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Law for Business

Knowhow - guidance - precedents

28 SEP 2012

In-house CFOs 'perform better'

Finance directors who are internally appointed enjoy more stable tenures and achieve better returns than those hired from outside, according to new research.

A study of FTSE 100 CFOs by Curzon Partnership found those appointed internally have an average tenure of six years, which is 30 per cent longer than the average of just 4.6 years for CFOs appointed externally.

Perhaps more importantly, the return on assets for businesses that have hired their finance chief from within is a third better at 9.5 per cent than the 7.1 per cent for companies that recruit externally.

Two examples of finance chiefs who have been promoted internally in recent years are Deirdre Mahlan, CFO of drinks firm Diageo and British Land's group finance director Lucinda Bell.

James Colhoun, partner at Curzon, said internally hired CFOs know a company's markets and culture "far better" than an outsider.

"The best CFOs will not only understand the right strategy to improve returns and properly exploit the businesses' assets but, crucially, they will know how best to deliver that strategy," he said.


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