Chief Financial Officers (CFO) are increasingly vital to every business endeavor. In recent times, they have been on the front line in helping businesses transition to new ways of operation. Along the way, they are also finding opportunities to increase efficiency, boost productivity and reduce costs.
Recently, 72% of respondents in a survey by the Institute of Management Accountants (IMA) and the Association of Chartered Certified Accountants (ACCA) admitted “that the role of the CFO will either “increase or increase significantly” in importance over the next three to five years”.
Given the importance of the CFO role to any company’s financial health and long-term success, appointing the right CFO is crucial. Specifically, finding the right CFO for a specific growth stage requires excellent timing and careful consideration of requirements for venture capital or private equity-backed companies. In addition, the company must recognize how to search for the best candidate and what to expect after making a hiring decision. These are complex questions that weigh heavily on many CEOs and decision-makers.
When you hire the right CFO and empower them to do their job well, the possibilities for your company are limitless. For example, your profitability improves, fundraising becomes easier, financial processes tighten, resource allocation gets more tactical, forecasting improves, etc. In essence, the business gets better and stronger.
However, hiring the right person in a tight talent market can be just as daunting as the CFO role itself. This guide itemizes ways to help you ease through the process and make the right decision for your company — whether you’re looking for a credit union CFO, a private equity CFO, or any other type of CFO.
Before the hiring process can begin, you must clearly define the CFO role. An excellent place to start is an in-depth understanding of the modern CFO role and how it is likely to evolve and integrate with your business.
Next, reflect upon your growth challenges and your company’s strategic goals over the coming years. Your CFO should possess the skillsets that allow them to alleviate your pain points and help with achieving the strategic goals of the company. The job description you’ll use to find a CFO — as well as your CFO interview questions — must be created with this in mind.
If you are a venture capital-backed company, you are looking for a CFO to oversee the ins and outs of your company’s finances, managing accounting, reporting, cash flow, and budgeting. The CFO must also be willing to get their hands dirty in the development of the business, helping attract and evaluate potential investments while effectively managing resources.
On the other hand, private equity-backed companies will mandatorily require a CFO with an established track record skilled in negotiation with investors and investment bankers. Your exit strategy is a critical consideration in CFO selection at this stage. Different strategies will require varying skills. Overall, you will need a CFO who possesses top-level financial skills, expertise, and network, enabling them to support strategic initiatives.
The skills and strengths to look for in a CFO have evolved over the years. For example, in a 2020 CFO survey report, Grant Thornton found that the COVID-19 pandemic has forced CFOs to act more like change agents and strategists. This is an evolution from a fiduciary position to a more proactive role. As a result, CFOs should now have skill sets that focus more on business value generation and optimizing the business to support crafting a corporate strategy.
The other specific skill sets you should be looking for include digital savvy, business acumen, financial aptitude, empathy, and a collaborative approach.
Once you have defined the role and the extent of the required industry experience and skillset, the active process of hiring a CFO begins.
Spreading the word would attract the top talents. The CEO, management team, and board of directors should reach out to their contacts to network and let them know the company is looking to bring someone in. In addition, you should have conversations with trusted business colleagues and current service providers to determine if they can refer anyone who would be a right fit.
Suppose your Human Resources department has the internal capacity to search independently. In that case, you can utilize your in-house personnel to look for your next CFO. Otherwise, and this is advisable in most cases, it is best to seek external help. Engage with recruiters and executive search firms to hire the CFO based on your predetermined requirements. Here, you must ensure that you are working with the correct entity. In addition, your preferred search firm must demonstrate expertise. Ideally, they should have done recent successful searches for the position you’re seeking.
When you find a good match for your company, a comfort level quickly develops between them and the rest of the company, building internal rapport. During the process, look out for the CFO that has a detailed understanding of the current financials of your company. In addition, a CFO who is a good fit for the role will contribute candid feedback on your existing operations and what can be done to improve them.
As you find the perfect fit, you must also ensure your company is in a position to attract the top talents and that CFOs want to work for you. CFO candidates are picky about which company they wish to join in today’s competitive market.
Your company must genuinely reflect that it can offer opportunities to put the CFO’s skills to the test, transform the business, and open doors for achieving even more impact in the future.
While they will need every hand on deck to implement new processes and transform performance, CFOs, especially VC CFOs, likely want to avoid companies where the executives are board puppets. Use the opportunity of finding an excellent CFO to re-order your company to conform with best corporate governance practices.
There appears to be no one-size-fits-all answer to finding the quintessential CFO. The successful company CFO will typically embody several vital characteristics. In a nutshell, the ideal candidate is forward-looking and strategic, serving as a thought partner to the CEO and a business partner to the organization in driving value.
With a good handle on the finance function and a clear understanding of primary levers for value creation, the right CFO would be a challenger and an influencer within your company—holding overly optimistic CEOs and inwardly focused business-unit leaders to account. If everyone is on their toes and aligned with the company’s goals, the possibilities are limitless.
Our hands-on executive recruiters have experience working with private, public, pre-IPO, and non-profit organizations. Clients are typically $50 million in revenue to Fortune 1000’s or have assets between $500 million to $15 billion.
Cowen Partners is the nation’s leading CFO search firm, driven to create value for our clients. Read more of our industry-leading retained search resources to see why Cowen Partners is a top CFO search firm, including tax and accounting leadership, in Denver, New York City, Chicago, Seattle, Atlanta, Dallas, Los Angeles, and beyond: