Fortune 500 companies are finding it hard to hire CFOs. They want candidates to bring previous big-company experience, but many CFOs with that experience don’t want to go to another big company except as CEO or in another top operational role. That's a survey finding by management consulting firm Spencer Stuart.

Of 90 Fortune 500 CFOs who made a job change last year, only four went to another Fortune 500 company as its next CFO, scarcely more than a rounding error.

"CFOs are choosing other paths and not electing to do the job twice," says Tricia Clifford, a consultant in Spencer Stuart's financial officers practice.

By contrast, 11 CFOs, or 18%, went to another Fortune 500 company as CEO.

Clifford says she sees a disconnect between the goals of hiring CEOs and their boards and those of top-candidate CFOs. 

The top criterion for those on the hiring side is previous Fortune 500 CFO experience, while CFOs who bring that experience, if they can't move into the CEO seat, prefer to take another top operational role, like COO, or move into private equity, either as an operating partner at a PE firm or as CFO of a portfolio company, or they want to retire and use their experience on public boards. 

"The role has changed and the CFO experience has changed, and the bottom line is, it's gotten harder," Clifford said. 

Not only are CFOs expected to play a strategic role, second only to the CEO, they're increasingly overseeing functional areas beyond finance, like IT and HR. At the same time, they're expected to communicate the company's financial performance to the board, investors, analysts, and, increasingly, activists.

"When you layer on the increase in presence of activists, it becomes a very difficult environment," she said.

Outsized importance

The difficulties multiply when the company is struggling. 

"CFOs are front and center in a crisis, playing essential roles not only in stabilizing the business but in positioning the company to make quick moves once conditions improve," she said. 

Because of the CFO's outsized importance, hiring CEOs and their boards have become less inclined to consider learn-on-the-job candidates. That means fewer opportunities for CFOs of smaller public, or private, companies, or for other finance executives who haven't yet sat in the CFO seat — especially when the pandemic's impact on company prospects is factored in.

"I would predict that boards and CEOs will be less willing to take a bet on an inexperienced finance executive, whether that's a step up or someone coming without public company experience, given the enormity of the challenge," Clifford said. 

Big-company CFOs might be more willing to take an equivalent role elsewhere if they can find an attractive challenge or if it's in a sector they're interested in. Of the ones who transitioned in 2019, they tended to go to a company that offered them a bigger opportunity.

"The scale and complexity and broader scope were important to them," she said.

For CFOs that make the switch because they're interested in, say, life sciences, they must be prepared to operate in a novel environment, because each sector comes with its own regulations and compliance issues. 

"Somebody out of financial services [moving] into a technology company is likely going to find it difficult," she said. 

The best thing finance executives who have yet to sit in the CFO seat can do is get a broad set of experiences — accounting, controls, treasury, and FP&A, for example — and try to get exposure to investors and the board so they can become comfortable sharing consequential communications.

"They won't own that accountability until they're in the CFO seat, but you can give them exposure to external constituents," she said. "The bar probably has gotten higher for the public company CFO role, which makes this dynamic tougher than it was pre-pandemic."