Great Expectations: Where Next for the CFO Role?

Welcome to our inaugural Global CFO Turnover Index Annual Report. For six years, we’ve tracked data from the world’s leading stock indices, identifying patterns and trends among C-suite roles that are shaping the leadership of global businesses and their future leaders. This year we launched our second Global CEO Turnover Index Annual Report and, in recognition of the critical leadership position of CFOs, this report adds to our analysis, offering a deep dive into what is shaping the CFO role today.

Our research has found worryingly high turnover in the CFO role. As expectations for CFOs continue to mount to levels that are increasingly difficult for them to deliver against, many experienced CFOs, with the option of retirement or of a move to a board role, are finding these increasingly appealing.

CFOs are laboring under an ever-increasing litany of demands that make longevity in the job a challenge—technology, variations in different markets, and the impact of regulation to name a few. The pace of change is demanding.

This means, as first time CFOs step into the gap, the expectations on them are the greatest they’ve ever been. When it comes to CFO succession, talent coming through the pipeline may not have received the support they need to survive a lengthy tenure, let alone succeed.

Here we examine three core themes that have emerged from this year’s research which could inform how boards look at the needs of their organization: The reasons for record CFO turnover and shorter tenures, the impact of the shifting CFO archetype on performance, and how the changing requirements of CFO experience are already affecting succession.

It’s our hope that this data and our expert analysis will help global leaders move forward in a time of radical change. Throughout the year we will continue to update our findings with our quarterly Global CFO Turnover Index to ensure that our clients are always ahead of the trends.

We look forward to working with you in 2025.

Jenna Fisher & Jim Lawson, Global Co-Leads Russell Reynolds Associates’ Financial Officers practice

Chapter One: CFOs quick to tap out at the top

In 2024, CFO turnover reached 15.1%, just shy of the record global turnover witnessed in 2023 of 16.2%.

This has been driven by a particularly active S&P 500, which reached its highest turnover level in six years, matching the peak set in 2021. The S&P TSX Composite also reached a four-year high, while the FTSE 250 reached a six-year high—30 new appointments compared with the six-year annual average of 24.

The high retirement rate of CFOs is one of the key drivers of record CFO turnover. In 2024, 54% of outgoing CFOs retired or moved exclusively to board roles. That’s up 10 percentage points year-on-year, reaching a six-year high. Notably, the average age of retirement or making a move to a board role is 56.6 years old—the lowest average in six years.

Why is this? Increasingly, CFOs find themselves having to navigate geopolitical instability, tough markets, and activist investors, as well as rapid advancements in technology and shifts in regulation.

Meanwhile the rise in equity markets offers a lucrative exit point for CFOs. As such, the prospect of a less stressful working life in board roles and retirement is beginning to look ever more appealing.

No second chances for CFOs

There is, according to Jim Lawson, co-leader of RRA’s Global Financial Officers Practice, a perhaps inevitable link between CFO turnover and CEO turnover. “Naturally, a new CEO will want to choose their own executive, perhaps, because their strategy timeframe doesn't align with the current CFO’s retirement timetable.” According to our Global CEO Turnover Index annual report, CEO departures hit a record high in 2024, with 202 departures, significantly surpassing the six-year average of 186—a 9% increase on the 2023 number.

He also notes the impact of activist dynamics on CFO turnover, where CFOs may be replaced if they are not strategically focused.

“With the activist dynamic, we're going to continue to see more executive turnover, because investors will want to make changes to the management team. CFOs will need to be more operational—stronger on strategy, capital allocation, and investor relations—rather than an accounting CFO.”

Laboring in tough markets

These shifts in expectation come to CFOs working in markets which have already been laboring under tougher conditions for some time, according to Lawson: “The post-pandemic era has been one of stricter regulation and higher inflation, a tougher business market where conflict and supply chain issues have definitely made it a more exhausting role than the previous four years.”

The data shows that tenure for CFOs in industrials is the lowest of all industries analyzed—4.7 years compared to global average of 5.8 and the highest industry tenure, consumer, where it’s 7.4 years.

“Your average, mid-market, industrial automotive supplier, for example, has been in an industrial recession for five years. And with transformation and cost-cutting too, all of that is exhausting,” Lawson adds.

“Market pressure on the CFO is so fierce given some of the uncontrollables in the global context, it’s a demanding role with increasing levels of stress,” agrees Ben Jones, RRA’s Co-head of the European CFO Practice. He points to the impact on the healthcare sector as an example, where 60% of CFOs working in healthcare organizations in 2024 retired or moved to a board, compared with the already high global average of 54%. “Given the valuations that exist within healthcare in particular—and therefore where performance sits within that sector—there must be a link between performance and turnover.”

Squeezed by regulation

Adelin Choy, one of RRA’s Hong Kong-based consultants also believes companies have not necessarily been prepared for regulatory changes. “The way the CFO needs to balance risk and the risk portfolio outlook now looks quite different. Companies are looking for CFOs who’ve dealt with similar challenges, and who are in a better position to advise the CEO or the board on what they need to do financially to prepare for some of the regulatory battles they're facing.”

The post-CFO life—where the grass is greener

Jones believes greater regulation is having an impact on turnover, as he sees CFOs make a move from public companies to private equity portfolio companies earlier in their careers. “Where we used to see CFOs have a shot in private equity towards the end of their career, now we're beginning to see that slightly earlier—even though the opportunity is muted due to the performance of equity assets, the level of regulation in the UK and the compensation differential.”

Lawson believes the greater number of working choices open to CFOs, as well as opportunities beyond the CFO role, is also driving turnover. “There are more options post-CFO than there were in the past. More CFOs are going into general management roles, the need for qualified financial experts for boards continues to be a trend, and private equity firms are tapping more CFOs to be operating partners.”

The data also demonstrates the broadening suite of options open to CFOs, including the prospect of a CEO role, COO role, or an investing role, for example, as an operating partner at a private equity firm: Of those outgoing CFOs taking on new roles in 2024, 34% moved to a President or CEO role, 5% to a COO role and 17% to another C-suite position.

Back to Foreword

Chapter Two: Great expectations burden the modern CFO

These trends are reshaping, not just the demands on CFOs in their roles, but also what boards are looking for in their appointments.

Much is expected of today’s CFOs. As a partner to the CEO, many boards see CFOs as CEOs-in-waiting. The need for CFOs to navigate the political and regulatory landscape as well as activist investors in the market means they are expected to have excellent communication skills. Not only that, but they’re also expected to keep abreast of and take advantage of all the opportunities presented by evolving technology. All this in addition to the expectation that a CFO will be solid on numbers and operations.

These expectations, along with the turnover described earlier, puts boards’ succession plans under pressure. We see this manifesting itself in two ways in our research: First, in recognition of the expanded remit expected in the CFO role, boards are also seeking to appoint leaders with CFO experience. This year saw the highest percentage of experienced CFO appointments in the past six years—40% globally.

But also, as experienced CFOs depart, reducing the talent pool of experienced CFOs, many are looking at their own internal talent. Our analysis shows a growing number of first-time CFOs stepping into the role. Just over half (53%) of global incoming CFOs were appointed internally in 2024, although the FTSE 100 was notably lower with only 36% internal appointments.

The career trajectory has changed, and only those who have gained the additional skills they need en  route or with experience already under their belts will be ready for today’s CFO role.

The CFO needs to be a strategic operator

“There's been a shift in the archetype of a CFO,” says Jenna Fisher, co-leader of RRA’s global Financial Officers Practice. “The CFO has almost become the de facto COO with more reporting—whether it's real estate, facilities, or legal—and so the role has become more complex.”

Lawson builds on this: “Trends are often in four or five year cycles. If you take a step back, 2003 to 2010 was the era of the audit and accounting focused CFO. From 2010 to 2020 there was a focus on operations. Since 2020, we're seeing a capital allocation and strategy-focused CFO. A lot of that is driven by the fact that there's now sophisticated data analysis of companies and their performance. As hedge funds come in—or activists—and look at the margins, the expectation is that the CFO will be very strong in looking at the portfolio of businesses and optimizing them.”

The CFO needs to be CEO-in-waiting

Fisher increasingly sees boards appointing CFOs almost as CEOs-in-waiting. “Often boards want somebody who could potentially be a CEO successor and are asking for that at the outset: they want somebody who has great leadership, who has built teams, who can help train up his or her successor. They want somebody who's had exposure, both internally and externally.

“Meanwhile, more and more CFOs want to become CEOs. That's a very real opportunity. It does vary by industry: Some industries, like biotech, for example, are less likely to put a CFO in as CEO. Same for technology, where they might favor engineering or sales talent. But certainly consumer, diversified industrial and financial services organizations are open to CFOs becoming CEOs, and that also has the effect of dissipating CFO talent.”

The CFO needs to be a storyteller

The ability of CFOs being able to communicate effectively and own their data—with both the board and investors—has never been more paramount, and can be key to a CFO’s initial success, as Lawson explains: “We typically see lack of success happen early, often because a new CFO doesn’t understand how to communicate with the board and investors. The right training, onboarding, and continued development can mitigate this—after all, CFOs are smart. But now they need to be able to influence, tell a story and get people excited to work with them.”

Fisher agrees. “Of course, there's the accounting controls piece, which CFOs need to at least be able to oversee. But boards want someone strong in financial planning and analysis, they want somebody who's had an opportunity to at least be a part of investor relations—even if they haven't led these before—who's had exposure to the board, can present the company well, and can be a thought partner to the CEO. It used to be that the CEO was the face of the company, and the CFO could ride sidecar. Now, CEOs often say, ‘I can't do this all by myself’.”

The CFO needs to be an intermediary

The ability to communicate plays differently in different markets and indices. Last year, only 15% of CFO appointments in the Nikkei 225 were external appointments and in the Hang Seng, appointments were exclusively internal.

Choy expands on this: “A lot of Hang Seng listed companies are family owned, which means that it takes a long time for anyone new to build trust with the families. The value of employees who have the institutional knowledge, have that strong network and trust with the family members is crucial. It’s why Hong Kong and Japan are interesting markets—it’s very rare they go external to look for a CFO.

“The first criteria for a CFO in these companies is someone who can work in a complex family business dynamic, who has agility and flexibility,” she continues “But last year was one of the toughest years for the Hang Seng market. Consumer sentiment in greater China has been low, and tensions between the US and China hasn’t helped. The number of Chinese companies listed on US indices has decreased drastically because a lot of Chinese companies realized they couldn't get the funding they used to have. The emphasis now is on the CFO being able to tell a good story, being able to convey a narrative in the right way to build trust with overseas investors as well.”

The CFO needs to be AI obsessed

Another shift in the demands of the CFO role comes from the importance of being able to use AI to drive efficiencies and cost savings and to stay ahead of productivity dynamics and automation to remain competitive.

“The fact that technology, particularly AI, has advanced at such a fast pace means that what companies need from the finance function has changed quite a lot,” says Choy. “There are two focuses for CFOs in relation to AI: One is the potential opportunities that the business can capture in terms of revenue, and the other is how they can optimize the use of AI so they can become more efficient and reduce operating costs.

“Finance has always been a partnering function,” she continues. “CEOs and boards don't necessarily expect the CFOs to be AI native, but they do expect them to understand its implications for business—from a revenue standpoint, for consumer behavior, in terms of timeline and its impact on the top and bottom line.

They need to be obsessed with how they could potentially benefit from AI, understanding the different types of AI out there and the potential impacts it could have from a revenue and operating standpoint.”

The CFO needs to be a political navigator

Almost half of the world’s population headed to the polls in 2024, and as Choy points out, the effect of geopolitical change has had an impact on the market over the past twelve months.

“So many countries had major elections last year that it contributed to a lot of turmoil in different jurisdictions across the world. The skill set that some companies require from a CFO looks quite different. It’s no longer someone who’s just ‘good with numbers’. The CFO needs to have strong business acumen, to understand technology, and to have a clear view on the impact of geopolitics.”

Back to Foreword

Chapter Three: Nobody next—The CFO succession squeeze

The consequences of these statistics are sobering for businesses looking at their succession plans. High turnover creates a growing demand for CFO talent. As stated earlier, 2024 saw the highest recorded percentage of experienced CFO appointments at 40%. Specifically, companies in the industrial sector were most likely to hire an experienced CFO—46% compared with the next highest sector, healthcare, where 44% of CFO hires were experienced.

But the list of expectations on CFOs means there’s a shrinking talent pool for businesses to draw on. Given CFO tenures now average only 5.8 years, with many experienced CFOs choosing to leave the role rather than make a lateral move, the pressure is on for first timers.

The impact on succession is plain: if businesses burn through CFOs without developing their own internal talent in tandem, there will be few people left up to the task.

Little experience left in the field

Demand for experience, according to Fisher, is high: “Some businesses will only look at experienced public company CFOs. Activist investors and private equity funds are chomping at the bit to buy companies and to help increase performance. The shareholder time horizon is shorter than it used to be, and so if a CFO is not able to effectuate change quickly, the question arises ‘who's next?’ Unfortunately, there's nobody next. There are so few people, it's become a challenge. Businesses might need to get creative and look to other analogous industries to be able to hire that experience. We have to make CFOs successful because we don't have an endless supply of them.”

Jones sees swift turnover and high retirement rates as having a significant impact on talent, particularly in the FTSE 100 where average tenure is notably lower than the average at 4.6 years: “It's the depth of talent that we're losing. We should have high quality people throughout the FTSE rather than just in pockets.”

The importance of succession planning has never been more apparent. As those with ambition to become CFO move through their careers, the skill set they need to fulfil that role is broadening before their eyes.

“CFOs, if they are doing their jobs, should be thinking about succession,” says Fisher. “They should be thinking about who is on their team—or who they need to get on their team—and what experiences they need to give them to enable them to be succession-ready. That takes years. Companies have been doing this for CEOs with some frequency. Now they need to gain rigor for the CFO as well.”

Diversity continues to lag

Jones also points to the impact a lack of diversity, especially around gender, is having on the talent available to fill the succession gap. “We should have greater levels of diversity in those senior leadership roles.” As in previous years, women remain underrepresented in the CFO role —the FTSE is eight years away from gender parity, but the S&P 500 is 36 years away.

Nevertheless, of the 275 CFOs appointed last year, 70 were women—the highest number of women CFO appointments in the past five years. Over half of these—54%—were internal appointments.

Some may look to the technology and financial services industries for insight, as they in particular have made large strides in gender diversity. In 2024, 36% of technology and 39% of financial services incoming CFOs were women, which is twice as high as the 2023 numbers, and a record high.

Lawson also highlights the role played by geography in aiding the gender diversity of these sectors, at least in the US. “If you're a woman in financial services living in New York City you don't have to travel as much because financial services basically take place in New York. Similarly, technology largely takes place in the Bay Area, and I think these are threads as to why we see these trends.”

From an APAC perspective, Choy also highlights the challenges faced by Asian women CFOs in securing overseas experience and the impact of that on their career progression: “One of the reasons a lot of the CFOs have been mainly men in the greater China region is that organizations are looking for CFOs with overseas experience and exposure to dealing with overseas investors. As a selection criterion, that can hinder some women CFO’s candidacies, whose life circumstances may have prevented them from gaining that experience.”

On the flip side of the coin, Fisher sees opportunities for women in the demand for diverse boards. She notes that this is also a contributor to the thinning out of gender diversity in CFO roles. “Once a woman becomes a public company CFO, she’s besieged with opportunities to go plural and sit on multiple boards full-time. That can be very appealing. If you pick the right boards, it can be financially lucrative and tends to be less onerous than a CFO public company job.”

Filling the experience gap

“It's worth investing in your internal candidates, because they last longer,” says Lawson–the average departing tenure of internally appointed outgoing CFOs is 6.5 years compared with 5.9 years for those who were externally appointed. “It's never going to make the external searches go away, because circumstances happen: You get activists, you get CEO turnover. But we make the argument that you should be investing more in your internal candidates, because the data suggests that if you promote one of those internal candidates, they have a greater likelihood of success.”

Back to Foreword

Authors

Adelin Choy is a member of the firm’s Financial Officers practice. She is based in Hong Kong.
Jenna Fisher co-leads Russell Reynolds Associates’ Financial Officers practice globally. She is based in Palo Alto.
Ben Jones co-leads Russell Reynolds Associates' EMEA Financial Officers Practice. He is based in London.
Jim Lawson co-leads Russell Reynolds Associates' Global Financial Officers Practice. He is based in New York.
Catherine Schroeder leads Knowledge for Russell Reynolds Associates’ Financial Officers Practice. She is based in Toronto.