In today’s fast-paced corporate landscape, CFO succession planning is more critical than ever. With the role of the CFO evolving to include greater responsibility for strategy, technology, and shareholder value, the stakes are high when it comes to ensuring smooth transitions in leadership. However, many companies still lack a formal plan to ensure continuity and stability during these critical shifts. A recent survey highlights a surprising gap in succession planning, even among top revenue-generating businesses.
A study conducted by Deloitte in the second quarter of 2024 revealed that about one-quarter of CFOs from 200 major companies reported no formal succession plan in place. Astonishingly, this lack of planning is most common among the highest revenue brackets. CFO turnover is rising, and the demands placed on new CFOs have grown more complex, with operational experience, technology fluency, and strategic acumen now top priorities for successors.
The average age of CFOs is 54, and many are approaching retirement amid the so-called “silver tsunami.” Succession is not just about filling a vacancy but ensuring the right candidate can drive future business success. As CFOs become key players in corporate strategy, companies that fail to prepare for leadership transitions risk losing both operational stability and shareholder confidence.
Implications for Business Leaders
Business leaders must recognize that CFO succession is no longer just an HR task—it’s a strategic imperative. The CFO's role has expanded far beyond traditional financial management to include technology leadership and cross-functional collaboration. A well-planned transition can mitigate risks, especially in industries undergoing rapid change, such as tech adoption or regulatory shifts. Yet, many companies remain reactive rather than proactive, potentially exposing themselves to operational disruptions and missed growth opportunities.
Actionable Strategies for Businesses
- Start Succession Planning Early: Build a pipeline of internal and external candidates with the necessary skills and leadership qualities.
- Emphasize Technology Proficiency: Ensure that potential successors are fluent in emerging technologies like AI and have the ability to integrate these innovations into business operations.
- Broaden the Candidate Pool: Look beyond traditional finance roles. High performers in operational, strategic, or even technological functions could bring fresh perspectives to the CFO role.
- Foster Leadership Development: Cultivate strong leadership through mentoring, targeted experiences, and cross-departmental assignments.
CFO succession planning is more than just identifying a replacement; it’s about future-proofing the company by placing the right leader at the helm. With CFOs becoming central to shaping strategy and driving innovation, a thoughtful and well-structured approach to succession is essential for any business looking to thrive in today’s dynamic market.
Author
Don Noble, a Partner at the Florida CFO Group and a technology expert, has an extensive background in financial leadership and advisory roles. Leveraging his wealth of experience, he collaborates with businesses to optimize their financial and technological strategies, fostering growth and resilience in a dynamic marketplace. Don is also a doctoral student studying CFO leadership. You can also visit Don’s LinkedIn Profile for more information.
Reference
Bujno, M., Clark, E., Reese, J., & Lamm, R. (2024, October 2). CFO Succession: Time to Jump-Start a High Stakes Process? WSJ.
Questions?
If you have any questions or would like to discuss your organization’s strategy, please give the Florida CFO Group a call at (877) 652-2367 or email us. We are here to help you navigate your financial challenges and achieve success.