28% of big companies have no formal CFO succession plan, finance chiefs say

Dive Brief:

More than one quarter (28%) of finance chiefs at large companies with revenue of $10 billion or more said their organizations have no formal CFO succession plans, with multi-billion companies the revenue group reporting the highest share of firms lacking such plans, according to a recent survey by Big Four firm Deloitte. The 2Q24 CFO Signals report released this week included the findings from 200 CFOs queried during April and May, with roughly 25% of all respondents stating their firms lacked such succession plans.
Given the growing influence of finance chiefs, the share of companies that aren’t prepared to replace a departing finance leader is surprising, Steve Gallucci, Deloite’s National Management Partner, US CFO Program wrote in the report, noting that the survey also “underscores how the remit for the CFO is expanding … Core finance skills remain important, but, according to the survey, maybe not as important.”
Asked what traits they look for when identifying their potential replacements, operational experience topped the wish list, cited by 37% of the respondents. Meanwhile, tech familiarity with generative AI, machine-learning and cloud tied with network leadership to be the favored strength of 30% of respondents, while accounting skills and broader enterprise knowledge were the next most important credentials, with both cited by 28% of the respondents.

Dive Insight:

The insight into the dearth of succession planning for the finance seats at many large companies comes as public company CFO turnover soared to a three-year high in Q1, according to leadership advisory firm Russell Reynolds Associates. That churn is attributed to such factors as CFOs increasingly being considered succession candidates for CEO roles, as well as increased retirement rates among finance chiefs wearied by the demands of the COVID-19 pandemic.

Lacking a planned successor in waiting, many companies have turned to interim CFOs when resignations are tendered, often tapping internal finance leaders temporarily to navigate through tricky periods of transition, CFO Dive previously reported. Others have looked outside for help in transitions, as Bed Bath & Beyond did when it tapped Holly Etlin first as its interim and then as its CFO and chief restructuring officer to lead it through bankruptcy proceedings.

Another notable finding of the Deloitte survey is that CFOs themselves are often not in charge of creating or keeping up succession plans. Of the respondents in the survey, the largest group (29%) said that task is largely held by CEOs, followed by CHROs ( 24%), and board of directors (21%). Special succession planning committees and audit committees also sometimes have those responsibilities.

But CFOs did have ideas about how to begin preparing their potential internal successors. The top actions cited were placing them in a managerial training programs, working with candidates to create a development and or transition plan, and mentoring and coaching the potentially future finance chief on how to do the job.