CFO turnover on the decline
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Big business appears to be increasing the focus on strategic fiscal management as CFO turnover within the ranks of large companies dropped 28% last year. An article on cfo.com titled Downturn in Turnover illustrates this trend with some impressive statistics, such as:
- CFO turnover within the Fortune 1000 dropped to 13% from a high of 19% in 2007 and 18% in 2008
- Turnover rates were lowest within the consumer, financial services, and technology segments, coming in at 9%
- Rates were the highest within the telecommunications sector at 24%
Additional trends in CFO hiring and retention came to light as well. For example, the importance of operational knowledge is highlighted by the number of corporate CFOs with finance backgrounds who have then become divisional presidents before being promoted to the C Suite. This number increased from 12% in 2008 to 22% in 2009. In these instances, the institutional knowledge that these professionals bring with them to the role is invaluable to the company they serve.
Whether a CFO is promoted from within or recruited away from another company at the same level, one thing appears certain: the CFO role is more important than ever, and that’s a trend that doesn’t appear to be going away any time soon.
While it’s not going to be a factor yet, the writing is on the wall: many businesses will face big changes to their reporting requirements when the IRS mandates that “uncertain tax positions” be identified. Essentially, these are strategies applied to tax returns that the IRS may not agree with. Before now, the IRS was at a disadvantage during audits regarding the matter. These changes will reverse that position and put the IRS ahead of the game.
Prior to this change from the IRS, most businesses that will be affected by this move were already reporting uncertain tax positions for accounting purposes. The difference now will be the additional disclosure to the IRS.
Reporting Basics include:
- Disclosures must be included with returns at the time they’re filed.
- Any business with $10 million or more in assets will be required to comply and must have a financial statement prepared under FIN 48
- Disclosures must include a brief description of the positions and possible tax exposure if they are not upheld.
If you have any thoughts or comments regarding this proposal, the IRS is accepting them until March 29, 2010. If you have any questions as to how this could affect your business, please feel free to contact us at any time and we’ll be happy to work with you.
Should we re-examine the way we examine candidates?
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As financial professionals, we know that we don’t exactly have reputations for being wild and crazy. But we were all young(er) once. Even 10 years ago, there weren’t nearly as many forums as there are today for our occasional lapses of judgment to find a permanent home.
These days, though, it’s not at all uncommon to hear about employers using Facebook, Twitter, LinkedIn and personal blogs to get the low down on job applicants. In fact, CareerBuilder put the number of employers who make use of the practice at 45% in August 2009.
Certainly, candidates for any job are growing more conscious of what might be lurking behind a simple name search on any social site. But a new question is being asked about the validity of using the results of that search to disqualify a candidate for a position. While many jobs require a credit check, those submitting to the check know that it’s going to take place and an employer must tell candidates why they’re no longer under consideration if the reason is related to credit.
With social searches, no such protection exists for a candidate. It can be argued that if anyone has been considering a job search, this topic has probably come up from the standpoint of managing his or her reputation. Many people let their lives play out online with very few filters. This is neither wrong nor right.
The question is: should that transparency go both ways? Should an employer be obligated to tell a candidate that he or she didn’t get the job because of a picture that popped from an old fraternity party? If so, that would at least provide an opportunity to try and fix the situation before another potential employer finds it.
What are your thoughts?
Is an interim CFO right for your business?
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In last week’s post (link the phrase “last week’s post”, we told you about the rising trend of hiring temporary CFOs. This week, we’re going to explore the trend from the business side so you can get a sense of whether hiring a temporary CFO might be a good solution for you now or in the future.
Interim CFOs can be an excellent situational asset
Hiring any executive is rarely a quick process. Whether your company is growing and you’re looking for your first CFO or you’ve recently had a seasoned pro retire and you need to replace his or her wisdom, you shouldn’t rush your search. But you still need leadership in the meantime to help keep the business on track.
Maybe your company has grown to the point that you’re starting to think it may be time to dust off that exit strategy you thought was a wild dream a few years ago. Positioning your business for sale is not cut and dry. You need the advice of a financial executive, but conducting a search and hiring one full-time doesn’t make any sense if you’re just going to sell.
Certainly, our economy has been nothing to write home about for some time, but there are many businesses that have thrived during these lean times. If yours is in this category and you’re ready to capitalize on that achievement by introducing a new product or entering into a new partnership, financial leadership is critical to ensuring that the success continues.
Then there are other reasons that are smaller in scope, but still just as important.
- You need guidance in the areas of financial planning and analysis in order to create a detailed budget and monthly forecasts.
- You’re approaching your executive search cautiously and want to try out an individual you think may be right for the job.
- You hate to think about it, but seasoned CFOs have what it takes to detect corporate fraud.
- You’re looking for new ways to improve the financial performance of your company, and need an unbiased point of view.
What does a temporary executive bring to the table?
Nobody earns the title CFO, either temporarily or long-term, without building an impressive resume and body of wisdom. So by bringing someone into the role on an interim basis, you’re instantly gaining access to all the lessons he or she has learned over time. All at a significant cost savings to you.
There is a strong upside to bringing in a short-term financial leader. If it doesn’t work out, there’s no messy severance to deal with, you just make a call and request another. If it does work out, and you find yourself in a position of continued growth, customer satisfaction and high employee morale, well, you may have found yourself a full-timer instead of a temp.
If you’ve had experience hiring an interim CFO or you’ve been thinking about bringing one on, we would love to hear your thoughts on this emerging trend in our business. Please weigh in using the comments section below.
Financial staffing trend on the rise: Interim CFOs
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Unemployment figures can easily be described as eye-popping, and the truth is that no job is guaranteed. While new jobs aren’t exactly jumping into anyone’s boat, there are more positions available for junior- and mid-level financial staffers than C-level professionals. But opportunities do exist at the upper levels of many small and medium sized businesses for those willing to consider short-term employment.
There are over 2 million temporary workers in America today. The Bureau of Labor Statistics doesn’t track how many of them are executives, but it’s safe to say that the number is on the rise.
For example, opportunities may seemingly arise overnight at fast-growing companies with revenues exceeding expectations. Another company may need someone to step in and help control costs during the launch of a new product.
Regardless of the scenario, interim CFOs often find themselves in very intense engagements. So, just as with a full-time hire, finding the right match for a short-term engagement is critical to success. Important topics to discuss whether you’re the one doing the hiring or looking to be hired include:
- The scope of the role
- Payment terms
- Confidentiality agreements
- The inner workings of the company
As in any similar scenario, it’s important to protect yourself by seeking out reputable staffing firms with a history of placing quality professionals. We’re here to help you do just that no matter which side of the interview you’re on.
Small Businesses…What is your credit worth?
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According to a recent article on CNNMoney.com, small businesses are having an even harder time borrowing money than they were a year ago just before stimulus funds flooded the coffers of the nation’s largest banks.
The U.S. Treasury released a report this month showing that these banks shrunk their collective small business lending balance by $1 billion in November alone – a figure that sits on top of the $12.5 billion already cut since April.
While small businesses across the country have faced tighter lending practices for a couple years now, this continued drop comes at a time that many Wall Street darlings are beginning to recover. Before the recession, 26 million small businesses nationwide were drawing $718 billion in loans each year. Between April and November 2009, that number fell to $256.8 billion.
So what does this mean for your small or even mid-sized company? Well, for one, there is hope in the fact that bank CEOs are getting pressure from Washington to ease their lending restrictions for companies with good credit. Still, many companies are taking this opportunity to focus on the goals that are within their reach, rather than take on more debt. Also, additional lending programs are in the works from the Small Business Administration, however experts say that the money available through these efforts won’t be able to make up for the funds that the big banks have taken off the table.
It appears that the credit situation will remain a significant obstacle throughout 2010. Knowing that now can help you be prepared for the year ahead. So remember, if you have any questions about your company’s financial situation, we’re always here to help.
Also, while many of us tend to keep banking affairs to ourselves, if you’ve had any experiences over the last few years that you think would be valuable to others, please feel free to continue the conversation in the comments below.
If you haven’t heard, the IRS announced last year that they would be randomly selecting 6,000 businesses to undergo employment tax audits, starting in February 2010. It will be the largest such audit by the IRS in 25 years, and is meant to close the “tax gap” between the amount of employment taxes owed and the amount that gets collected.Considering that 70% of federal tax revenues are generated by payroll taxes, it’s easy to see why the government has initiated this process.
For the next three years, 2,000 businesses of all sizes, including non-profits, will be randomly selected to undergo an audit for the 2007 and 2008 tax years. The primary issues that will be targeted during each audit are:
- Worker classification – employee vs. independent contractor
- Executive compensation Fringe benefits –employee discounts, personal use of company vehicles, stock-based compensation, etc.
- Non-filers Reimbursed expenses.
While business owners and executives can’t do anything to avoid being tapped, here are steps you can take to be prepared in case your business is among the 6,000.
- Review your current payroll procedures in the targeted audit areas.
- Start compiling files now that could be requested during an audit.
- Review documents for information that might be protected by attorney-client-privilege.
- Develop a clear chain of command to respond to the IRS
If you find your business the subject of an audit, don’t forget that it’s not too late to bring in expert help from legal counsel and additional financial personnel. Our roster of financial professionals is stocked with talented individuals who thrive on the prospect of a challenging assignment.
Current webcasts and webcast archives from CFO Magazine (link to: http://www.cfo.com/webcasts/?f=bc) are a fantastic resource for the latest financial strategies being used by corporate finance professionals.
One in particular that caught our eye was this one (link to: http://www.cfo.com/webcasts/index.cfm/l_eventarchive?webcast=14451575&pcode=nwsltrs_con121009_archive) that highlights how RiskMetrics Group went beyond revamping the process employees used to report expenses, to actually shortening the time between expenses being incurred to when they get reported.
It’s no secret that expenses and expense reports can be a source of headaches for financial staffers at any company. The strategies in this webcast will help you improve the timeliness and accuracy of the reporting process.
While you’re there, check out some of the other webcasts in the archive and let us know in the comments which ones you recommend.
Employers Expect an Uptick in Hiring in 2010
By · CommentsMany employers were cutting back on new hires in 2009; in fact, most were eliminating positions in order to survive the financial crisis. 2010 is looking quite a bit brighter!
The encouraging news regarding the economy is easing hiring fears throughout the US. Employers signal an increase in their plans to hire in the New Year according to CareerBuilder’s 2010 Job Forecast. “While employers continue to closely monitor the progress of recovery for the US economy, they are beginning to consider hiring strategies designed to preserve the health and growth of their businesses for the future.” CareerBuilder surveyed more than 2,700 hiring managers and HR professionals nationwide across multifaceted industries. The financial industry in particular is expecting 23 percent of financial service employers to add full-time, permanent employees in 2010. “There have been many signs over the past few months that point to the healing of the U.S. economy, especially the continued decrease in the number of jobs lost per month, a trend that will hopefully carry over into the new year,” said Matt Ferguson, CEO of CareerBuilder.
We’re headed in the right direction countrywide and if you pay attention to the overall pulse of current financial news, the second quarter of 2010 should prove to be a job growth period for the US. Cheers to a great New Year!
Gartner reports that “IT investment level are on the rise and growth is more important than cost cutting in 2010.” According to a targeted, web-based survey of 190 senior business executives in large U.S.- and U.K.-based compani
es, the focus for 71 percent of business leaders is a return to revenue growth. Other top priorities for CEOs and business executives in 2010 are the retaining customers, competitive positioning, and attracting and retaining talent.