Stressed CEOs zero in on CFOs

Some say pressure makes diamonds. Is that true in the C-suite when CEOs and boards of directors demand more of the CFO and other execs?

According to an October survey from BCG on the stresses CEOs face, almost 60% of chief executives said they “plan to replace a member of their senior team in the next six months.” CFOs topped the list of C-suiters whom CEOs said they will axe, at 16%. The data is based on June–July surveys of 645 CEOs globally, at companies with revenues of $100 million or more, as well as 500 nonexecutive employees.

Stressors. What’s irritating CEOs? For one, they face pressure from their boards of directors. In the BCG survey, when asked what the most stressful part of being a CEO in the next six months would be, the most frequent reasons were “meeting growth targets,” “managing costs,” and “meeting expectations of the board.”

What’s more, “only 63% of CEOs are confident their senior leadership team can execute their vision over the next two to four quarters,” BCG said.

Craig Stevens, managing partner at executive search firm Boyden, told CFO Brew, “the geopolitical instability, [and] the slowing of [the] economy to some degree,” are other reasons why the entire C-suite may be feeling the heat.

“We had a mini recession in 2020 with Covid, and by just pure economic cycles, we have to have one in the near term; it has to come about. So as a result, CEOs are then applying pressure on their teams to really get performance at a new level,” Stevens said.

And for some CFOs and other members of the C-suite, that pressure may be new, Shawn Cole, president of Cowen Partners Executive Search, told CFO Brew.

“Post-Covid, a lot of executives looked really smart because business was easy, right? Gosh, like money was cheap, demand was high,” Cole said. “So a lot of executives that shouldn’t have been successful were, and a lot of companies are over-leveraged and have lost their product-market fit, and they’re having a declining market share right now.”

And “a lot of these executives have never experienced a truly competitive market landscape in the C-suite. They have not been in the C-suite fighting for their lives before,” Cole added.

Replacement target. But why is the CFO the most likely target? Stevens provides an analogy: “On a nice clear day, you’re a pilot, you’re flying along, and everything’s wonderful,” he said. “But when the weather starts getting bad, you want a copilot that is instrument rated, and that’s particularly the case with market-facing roles, i.e., CRO and CFO.”

In particular for CFOs, the prominence of the position at most organizations means that some CEOs may see their CFOs as a threat to their own jobs, BCG noted. In a separate BCG survey of CEOs in April, 26% of respondents said the CFO posed the greatest risk to their job security.

“The thing about the CFO and the CEO dynamic is, the CFO has a lot of board visibility and can oftentimes outshine the CEO when it comes to numbers and how the business is doing or not doing,” Cole told CFO Brew. “So a CEO, if they are insecure, could feel like the CFO is threatening just because they are a master of the numbers.”

We’re not suggesting CFOs downplay their expertise or suppress their commentary in board meetings. Rather, if CFOs want to keep their jobs, Cole advised them to come to the table with solutions, not just problems.

“CFOs get fired because they are the negative person in the room, and I think a lot of CFOs take pride in that somehow,” Cole said. “But no one needs that, so you can be the objective truth teller, but you have to provide or suggest solutions. They don’t need to take you up on those solutions, but you need to come prepared with solutions.”