JCPenney’s CFO Debacle: What Can We Learn From It

During the Olympics, JCPenney unveiled a new advertising tagline that raised eyebrows:

“When it fits, you feel it.”

Applied to their recent bout of turnover in the company’s executive suite, that tagline accurately sums up personnel moves that have included the ouster of their CEO and, most recently, their CFO.

When it fits, you feel it—and when it comes to hiring and keeping top executives—JCPenney, one of the nation’s largest apparel and home furnishing retailers, hasn’t been feeling it lately.

It started last April, when CEO and former Apple retail store wunderkind Ron Johnson was ousted after just 17 months—and a $4 billion revenue loss and falling stock price—in the job. CEO Myron “Mike” Ullman returned to helm the company he previously lead. As usual during a CEO turnover, much of Johnson’s old c-suite left. Hannah stayed. In January, the retailer closed 33 locations across the nation and laid off some 3,000 workers.

Now, on March 24, CFOs Ken Hannah’s tenure will come to an end. Ed Record, the former COO of Stage Stores, will assume his duties.

In a revealing interview with Fast Company published last year, Johnson told the magazine:

“I don’t think I’ve ever said that before, but the other day I was thinking about what my role is. I just believe everyone has skills and someone’s got to be the leader, which I get to do, but leadership, I always tell people, is a situational thing. So when we’re creating a book [catalog] I get to have an opinion and throw out ideas, but ultimately whoever is doing this product, that’s their deal. We all have roles to play, but leadership is very situational (emphasis added).”

The episode reveals larger issues at work in CFO World these days. Last year, CFO turnover rose for the third consecutive year, according to the recruiting firm Krist-Colder Associates.

Among their other findings: Internally promoted CFOs end up having longer tenure than their externally hired peers. So, given those statistics (officially, internally promoted CFOs have a tenure of 5.9 years and externally hired CFOs have a 4.7-year tenure), it’s possible that Hannah’s tenure might end up being longer than his predecessors.

Likewise, in the recruiting firm’s other findings, they discovered that 44 percent of CFOs came directly from another CFO chair or controller position, according to

“I don’t think the specs for any of our CFO searches right now require controller experience or even a CPA designation. The effect of Sarbanes-Oxley on the must-have skill set for CFOs has all but disappeared from the landscape,” Kolder, the president of the recruiting firm, told

Also telling: CFO turnover varies widely by industry, according to Krist-Colder. Here’s a look, for example:

  • Industrial CFOs have the highest turnover rate, at 19.7 percent;
  • CFOs in the services industry have the lowers tenure at 4.5 percent;
  • CFOs in the consumer products and energy industry have close to the median turnover rate at 12.1 percent.

What does this tell us?

Financial leadership within a company is both contextual and situational. It’s a great takeaway for CFOs and executives alike. It may seem like an intuitive realization, but even if you have an excellent relationship with your CEO, you’re not guaranteed a job. Former CFO Hannah found that out when he was forced out. Sure, it’s important to be able to communicate well with your CEO. But at the end of the day, performance matters. Results matter. Industry type matters. Executives fit between a CFO and a company’s strategic goals—like the way a suit jacket sits on the shoulders—matter.

Question: What is the CFO turnover rate like in your industry? What do you think JCPenney’s CFO could have done better, if anything, to turn the company around? Let us know in the comments.


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