November 5, 2018
Although most contractors have a business plan that they continuously update and use to guide the company, few have a succession plan. Generally, a succession plan will secure the future of the business. It is a guide for the owner and executive team to conduct business and transition the company to the next generation of leaders.
Typically, a succession plan focuses on the CEO and operational management positions. It is rare, but important, to have a succession plan for the CFO. A survey conducted by Korn Ferry, an executive recruiting and consulting firm, found that only 34 percent of the more than 700 global CFOs surveyed reported that their companies had a succession plan in place. This is an alarming statistic since the companies that participated in the research were primarily large corporations. Furthermore, the study revealed that although 46 percent of the public companies surveyed had CFO succession plans, only 28 percent of the private companies did.
Marty McCarthy, CPA, CCIFP, outlines why it is important for companies to develop a succession plan for all members of their leadership team in his article entitled
Create a Succession Plan That Includes the CFO
(CE This Week. September 20, 2018).
According to the Korn Ferry study, only 19 percent of the companies with CFO succession plans thought there was an internal candidate capable of stepping into the role. Highly specialized skills and training are required to be a CFO. The right candidate should have an in-depth knowledge of financial accounting and reporting systems, income taxes, business law, government regulations and numerous other subjects. Although the person supporting the current CFO or a bookkeeper may have a good working knowledge of the company’s finances, it is not enough to be successful in the CFO role. The person in this position must be able to interpret the meaning behind the numbers reported on the financial statement to add value to the organization.
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