The study by the global executive recruiting and assessment firm showed that there was a 23% increase in turnover among CFOs of Fortune 500 companies in 2004 and a corresponding 21% increase in the number of resignations. Overall, 16% of Fortune 500 companies changed CFOs on the year, up from 13% in 2003, according to the study. Twenty-nine percent of changes were due to promotion, while 23% can be attributed to retirement.
The trend is the same for controllers at Fortune 500 companies, with the turnover rate increasing by 25% in 2004, as well as a whopping 400% increase in the number of resignations. In total, 15% of Fortune 500 companies changed their controller in 2004, up from 12% a year earlier. However, a significant factor in the high turnover rate was a 29% increase in the rate of promotions.
For treasurers, the trend was different in 2004, with no increase in the rate of turnover seen on the year. Twelve percent of Fortune 500 companies changed their treasurer in 2004, which was the same as in 2003. However, there was a 42% decrease in the rate of resignations among this group.
In 2004, there was also a slight increase in the number of insiders hired to fill these vacated positions. In 2004, the number of insiders v. outsiders hired stood at 61.7% v. 35.8%; in 2003, the figure was 60.6% v. 36.4%. However, with controllers, there was a noticeable shift towards a preference for outside candidates. In 2004, 53.4% of companies hiring for this position chose insiders, down from 55% the year before.
Russell Reynolds executives attribute these changes to multiple factors. “The increased and relentless pressures of Sarbanes-Oxley compliance and the competitive drive to beat the numbers every quarter are two factors driving rising turnover among financial officers,” said Lorraine Hack, a member of Russell Reynolds Associates’ Financial Officers Practice, in a press release. “Many CFOs and controllers rise to the occasion; but some decide to opt out of public company top roles, too. Being a financial officer of a publicly traded company has become more challenging and less attractive with compliance demands, so companies must keep scouting new talent.”