5 reasons CFOs get fired: CFOs are accustomed to taking a lot of heat, but when the heat turns into a firing, charred CFOs may be left asking the question, "What went wrong?" - Document (2024)

Date: Oct. 2004

From: Healthcare Financial Management(Vol. 58, Issue 10)

Publisher: Healthcare Financial Management Association

Document Type: Article

Length: 1,102 words

Although CFOs lose their job for myriad reasons, five reasons predominate industrywide and perhaps even across industries. But take heart. There are several practical strategies CFOs can use to avoid failing victim to termination.

1. Failure to Warn

CFOs are expected to be the bellwethers--the individuals wearing the bell upfront in the executive group that is leading the flock--to sound the warning about the direction of a trend or indicator. A downward direction is particularly "warning worthy." CFOs are expected to forecast or anticipate where the numbers will go, monitor or track the trends, and sound the warning when things aren't going as expected.

As mentioned in my July 2004 column in hfm, surprises that involve bad news are not welcome by anyone. Surprises catch people unprepared and often ill-equipped to deal with a current reality. The failure of a CFO to anticipate trends is often the result of lack of experience or a big-picture view of the organization. This may or may not be rectifiable. However, the failure to warn is 100 percent avoidable through two strategies:

Put information that could result in bad news on the appropriate agenda and ensure that it is known in advance. This means that information must be communicated promptly and thoroughly to the CEO, management team, and often the finance committee or entire board of directors.

Tell it straight. Don't use euphemistic words to sugarcoat bad news. Give colleagues a feel for the range of possible outcomes.

2. A "Bust in the Numbers"

Everyone agrees that healthcare payment is exceedingly complex. CFOs are assumed to be expert in forecasting contractual allowances provided to insurers or other group health providers. CFOs...

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