A Step Up or a Push Out? The CFO’s Choice

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A Step Up or a Push Out? The CFO’s Choice

Category : 2017

Google the phrase “CFO Departures” and the headlines aren’t pretty—

  • Shares Shed 7% in Reaction to CFO Departure
  • CFO Abrupt Resignation Doesn’t Pass the Smell Test
  • Company Climbs Following Q2 Sales Update, CFO Departure
  • CFO to Leave After CEO Departure
  • Company Files for Bankruptcy, Announces Departure of CFO

To eliminate some of the ambiguity surrounding CEO and CFO departures, financial journalist, and owner of Exechange, Daniel Schauber, developed the Push-out-ScoreTM. Schauber’s model measures nine dimensions of publicly available data surrounding departures including the form and language of the management announcement, the notice period, the official reason given (“to pursue other interests”), and succession. Recognizing the link between executive changes and stock price, Schauber tries to determine the likelihood an executive was forced to leave.

A scatter diagram for 226 departures over six months confirms why researchers struggle to define the relationship between CEO performance and CFO termination. Generally, stock price volatility increases with a higher Push-out-ScoreTM. But, if shareholders think a CFO departure reflects deeper financial issues, a departure can raise a stock price. In short—it’s complicated.[i]

How do a Push-out-ScoreTM and a fluctuating stock price connect with executive branding? If a CFO doesn’t have a strong personal brand, there is a higher likelihood a CEO transition will mean a job change for the CFO as well.

While a sitting CFO often has deep knowledge of financial metrics and broad organizational expertise, McKinsey found that less than 15% of the CEOS they follow moved to the top job from CFO, CMO, CTO, Chief Counsel, or Head of Strategy roles. KPMG research with 500 executives in six countries found similar results. [ii]

The most frequent reason given for CFOs not making it to the CEO chair is the CFO’s lack of operating acumen. Explaining the P&L to investors is an essential skill for both a CFO and CEO. Owning the numbers and having a direct connection to what created the results (customers and business operations) is often what CFOs lack.

It is universally known that the closer you are to the customer and revenue, the better your chances of surviving a corporate upheaval. Behavior, not spin, creates a personal brand. CFOs wanting to move to the CEO spot are wise to proactively—

  • Make customer visits a priority. The better a CFO understands a customer’s business, the more relevant the CFO becomes to his or her top executive.
  • Strengthen relationships with line of business owners and operators within the company.
  • Get known for owning an opinion of the business—and candidly sharing it.
  • Build a brand as someone with innovative ideas and straightforward solutions.
  • Create a network with CEOs outside the current organization.
  • Join a board outside the company.
  • Develop a succession plan. An indispensable CFO isn’t going anywhere. [iii]

A PWC study puts CEO turnover at 14.9 percent in the world’s largest 2500 companies. That translates to over 370 opportunities for CFOs to consider a move to the CEO chair. Building a brand now could mean a greater opportunity in the future.


Details of the research are at

[i] https://corpgov.law.harvard.edu/2017/06/08/retired-or-fired-how-can-investors-tell-if-the-ceo-left-voluntarily/.

[ii] CEO Monthly: KPMG reveals nearly a third of global CEO’s feel their CFO’s are not up to the challenge.

[iii] A Deloitte study titled Four Faces of the CFO offers valuable insights about developing the skills critical to moving to a CEO role https://www2.deloitte.com/us/en/pages/finance/articles/gx-cfo-role-responsibilities-organization-steward-operator-catalyst-strategist.html.