Two recent studies on succession plans for the C-suite’s finance head found that many organizations didn’t have one—especially when it comes to smaller workforces.
If your chief financial officer was to win the lottery tomorrow and quit his or her job, would your organization be able to get by?
Short answer: maybe not.
A recent survey from Robert Half Management Resources found that at many organizations, especially those with fewer than 250 employees, there was no set successor for the key finance role. Just 52 percent had one, and only 37 percent of organizations with fewer than 50 employees had one set aside. Larger organizations—especially those with 500 to 999 employees—did better, but overall the picture didn’t look so hot.
Among the most commonly cited reasons for not having a succession plan in place were that the CFO wasn’t planning to quit anytime soon (64 percent) and that there weren’t qualified replacements within the organization (17 percent). Another factor, said Tim Hird, the executive director of Robert Half Management Resources, involved competing interests.
“Succession plans are critical but often overlooked as executives focus on other pressing issues,” Hird explained in a news release.
Another study on the same issue had even more dire findings. A Korn Ferry survey from last March found that slightly more than a third of respondents (34 percent) said they had a successor in place, while 81 percent of respondents would be unable to make an immediate replacement if necessary. (It was more likely at many organizations, per Korn Ferry, that there would be a succession plan for the CEO—and if there wasn’t one, the odds of the CFO having one were also likely low.)
The Korn Ferry and Robert Half surveys differ in one other key place: the importance of internal promotion to the role. The Korn Ferry report noted that 51 percent of CFOs currently serving had been appointed to the role internally—which seems to differ sharply from the Robert Half survey findings.
But there may be another reason why succession plans may be are tough to come by: Korn Ferry’s Bryan Proctor noted that the CFO role is sometimes seen as a potential precursor to another jump up the executive food chain, making the role more territorial in nature.
“Some CFOs still have career objectives that go beyond finance,” Proctor told CFO. “And so as they think about their ability to progress into maybe a role as COO, a business-unit president, or a CEO, they know they need to present a strong succession for their own role as part of their case.”