|
|
iVillage: six CFOs in five
years. Delta Air Lines: four in four years. Hastings Entertainment: four in
two years. Why all the churn atop corporate finance departments?
In Delta's case, at least, two CFOs (Warren Jenson, now at Amazon.com, and
Ed West, now at Internet Capital Group) were lured away by dot-coms. A
third (Tom Roeck) was replaced in 1997 when a new CEO came aboard, not an
unusual turn of events. So, while high CFO turnover may be a traditional
symptom of a troubled company, often it is simply a fact of modern
corporate life.
In the recent past, according to William Sihler, a professor at the
University of Virginia's Darden Graduate School of Business, the average
tenure of a CFO has been five to seven years. "CEOs often turned at
about that rate," he explains, "and wanted to bring in their own
CFOs." But, adds Sihler, co-author of Financial Turnarounds:
Preserving Value, a Financial Executives Research Foundation study,
"just as companies need CEOs with different skills, CEOs need CFOs
with different skills for different stages in a company's life." One
CFO to perform triage, say, another to prescribe treatment, and a third to
expand again, not to mention a CFO who specializes in going public.
FALL GUYS SAYS LAURENCE STYBEL
Boston recruiter Laurence Stybel of Stybel Peabody Lincolnshire of says
most finance positions he's been asked to fill recently involve tenures of
two to four years. "The market is offering project-oriented
assignments of that duration," he says. "Companies are thinking
short term."
In such an environment, a growing subset of CFOs-for-hire specializes in
short stints--especially to repair broken companies. But clearly, any
finance executive hunting for a new post must consider working for a
shorter term, and can't ignore a good opening just because of past
turnover.
The adjustment may not be easy. "CFOs tend to like stability and
consistency, probably more than other functional groups," says Stybel.
"But most companies today are guided by exit strategies such as
mergers, in which case the CFO's job is going to be eliminated."
Get used to it. Shorter terms will increasingly be the rule. Certainly,
"in a big, mature company, CFO tenure can be 10 to 15 years,"
notes New Yorkbased executive recruiter Harry Higdon. But "in a
dot-com, it can be 10 months." The IPO market's collapse increases the
turmoil--and the turnover in finance. "Somebody's got to take the
fall," he says. And when Wall Street is disappointed, "usually
the CFO is blamed."
Of course, some walk if their stock options become worthless, adding to the
churn statistics, notes Higdon. Others leave for the opposite reason.
Graham Mitenko, professor of finance at the University of Nebraska, Omaha,
blames prosperity for some of the leave-taking. "If you have any
options at all, suddenly you're worth $10 million; why do you need the
hassle any more?" he asks.
In general, the rise of the short-term CFO isn't a pretty prospect, warns
Scott Davis, United Parcel Service's vice president of finance. Davis, a
15-year veteran of the company, soon will succeed CFO Robert J. Clanin.
"To be CFO for 1 or 2 years and jump ship doesn't add value for the
company," says Davis. Clanin, who joined UPS in 1971, was named
finance chief in 1994.
ATTRACTED BY CHURN
Still, adds James O'Toole, a research professor at the University of
Southern California's Center for Effective Organizations, "Sometimes a
CEO has to replace top members of the management team. Where you have a
sign of weakness is when it occurs continually. Just as a baseball team
fires its manager because it doesn't know what else to do, a CEO may be
frustrated [by poor performance] and not know what else to do."
Some CFOs are unfazed--and indeed are even attracted--by churn, even at
troubled companies. That's if there's a visible upside. For example, Robert
Sartor became CFO of The Forzani Group, Canada's largest sporting-goods
retailer, in 1997, despite two years of losses. "This was the third
money-losing organization I've joined," he says, laughing. "I
snooped around the books extensively, and thought the company could be
fixed."
Sartor remains Forzani's CFO, having engineered a turnaround. "The
reason I am comfortable taking on assignments in money-losing organizations
is that losses are catalysts for change," he says. "Change in how
management operates, in how it defines its business, in how it measures
itself, and in how it views the term 'win' for the future."
Still, it's proper to be skeptical about a company that has been churning
its CFOs, advises Professor Mitenko. "Consider where departing CFOs
are headed. If they're going to a similar job, or even stepping down [to a
lower-level job], you don't want any part of it," he says. "But if
every two or three years a CFO goes on to bigger and better things, that's
OK."
|
