Finance Director Tenure, How Long Do Finance Directors Stay and How Do You Keep Them?

Finance Director tenure is shorter than many boards expect. Most departures follow an event such as a new Managing Director, an investment round or a sale. In private equity-backed businesses, the Finance Director is often one of the first senior roles reviewed after a deal. 

This guide explains how long Finance Directors stay in post, why they leave and how boards can keep a good one or plan Finance Director recruitment before a vacancy opens. 

Key Takeaways

• Finance Director tenure is shaped more by business events than by a set number of years in post. 
• In private equity-backed businesses, the Finance Director is one of the first roles investors review after an acquisition, and a change of investor usually triggers a review of the role. 
• Most departures follow an event, such as retirement, a new Managing Director or a change of ownership.  
• Influence over strategy, keeping them challenged, reward linked to outcomes and market-rate pay keep a good Finance Director. 
• Finance Director notice periods are longer than for most finance roles, from 1 to 3 months in SMEs to 6 to 12 months in a PLC, so succession planning and Finance Director recruitment should start before anyone resigns. 

How Long Do Finance Directors Stay in Post?

There is no fixed length of time a Finance Director stays in post. Tenure depends on ownership, growth stage and the job the Finance Director was hired to do. It also depends on the type of Finance Director. Some prefer a steady business, while others are hired to grow it through acquisitions. If that growth work is done in around three to five years and the board then wants stability, they will usually move on.  

A shorter tenure is not always a problem. The risk for a board is a departure it did not see coming. It also means FD recruitment is rarely a one-off decision for a growing business. Published tenure studies also focus on large listed companies, so they are a poor guide for private and private equity-backed businesses. 

Is Finance Director Tenure Shorter in Private Equity-Backed Businesses?

Usually, yes. In private equity-backed businesses, tenure tends to follow the investment cycle from acquisition to exit. In listed companies, it more often ends with retirement, a new Managing Director or results below expectations. In founder-led and family-owned businesses, it usually tracks growth, because the finance leader who suits one stage may not suit the next. 

Private equity-backed firms generally look to exit within around three to five years, and a change of investor usually triggers a review of the Finance Director role. By contrast, owner-managed businesses can see much longer tenures, with some Finance Directors staying 20 years or more. 

Why Do Finance Directors Leave?

Finance Directors usually leave for one of four reasons, which are retirement, a new Managing Director, a change of ownership or a gap between the role and what they want from it. Retirement is the easiest to plan for, but a board that pays attention can usually anticipate the other three as well. 

How Do You Retain a Good Finance Director?

Boards retain a good Finance Director by giving them real influence over strategy, linking reward to the outcomes they are expected to deliver and keeping pay in line with the market. Equity or a long-term incentive plan matters most where the business is working towards a sale, refinancing or listing.   

• Influence and challenge: A Finance Director who shapes pricing, investment and funding decisions has more reason to stay than one limited to reporting. It is important to keep them interested and challenged, because when the role becomes routine or stagnant, even a good Finance Director will lose interest. The role also needs to match their professional and personal goals, including the chance to grow. 

• Pay: Benchmark Finance Director salary against current data each year. Our Finance Director salary guide sets out current base pay, bonus and pension benchmarks by turnover and region. 

• Relationship: The Managing Director and Finance Director need a close working relationship built on trust. They should agree the objectives quickly and how they will achieve them together. The Managing Director is usually the face of the business, representing it to the wider market, and needs to trust the Finance Director to look after the finances and drive profitability. A close working bond should form very early. 

What Is The Notice Period For a Finance Director?

A Finance Director’s notice period is set by their contract and is usually 1 to 3 months for SMEs. It is longer than for other members of the finance team, reflecting the seniority of the role. In a PLC the notice period can be 6 to 12 months, and some large multinationals use notice periods of up to a year. 

A replacement will usually have notice of their own to serve, so the gap after a resignation can be long. Many boards use an interim Finance Director to keep the audit, cash and any live transaction on track.  

How Should a Board Plan Finance Director Succession?

Boards should plan Finance Director succession before a vacancy exists. That means testing whether an internal candidate could step up, writing the brief for the role the business will need next and deciding in advance how any gap will be covered. Planning matters most ahead of a sale, buyout or refinancing. 

• Test internal options honestly: It depends on what the business wants to achieve. If growth is slow and steady, a Financial Controller probably has the knowledge and time to step up. If the business is seeking investment or struggling financially, they are unlikely to cope, so test this before relying on an internal candidate. 

• Consider hiring externally: We usually recommend looking outside as well. An external appointment can bring experience the business has not needed before, such as leading a sale or a refinancing. 

• Agree interim cover: An interim Finance Director can work full-time or part-time. Larger businesses will often need a full-time interim, while smaller ones may manage with part-time cover. An interim can manage the finance department and keep the business moving forward while the permanent search is under way. 

• Brief the market early: Finance Director recruitment agencies can map candidates confidentially. A specialist adds most value by assessing fit and owning the brief from first contact to offer.  

Conclusion

Finance Director tenure is shaped more by events than by a set number of years. Boards that watch for those events can decide whether to retain, plan a succession or begin Finance Director recruitment on their own timetable rather than after a resignation. 

Also read: Interim vs. Permanent Finance Director or CFO: Which Costs Less?