Three Keys to Success In Hiring a CFO
CFOs are increasingly the key difference makers in creating value and determining a company’s success. Do you know how to pick the right CFO?
Recruiting the right CFO can make or break your company’s success. The core responsibilities of a CFO are largely the same from one company to another, but the role of the CFO is different in every situation. Having interviewed hundreds of CFOs over the last three decades, I’ve found that focusing on three things can dramatically improve your chances of recruiting the right CFO.
Fit for scale
First, how does the size, scale, and complexity of your company impact the role your CFO will ideally play? It’s critical to understand that “one size does not fit all”. Ensuring the CFO is well suited for the challenges of your company today, and also well prepared to handle the issues you’ll face in the future, is the key. Either focusing too heavily on the current challenges or thinking too far ahead can lead to mistakes. So, take a balanced view and get the scale fit right.
CEO / CFO relationship
Second, what is the nature of the leadership role the CFO will play in the company? The primary aspect to consider is how the CEO will partner with the CFO. The CEO not only sets the tone from the top, but the CEO’s relationship with the CFO frequently defines the leadership dynamic in the company. If the CEO depends on the CFO as a primary business partner, recruiting a CFO who doesn’t have the right style and personality can be the kiss of death. You’d be surprised how often companies seek a strong business partner and fail to understand how the CEO and CFO will actually work together.
Third, what are the operating issues in the company and how operational does the CFO really need to be? Simply stating that you’d like to recruit an operationally oriented CFO isn’t enough; it’s all relative. If your company’s operations are relatively straightforward, and if the company’s organizational structure isn’t well suited for the CFO to play an operational role, operational experience may not be required. On the flip side, if a company’s success is dependent on the CFO playing a central role in operations, projecting the CFO’s potential and not requiring operational experience, can be a big mistake. You may even want to expand the title to "CFO and COO".
Get it right, avoid costly mistakes
In a market where the competition for CFOs is as intense as it’s ever been, getting these three things wrong will most certainly negatively impact a company’s search for a CFO as well as the speed and magnitude of creating value. For example, if direct industry experience is required to achieve the operational objective, a company may be unnecessarily limiting the talent pool where the supply of experienced CFOs already falls well short of the demand. In addition, hiring the wrong CFO who leaves the company in a short period of time can be a huge and costly mistake.
If you’re hiring a new CFO or contemplating a search, focus on the CFO’s fit for the scale of your company, the CEO’s desired relationship with the CFO, and the operational role the CFO is expected to play. If you get these three things right, you’ll dramatically improve your chances of success and maximize your CFO’s impact in creating value.