Vanishing CFOs: Why So Many in Oil, Gas are Choosing to Leave
In the months following the sudden dip in crude oil prices that began late 2014, the oil and gas industry has been challenged with finding ways to cope and maintain until the market turns around. The whole “do more with less” approach to work has been adopted by many companies who have had to downsize and restructure within their organizations.
But in addition to layoffs and other cost-cutting measures, several companies have had to deal with a few surprises.
The most recent downturn has seen a shakeup of many C-suite executives, as some have entered – and departed – their companies. While many smart and resourceful oil and gas companies already have succession plans in place to prepare for senior-level employee departures, for companies that don’t, now is an opportune time to visit the topic and implement some strategies, as the industry can expect to see several more months of the low-cost oil environment.
Recently, it seems there has been a wave of chief financial officers deciding to step down from their positions – in Houston alone, three CFOs of oil and gas companies resigned within a one-week period. Independent exploration and production company IGas Energy plc, based in the UK, named its new CFO Aug. 26. And Profire Energy, Inc., based in Utah, announced a new CFO Sept. 8 after the previous CFO stepped down. Globally, the industry has been hit hard and with some of the more recent departures, Rigzone wanted to explore why so many individuals primarily responsible for company finances are deciding to leave and what that means for the industry as a whole.
Unexpected Exits: The Show Must Go On
As many would expect, during the up and down cycles of the oil and gas industry, CEOs of companies often decide to leave. Mistakenly, some companies focus their succession plans around the CEO only, but the CFO also makes up an integral part of the management team. What factors cause a CFO to leave? And why in the midst of a downturn?
“There is a significant amount of reliance on the CFO to navigate through these turbulent times,” Raoul Nowitz, managing director for capital advisory and financial restructuring firm SOLIC Capital, told Rigzone. “In accepting the mindset of having a prolonged industry downturn, certain folks aren’t best served or ready to weather the storm.”
Nowitz added boards are becoming more diverse and feeling more pressure from shareholders. Boards are interested in more seasoned CFOs and less seasoned CFOs may not have the experience.
“You never really want to see good talent leave,” said Nowitz.
However, when it happens, Nowitz said a company needs assurance that it has the capabilities within the organization to continue to navigate forward – either with the CFO position remaining vacant or temporarily assigning a capable person in the organization to the role.
“There is a team that should be supporting that individual who can handle interpreting data effectively to influence present decisions, and I think the assurance needs to come from the top that these capabilities will be brought to bear,” Nowitz said.
He added that the company should not remain unresponsive, rather, be active and dynamic in either recruiting externally or nurturing someone within the organization into the role. Whichever approach the company decides to take, it should be confident in the decision.
The Best Person to Weather the Downturn
The transition to a new CFO is extremely important to a company’s success and the company’s stakeholders should make great effort to make the transition as seamless as possible. A huge component in the transition: selecting the right candidate.
Nowitz said though some CFOs are “fairly flexible and can adapt to a variety of industries,” some have grown and been immersed in a specific industry, such as oil and gas, and “might be better served to stay in that industry.”
With a desire for CFOs to be strategically minded, experience in the industry is of great importance.
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