CFO Turnover is on the Rise. What does it mean for organizations?

An alarming stat: the S&P 500 experienced a three-year high of 14.4% in CFO departures in the first three quarters of 2024, driven predominantly by the technology and industrial sectors. The implications of this turnover are profound, prompting organizations to adapt their strategies to remain resilient in the face of change.

What are the factors contributing to the higher CFO turnover?

While there are many reasons for the turnover numbers, we’ve narrowed it down to three that stand out. 

Extensive responsibilities

The CFO’s role has expanded far beyond financial reporting and budget management. Today, CFOs are deeply involved in strategic planning, risk management, digital transformation, and technological integration. 

The day of being confined to spreadsheets is well in the past. Instead, they are big players at the executive table, providing insights that shape the organization's future. 

Their expanded scope, however, comes with increased pressures. The demands on CFOs now include mastering advanced analytics, overseeing complex tech-driven financial systems, and leading enterprise-wide strategic initiatives. At Pender and Howe, we recognize that while these expanded responsibilities are exciting, they can also lead to increased turnover as individuals face heightened expectations and the associated stress.

Successful CFOs in this environment can effectively delegate, manage cross-functional collaboration, and focus on both the broader vision and the financial details. The key lies in balancing visionary thinking with meticulous execution—which, to be fair, is a balancing act that isn’t always sustainable long-term for every finance leader.

Career progression

Another reason for the high turnover is that the CFO position is commonly seen as a stepping stone to other high-profile roles, including CEO positions. Because CFOs today are expected to wear multiple hats, they are uniquely positioned for broader leadership roles.

Post-pandemic retirements

The pandemic has caused a significant number of senior executives to reassess their priorities, leading to a wave of retirements and career shifts among CFOs. For many finance executives, the intense workload and stress brought on by the pandemic have prompted them to step back and either retire or pursue new, less demanding opportunities. The pandemic accelerated trends already brewing—executives seeking better work-life balance, the desire to focus on personal health and the growing recognition of life outside the office walls.

In the post-pandemic era, CFOs are re-evaluating what they want from their careers. 

We see this as both a challenge and an opportunity. Organizations need to recognize these shifting dynamics and respond with adaptability and flexibility. This might mean offering better work-life integration, wellness initiatives, or different career paths within the company that still leverage the CFO's expertise while reducing their day-to-day burden.

What are the implications for organizations?

There’s no arguing that high CFO turnover can disrupt organizations, especially regarding financial strategy continuity and investor confidence. However, with proactive measures, companies can manage this transition effectively.

Develop succession plans

CFO turnover is inevitable, but unplanned vacancies can create significant disruptions. Developing a robust succession plan is incredibly important for maintaining stability during transitions. By identifying potential future CFOs, companies can ensure a smooth handover and minimize operational disruption. 

We wrote about C-suite succession planning last week and advised organizations to treat succession planning as a contingency measure and an integral part of leadership development. Doing so also demonstrates to investors and stakeholders that the company is prepared for changes.

Foster internal talent

Promoting from within helps retain institutional knowledge while motivating the broader finance team with proof of a clear path for growth. 

Did you know that 54% of new CFOs in the first three quarters of 2024 were internal promotions?  Internal promotions can offer significant benefits—from minimizing the learning curve associated with the new role to retaining corporate culture. We always encourage our clients to invest in mentoring programs and targeted leadership development initiatives to build the next generation of finance leaders from within.

What are the opportunities for organizations? 

While increased turnover presents challenges, it also offers unique opportunities for organizations to reframe how they approach financial leadership and team development.

Diverse perspectives

Bringing in new CFOs can introduce fresh perspectives and innovative ideas. A new CFO often brings experiences from different sectors or companies, and this diversity of thought can bring adaptability and growth within an organization. 

Historical practices do not constrain new leaders and can challenge the status quo to identify better strategies. Viewing turnover as an opportunity for reinvention rather than a setback is crucial for long-term success.

Advancement for emerging leaders

CFO turnover creates opportunities for the rising stars within finance teams to advance into leadership positions, promoting career development within the organization and strengthening morale. When teams see that hard work and dedication lead to real advancement opportunities, they are likelier to remain engaged and motivated. 

At Pender and Howe, we support this internal mobility by helping organizations identify high-potential individuals and preparing them for the next step. More often than not, internal mobility can lead to a more committed and effective leadership team.

The final word 

The trend of CFO turnover clearly reflects broader shifts in the corporate environment, from changing career aspirations to the expanded role of finance in strategic decision-making. 

By proactively addressing these changes through strategic planning, strong leadership relationships, and seeing turnover as a chance for growth, organizations can work through these transitions effectively and thrive in them.