Companies, especially in hard-hit industries, are turning to familiar faces to help them steer their finances through the coronavirus pandemic.
More than six months into the pandemic, businesses have shifted from immediate crisis management to adjusting to a new normal that looks very different for some industries. This could involve making long-term changes to operations, cost cuts and restructuring. A finance chief with deep knowledge of a business and its inner workings can help navigate these difficult decisions, making internal candidates the way to go for some companies looking to fill the role.
Internal hires are familiar with the challenges their business is facing, and know whom to speak to and trust. Those characteristics are becoming more important as companies grapple with the economic downturn and damage caused by the coronavirus, recruiters said.
That is contrary to the mind-set during the past decade of economic growth, when many companies’ goal was to boost market share and enlarge their business. During that time, chief executives and boards were more open to hiring from the outside, recruiters said.
Internal hires to the role of chief financial officer have edged higher this year to 61.2% of appointments at companies in the S&P 500 and Fortune 500, compared with 60.5% last year, according to the Crist Kolder Volatility Report, which tracks executive moves. Recruiters said they expect bigger shifts toward internal appointments later this year and next year, as the pandemic drags on with no clear end in sight.
Among the companies that recently elevated a CFO from within is
Motor Co. The Dearborn, Mich.-based car maker, which booked a pretax loss of $1.9 billion in its latest quarter, on Thursday named John Lawler its next chief financial officer.
Mr. Lawler is succeeding Tim Stone, who joined the company last spring after a stint at social media company
and about two decades at
Mr. Stone is leaving the company to become CFO and chief operating officer at a New York-based software firm.
Mr. Lawler, a contender for the top finance role in 2019, started his career at Ford in 1990. He held various roles in finance and operations, including as chief executive of the autonomous driving unit, head of the China business, corporate controller and pricing manager. The company’s CEO, Jim Farley, lauded his new CFO in a press release as knowing “our company inside-out.”
The move at Ford follows recent internal promotions to the CFO role at
Bank of New York Mellon Corp.
Jones Lang LaSalle Inc.,
Occidental Petroleum Corp.
Group Inc., among others.
Altria, the company that sells Marlboro and other cigarette brands in the U.S., in April hired Salvatore Mancuso as finance chief. Mr. Mancuso has spent about three decades at Altria.
Karen Brennan, who was named finance head at Jones Lang LaSalle in June, has worked more than 20 years for the commercial real-estate firm, most recently as CEO of its operations in Europe. “Her diverse global experience and understanding of our business will be invaluable as we navigate the current economic environment,” the company’s CEO, Christian Ulbrich, said in a release announcing the appointment.
Driving change and helping companies transform their business model amid the pandemic can be easier for people who come from inside the organization, said Cathy Logue, head of the chief financial officers practice at Stanton Chase, an executive recruitment firm. “It’s about having an internal reputation and the respect of your people,” Ms. Logue said, adding that it requires credibility to overhaul operations, especially in tough times.
Promoting from within also reduces the time it takes to onboard a new executive, said Beau Lambert, a senior client partner at consulting firm
“We will continue to see more…pandemic appointments that are likely to be company veterans with pre-existing institutional knowledge and historic relationships,” he said.
Hiring from within also speaks to growing risk aversion within certain companies. “The current environment with [Covid-19] favors internal candidates,” said Peter Crist, the chairman of Crist Kolder Associates. “Companies are not taking the risk to hire someone from outside.”
A recent decline in first-time CFO appointments underscores this caution. The hiring of finance chiefs who hadn’t served in the position before declined to 9% of CFO appointments between January and June, down from 18% in all of 2019 and the lowest percentage since at least 2015, according to Korn Ferry. The average age at hire went up to 52 years, from 49 years in 2019, Korn Ferry said.
Ford’s new CFO, Mr. Lawler, “will be able to step very naturally and smoothly into the CFO role,” a spokesman for the company said. The company declined to make Mr. Lawler available.
Write to Nina Trentmann at [email protected]
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