After SOX, Some CFOs Are Saying, 'I Never Signed Up For This'
With the advent of the Sarbanes-Oxley corporate reform legislation in 2002, CFOs are facing an avalanche of new regulations, strict deadlines, and tough scrutiny from investors and Wall Street analysts.
SOX requires CFOs and chief executive officers to formally certify that their company earnings are accurate, among other rules, and the pressure to comply is forcing some CFOs out the door, according to a survey reported earlier this month in The Wall Street Journal.
In 2004, total turnover of CFOs, controllers and treasurers at Fortune 500 companies rose by 23 percent compared to 2003, according to a study by executive search firm Russell Reynolds Associates of New York. In 2003, 12 percent of companies changed CFOs – a number that jumped to 16 percent in 2004.
With an increased emphasis on accounting details and less time on big-picture corporate financial strategies, many CFOs are experiencing burnout and a sense that "I never signed up for this," said David Wright, director of the Paton Accounting Center at the University of Michigan's Ross School of Business.
"A lot of these people moved into CFO positions because they were interested in the finance side," Wright told the Ann Arbor News. "But the accounting and reporting part, which may not have interested them as much, now falls on their plate as well."
Even vacation provides no relief. A new Robert Half Management Resources survey reveals that almost 75 percent of CFOs said they check in with the office at least once or twice a week while on vacation, with 34 percent checking in every day.
Hugh F. Johnston, the Chief Transformation Officer of PepsiCo (recently transitioned from CFO), said the skills and roles that CFOs are expected to have can be paradoxical, according to Chicago Business, published by the University of Chicago Graduate School of Business. CFOs must have both hard and soft skills, be both experts and generalists, stewards and strategists, "bean-counters" and big thinkers, are expected to both control and collaborate, be both accountants and technologists, partners and consciences, and, he joked, human and God.
A recent study on the evolution of the CFO's role by Booz Allen Hamilton shows that the classic model of the CFO as chief accountant and technical expert – focused on the firm's financial statements and capital structure – is old news.
“When you take a look at a CFO's responsibility today, you also have operations planning and analysis, information technology, strategic planning and M&A. As a member of the senior management team, you have to be able to take off your technical hat when you walk in the room,” said David L. Shedlarz, CFO of Pfizer Inc.
Booz Allen Hamilton interviewed CFOs of Pfizer, FedEx, Johnson & Johnson, BASF, Procter & Gamble, Deutsche Telekom, and 11 other U.S. and European companies. The interviews are published in the book, “CFO Thought Leaders: Advancing the Frontiers of Finance.”
Shedlarz said the greatest transformation in the CFO role is a transcendent one. “People are asking the CFO, as well as the rest of the management team, to act as change agents.”