The pandemic has had at least one beneficial impact on high-stress corporate cultures, C-suite consulting specialists say. Executives have become more adaptable to granting and preparing for extended leaves of absence.
“There’s a more understanding environment than there has ever been in my 16 years in the business,” Barry Toren, head of the North American CFO practice at Korn Ferry, the global business consulting company, said.
Even in this more forgiving environment, there are a few things that never change, Toren said, starting with the need to plan far ahead — as much as a year, if possible. That’s because, no matter how understanding the C-suite is, only adequate planning can lessen the disruption when there’s a long-term absence by someone as key to the organization as the CFO.
For instance, if you have an elderly relative who you expect will need your in-home assistance in a few years, the time to prepare for that is long before you plan to leave, Toren said.
For this, or any situation in which you expect to leave, you should start building a strong bench, he said. That can include familiarizing workers who might fill in for you on the broad breadth of business that you interact with regularly.
“The earlier that the CFO alerts their team and stakeholders of the absence, the better,” Kathryn Kaminsky, vice chair and trust solutions co-leader at PwC, said. “Be prescriptive. Make sure that people know how to get to you if absolutely needed, and who to go to in your absence. And while absences can be viewed as a challenge, communication is the key.”
CFOs must be confident that their team has their back, she added; it all goes back to trust.
“Executing these preparations with care and personal accountability will not only set the CFO up for success for the immediate absence but can also offer their team an opportunity to grow and learn,” she said.
Your organization should use an extended planned or unplanned absence by you as opportunities to develop and assess people who are in the succession pipeline, recommends Kevin Martin, chief research officer at the Institute for Corporate Productivity.
However, a company's interim successor must take into account the state of the business and its culture. For example, is the business in a cycle in which things are relatively status quo, or is it preparing for something highly strategic, such as an acquisition or new market entry?
If status quo, the company could split CFO duties between its controller and its vice president of finance.
“Job duties and responsibilities would be determined based on current and needed expertise,” Martin said. “as well as the need for exposure of each person to others across the organization for strategic relationship-building purposes.”
On the other hand if the need for an interim successor coincides with a highly strategic acquisition and no successor candidate has any significant M&A experience, it could be wise to match an internal successor candidate with a consulting CFO, such as a retired CFO working on a contract basis. That could make more sense because it brings the person with M&A expertise together with an insider who understands the history of the company and its culture.
Importance of flexibility
In CFO succession planning, whether the CFO is going to be gone for a short time or permanently, the keys for an organization are flexibility, agility and contingency planning.
“Organizations can’t plan for every scenario, but they have got to be more planful,” Martin said. Critical to agility is the ability to anticipate, adapt, and act on change — the function of scenario planning, of which contingency planning is part.