The most challenging duty for any company is firing a team member since the amount of time, money, and training invested in employees is wasted because they must go through the process when recruiting a new person for the same role. Terminating any staff member is complex for any company, but terminating your chief financial officer (CFO) adds a unique set of complications. The chief financial officer’s primary duty is to manage the organization’s finances, and the CFO will have essential financial knowledge and strategic information that will be destroyed if they are dismissed. As a result, terminating your chief financial officer must be handled carefully to prevent impeding the organization’s future development possibilities.
Related: CFO Action Plan
When to fire CFO?
The following are the most common reasons for chief financial officers being terminated:
Lack of communication skills
The most prevalent reason for the departure of a chief financial officer is a lack of communication skills, which allows them to miscommunicate information or omit critical details. As a result, it can affect productivity, mental health, and professional relationships. Communication skills are necessary for any job, but they are especially critical for the CFO since they communicate with internal employees, clients, and the board of directors. This is why most CFOs are fired when they cannot communicate critical information at a higher level, and any delay in small business-related matters might lead to disaster for the organization.
Unable to forecast
Forecasting is critical for your organization to stay current and make necessary changes. It is CFO’s responsibility to foresee the future and make any required changes to strategy. If your CFO is making regular mistakes and cannot forecast a future that will benefit the firm, you should meet with him to discuss the matter. Otherwise, he may be dismissed.
Illegal activity
It is a red flag if your chief financial officer is engaging in criminal conduct or if anything illegal is taking place under their supervision. No organization will accept any internal fraud that might result in immediate firing.
Related: How to Become a Fractional CFO?
Lack of leadership skills
The Chief Financial Officer is the head of the financial department, and if he cannot display leadership abilities to guide his team members in the proper path, the firm will suffer. People look up to you as the CFO and your staff must be encouraged to do well daily. An absence of effective leadership while executing the duties of a CFO may result in termination, as firms are searching for someone who is not only knowledgeable about finance but is also active in leading other staff members.
Lack of technical skills
Technological advancements have made our occupations easier and less stressful. If the CFO cannot utilize accounting software or adjust to technological progress, this is not a good sign for the company. In today’s culture, every individual must be an expert in technological skills; otherwise, they risk losing employment.
How to fire a CFO?
Much work must be done before you decide to fire your chief financial officer. It would help if you made all the attempts to transfer position-specific knowledge to avoid the same thing happening again when you hire a new chief financial officer. You should also ensure that the organization has all access to the accounts used by the CFO or under his name, such as login credentials. Doing this will protect you from any security risk after the termination of the chief financial officer.
Related: Soft Skills for CFOs
Furthermore, when you decide to fire the chief financial officer, you should assemble an exit package for them. Depending on the reason for departing, CFOs may be ready to compromise on the conditions of their termination package. Chief Financial Officers are not like the rest of us. So, if you’re considering terminating them, you should treat them well. Before you begin termination, keep the following considerations in mind:
1. The Agreement: Most chief financial officers come with a contract, and you must ensure that all terms and conditions are satisfied before terminating them. Most firms fail to understand that firing also requires specific requirements to be satisfied when employing the chief financial officer. So, remember that effective termination may benefit your present employees and that words spread quickly, and you don’t want to have a negative reputation in the market.
2. Wage and leave pay: Check for pending leave and wage compensation. These should be handled right away. Some CFOs are entitled to a one-time vacation but take many weeks off. Companies that follow proper procedures and dismiss employees promptly benefit the firm, and all employees expect to be rewarded for work accomplished and vacation time not taken.
3. Termination with dignity and respect: Finally, you must conduct the termination so that it has no negative impact on your staff. Even if you despise your chief financial officer, some team members may have a positive connection with them. It would help if you made this procedure as easy as possible for all employees so that it does not negatively impact anybody inside your firm, and the CFO will additionally share positive comments about you after exiting your organization.
Related: CFO KPIs
Wrapping up
Firing your chief financial officer should be your last option because it is a critical job that requires you to comprehend the team member situation and rectify their performance before considering firing them. If you have chosen to fire your chief financial officer, ensure it is done professionally and respectfully and that all relevant standards are met.
![When and how should you fire the CFO? [2024] (2024)](data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/h8AAvMB+NzmkbcAAAAASUVORK5CYII=)