of turnover, reaching 8.9 percent. “This high indicates that as economic uncertainty becomes the new normal for organizations, previous trepidation to replace CFOs has dissipated,” the report said.
The study also found that gender diversity strides continue to be made. While women remain underrepresented in the CFO role (e.g. the S&P 500 is 40 years away from reaching gender parity), in the half of 2024, of the 163 CFOs appointed, 44 were women—the highest number of women CFO appointments in the past five years.
The tech industry in particular has made large strides in gender diversity, with 38 percent of incoming tech CFOs being women, the highest proportion since first half of 2021 records. “To build on this progress and achieve true gender balance in the CFO role, organizations must continue to build robust and diverse internal pipelines and invest in structured sponsorship programs that target underrepresented groups,” the Russell Reynolds report said.
The report also found that CFO tenures are becoming shorter. The average tenure of an outgoing CFO has reached a five-year low of 5.7 years in the first half of the year. When Russell Reynolds looked at the reasons why CFOs departed the role, more CFOs are choosing to retire, with 54 percent of outgoing CFOs retiring or moving to board roles exclusively, up 15 percentage points year-over-year—a five-year high.
Related: The Demand for Interim CFOs Soars
“CFOs approaching retirement may not seek another CFO role due to factors like burnout, financial security, or simply deciding that retirement seems the more attractive option,” the report said. “Instead, many are leveraging their finance expertise in various board roles.”
Internal Appointments
CFO succession plans are coming to fruition, with 56 percent of global incoming CFOs being appointed internally in the first half of the year. But, certain indices are more successful at promoting internal CFO talent than others. The Nikkei 225 and Hang Seng’s CFO appointments were almost exclusively internal, but in more western indices, there was a greater reliance on external appointments.
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For those externally appointed, experienced CFOs have been increasingly favored—the first half of 2024 has seen the highest percentage of experienced CFOs being recruited into the role in the past five years, as organizations continue to navigate complex economic markets.
Turnover
The healthcare and tech industries recorded three-year highs of 14.2 percent and 11.4 percent in the first half of 2024 respectively. Increased retirement rates, high levels of CEO turnover at the end of 2022 and throughout 2023 within the industries, and lower market performances over the past two years have many organizations rethinking their CFO.
Russell Reynolds Associates is a global leadership advisory and search firm. Its 520-plus consultants in 47 offices work with public, private, and non-profit organizations across all industries and regions. The firm also conducts in-depth organizational culture assessment and measures the cultural fit of key leadership and candidates in the following areas: arts and culture, global development, higher education, non-profit health and human services, public sector, social justice and advocacy, as well as trade and professional associations.
Related: A Look at How the CFO Role in Private Equity is Evolving
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
