According to news reports, Tesla’s CFO, Zachary Kirkhorn, has unexpectedly stepped down after 13 years with the company. This came as a shock to many because he was widely viewed as a possible successor to Elon Musk for the CEO role. He announced that he will remain on until the end of the year to help with the transition, but that the company’s Head of Accounting would replace him within the week in an interim capacity.
What happened? And could this happen to you as well? Let’s dig in to understand more.
Why did Kirkhorn Leave Tesla?
We do not know definitively why Kirkhorn is leaving – neither he nor Tesla as a company has provided an official reason. One thing is clear though, Kirkhorn is going to leave a big hole with his departure. One investor phrased it in this way, “He was able to be an effective liaison communicator between Elon and other executives ...that would be a skill set that is hard to come by and very valuable but hard to quantify.”
Why does it Matter to You?
From everything we have heard, Kirkhorn should have been a good balance for Musk from a personality standpoint. And, based on Tesla’s growth over the last decade, Kirkhorn was certainly adept at leading the company financially. So, if an executive who was a great fit personally and highly proficient professionally decided to throw in the towel, there is a valuable lesson that we can take away and apply.
This high-profile departure reminds us how important it is to lay the groundwork to retain employees before it is too late. And, while this is true at all levels, it is even more critical at the top because turnover in senior, director, and executive-level roles gets costlier the further up the ladder you go.
If you do not take the steps now to keep your CFO, you may lose them! By the time your CFO is fed up enough to resign, you have missed the opportunity to correct whatever issues were creating friction and causing them to look for the exit. In the long run this can (and will) absolutely cost you your CFO, but that is not the only potential for damage. Ignoring the warning signs that there is a problem at the top can also result in:
- Decreased confidence in the company – both internally and externally
- Additional staff turnover
- Diminished company-wide morale
- Loss of customers and key accounts
- Poor strategic decision-making
- Reduced financial performance
- Constrained funding opportunities
What to do Before your CFO Leaves?
By their very nature, CFOs are calculating and methodical, which means that they are not likely to jump ship simply for a newer shinier opportunity every couple of years. They want to stay with an organization and be part of its success, helping to shape its growth over time. The biggest reason that CFOs leave their role is because they do not feel that their input is being heard and valued.
It is crucial to allow your CFO to help you lead by giving them an equal seat at the table. Acknowledge that your CFO has the organization’s best interests in mind when they are making recommendations. Let them be a part of the strategic planning process in a way that values their expertise.
Imagine, for a moment, a highly experienced doctor that only has one patient. After going to medical school for over a decade to accumulate the knowledge needed to understand the complex human body, and then spending many more practicing medicine at various institutions, this doctor then tries to apply that knowledge to their patient to give them a good quality of life for as many years as possible. However, that patient refuses. Instead of taking the shrewd medical advice that the doctor has to offer the patient simply says, “But I don’t want to do any of the things you have recommended, I’ll just do what I want and hope that I stay healthy.” What happens next? Well, one of two things can happen: either the patient is completely healthy on their own, and the doctor feels useless, or the patient gets sick, and the doctor must work harder to try to restore the patient’s health, which is frustrating and difficult. A great doctor is not going to keep this patient for long because they know that their skills are going to be put to better use working in partnership with a patient that values and respects their expertise.
To avoid the flurry of negative consequences that can accompany executive turnover, focus on communication. Communicate well with your CFO from day one and then never stop being transparent. Take their professional opinion seriously, showing that you respect their perspective, and be open about strategic plans and business goals.
What if it is too late and your CFO is already on their way out the door? When you need to find a new CFO, contact us! Our executive search team specializes exclusively in accounting and finance to hire CFOs and Controllers, and because our team is made up of former and current CFOs, we know what we are looking for better than regular recruiters. We will work closely with you through every step of the process to make it as seamless as possible. If needed, we can provide interim financial leadership while conducting the CFO search as well to minimize disruption. When you work with us you will get the advantage of being able to tap into our pipeline of qualified candidates that is not available through regular channels. Let our reputation work for you to hire a CFO that will be the right fit!