Dive Brief:

• Global turnover of S&P 500 CFOs reached a six-year high last year at 17.8%, matching the previous peak seen in 2021, according to Russell Reynolds’ CFO Turnover Index. Overall global CFO turnover hit 15.1%, just below the record 16.2% turnover seen in 2023, according to the index.
• Rising retirement rates were a key driver of the increasing turnover, with 54% of finance chiefs departing from their roles either retiring or moving exclusively to board positions — a jump of 100 basis points year over year, the leadership advisory firm said. The average age of finance leaders making those switches was just over 56 years old, the lowest seen in six years.
• The rising turnover is part of an ongoing trend affecting financial talent: "We're at a point where the supply, demand dynamic is getting concerning,” said Jim Lawson, co-leader of executive search and leadership advisory firm Russell Reynolds Associates’ CFO practice. “Classically-trained” CFOs are making the move to retirement, and “that is really limiting the pool of candidates moving forward,” he told CFO Dive in an interview.

Dive Insight:

Retirement rates are rising among finance chiefs for a number of different reasons — equity markets throughout 2024 were strong, with jumps in stock prices prompting more CFOs to consider if it was an opportune time to retire, Lawson said.  

Another factor informing rising retirement rates is that finance chiefs “get the top job at an earlier point in their career than CEOs,” Lawson said. “It's just the average tenure of a newly appointed CFO is lower than that of a CEO.”  

However, with CFO retirements at a six-year high, and with finance chiefs logging shorter tenures in the top financial seat — coming in at 5.8 years on average in 2024, another six-year low, RRA found — businesses are beginning to think differently about how they find their next financial leaders.

Most are putting an increasing premium on experience, with 40% of global CFO appointments last year going to experienced finance chiefs — a six year high, according to the index. However, with retirement rates growing and tenures shrinking, businesses are vying for a dwindling pool of those experienced leaders.

Many are looking to their own talent ecosystem for their next finance chiefs, with the importance of an efficient succession plan growing. In 2024, 57% of CFOs were internal appointments, 34% were external hires coming from a sitting CFO position and 9% were external appointments coming in as first-time CFOs, RRA’s index found.

For CFOs, a smaller pool can also create more options for new positions or career advancement. Many finance chiefs “are looking for more tech enablement in their opportunities,” Lawson said. “We are often seeing somebody going from more of an old economy company to a new economy company just because they want to work in a more innovative environment, or sometimes it’s higher margins.”

Higher turnover in the top financial seat also comes as CFOs continue to see their list of responsibilities grow and evolve in the face of changing business needs and new technologies. The growing list of responsibilities CFOs need to juggle is also contributing to increased turnover, Lawson said.

“There are a lot of CFOs that were just exhausted from that continuous cycle of being a public company, working through the quarters, working through kind of one-off debt issuances, and it really just takes a toll over a period of time,” he said.

CFOs need strong financial, operational and communication skills, while also being able to understand how to tap new technologies like artificial intelligence to drive efficiencies at their companies, RRA said. As finance chiefs continue to absorb new responsibilities, a rising number of companies have taken steps to merge their CFO and chief operating officer roles.

Both software provider Salesforce and payments provider PayPal announced such changes in February, for example, with Salesforce creating a new “COFO” position and PayPal appointing its CFO Jamie Miller to the additional role of COO.

Although turnover continued to rise, RRA’s index also showed some bright spots, particularly regarding diversity. Last year, of the 275 finance chiefs appointed, 70 were women, another six-year high.

Fifty-four percent of the women tapped for the top financial seat were internal appointments, according to the index. In terms of industry, technology and financial services led the pack on increasing diversity, with 36% and 39%, respectively, of incoming CFOs being women.