Internal vs. External CFO Candidates

There is an ongoing discussion in my Linkedin CFO Careers group over an article written by executive search consultant John Touey about the shrinking CFO candidate pool. While that potentially spells good news for those who are seeking their first CFO position, it is also creating risk for companies who hire external or promote internal – inexperienced – folks to those strategic positions.

Here’s one comment from the group …

I think Touey is right on target with this article. I have had a number of recruiters contact me about open CFO roles in the last year. Each one I have asked why they are not promoting someone from within. Almost every one has said because the internal candidates lacked the breadth of experience that the company desired. Most of the time they were talking about a controller who had been with them 10+ years.

Coincidentally, in doing research for a Proformative webinar I conducted back in 2012, I found stats that indicated the average internal promotion to the CFO seat did not happen for an average of 11 years. Apparently, that has not changed in the last few years.

Good-fitting CFO

Good-fitting CFO

Here’s the conundrum.

With internal candidates you have fit-for-culture but limited experience. With external candidates, you might get transformation, but culture fit could be an issue.

Companies want – and need – both. Proven leadership and a track record of measurable impacts (experience, not necessarily title), along with a clear fit within their established culture.

photo by: reynermedia
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3 Responses to Internal vs. External CFO Candidates

  1. Susan Lowe says:

    This is an ongoing and interesting topic, that applies to all Senior/C Level needs — how are companies grooming staff to take over leadership positions? In my career, I have not seen many internal promotions to the C-Suite. A big question to me is why are companies not investing in the professional development of some of their middle management staff so the executive level skills can be developed and nurtured?

    Also, I do not think Controller to CFO is an automatic or natural step to take — they are two very different roles, needing very different skill sets. Could a Controller assume a CFO role? Of course, but not without the right nurturing and mentoring to take that leap.

    • Cindy Kraft, the CFO-Coach says:

      Great questions, Susan. Perhaps with all that CFOs are juggling these days, grooming their successor just doesn’t fit on the To Do list?

      While the Controller-to-CFO “was” a fairly typical career path in the past, it is now less than 50% with atypical career climbs becoming more common.

      Thanks for reading and for commenting!

    • Susan,

      I have found that Controller to CFO is a great opportunity for many to step up in to the CFO role. It is hard to be hired as CFO without previous CFO experience. In many cases, the only time a senior finance person can move into a CFO role is with the company they are with.

      I have also found that too many companies make a mistake when promoting their Controller to CFO. It is an easy choice to make for a company, especially when their incumbent CFO has been presented with a better opportunity elsewhere, and promoting the Controller can limit the risk. When a Controller is not properly prepared for the CFO role, the company may soon realize that it made a big mistake indeed.

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