Many sharp and capable CEO’s fall short when it comes to
grasping the basics of maintaining healthy financial
fitness. That’s why the person making daily
financial decisions is the CFO, the CEO’s most critical co-pilot in driving the
business. While the CEO should know how to interpret complex
financial information, that can alter the overall strategic picture, this is
often not the case. The company’s most
senior executive is focused on myriad other “critical” daily demands. For most
companies, the majority of the strategic financial decisions will be made by the
CFO, and so that person will be either the greatest ally, or the biggest obstacle,
to carrying out the vision crafted by the management team.
When someone else is holding the purse strings, they must advocate for the CEO's vision, implement strategic financial plans and know how to mitigate risk for the long-term health of the company, especially as it pertains to spending. And, sometimes, a good CFO may have to say "No" even if they want to say "Yes"!
So, how does a busy CEO go about hiring a CFO if no great
referrals are offered, or their professional network bears no fruit? There are a couple of different approaches
one can take to ensure proper calibration on technical talent, ethical
reliability, strong caliber and chemistry across the table from their
candidates. The right hiring resource,
such as an experienced Human Resources team or Executive Search firm specializing
in CFO placement is a good first step. An Executive Search firm will have a ready network of passive and active CFO candidates waiting for the right opportunity to emerge. Designing the right profile will depend greatly on the goals, regulatory requirements and the size of the organization. Every company has unique needs and so knowing the growth trajectory and aligning with the experience required to be successful in carrying out those goals, will be important to consider before embarking on a search. Before contracting with a search firm, ask for recent references on how many CFO's they have placed, what company(s) they have
hired for and whether the individuals placed are working out well for their new
employers.
Another approach is to hire an "On-Demand" CFO. This is a strategic
financial partner contracted by your company through an outside resource,
committed on average from 10 and 40 hours per week, until a permanent CFO is
identified and hired. The length of a
typical contract is about 90 days or more, but can actually be a lot longer if
the company decides not to hire a full-time CFO. The
benefits of contracting a consultant CFO or Controller are many and can pay great immediate dividends
if the CEO is interested in learning about what makes a great CFO before they
hire one.
"On-Demand" CFO's are typically
very experienced strategists who have sophisticated knowledge of corporate finance and often with a background in public company auditing. Wherever they may have received their training, their expertise is in big picture planning and route-mapping to
navigate a company through tough or calm seas.
Often they will partner with the CEO to present ideas or insights to the
Investors at Board Meetings, sharing critical details and articulating
complicated financial information with confidence.
The CFO consultant is also a knowledge transfer
expert, able to dig in and assess the company’s financial health and challenges
quickly and efficiently. They are
usually just as fast and effective with the hand-off to the new CFO, and will stay
on as a consultant until the new financial leader has come up to speed.
Hiring a CFO with both the strategic skills and strong
technical capabilities that keep a company in balance is only one aspect of the
search. Their fit with the team cannot be under-rated
either. I have witnessed many CFO’s who’s
brilliant financial performance was downplayed considerably by their inability
to bridge the communication gap with co-workers, or lacked good interpersonal
skills.
A bit of distance between
finance and operations is not uncommon, and can be required to maintain
confidential or ethical boundaries. But
in social situations, a CFO who distances themselves from the team, or doesn’t
take an interest in getting to know their co-workers, is in danger of
alienating themselves from resources and influences governing the political
forces of the organization overall.
Employees who have the CEO’s ears and interests in mind may have a
direct impact on the direction of the company, and that includes decision-making
around financial leadership. If you have
found you are not connecting with your co-workers, never underestimate the
power of a smile and a cup of coffee.
So, before handing your wallet and your company’s financial
reins to someone, make sure you know exactly what you need, how well they share
your vision and whether they can execute effectively. Learning how to identify and hire your most
critical financial partner is a short term investment that offers a big ROI!
To learn more about the advantages of partnering with a
search professional for your most critical strategic hires, contact me directly
at karen@greensearchpartner.com.
*For more information and insights into "On-Demand" CFO’s
and Controllers, please visit: www.nextstagesolutions.com.