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Is Your CFO Hiring Budget Realistic?
By Shawn Cole, President & Founder — Shawn Cole is a nationally recognized authority on CFO recruiting. His insights regularly appear in Forbes, Bloomberg, The Wall Street Journal, Harvard Business Review, Fast Company, CFO Dive, Entrepreneur, and other leading publications, delivering nuanced and critical analysis on executive recruitment, succession planning, enterprise transformation, and the evolving demands of modern C-suites.
Who is in charge of a company?
Ask anyone this question, and they’ll tell you it’s the CEO. That may be true, but a competent CFO is essential if you want your company to move in the right financial direction.
Hiring the right CFO for your company is often harder than it sounds. Competition is fierce for established CFOs, and if a candidate isn’t satisfied with the salary you’re offering, it’s very easy for them to go elsewhere.
With the right planning, you can decide on a CFO salary that’s large enough to bring in more talent but not so large that it hurts your bottom line. Here’s a closer look at today’s CFO salaries, along with some guidelines for deciding your own hiring budget.
Factors That Impact Typical CFO Salaries
There’s no simple equation to use to determine what your CFO’s salary should be. Before you begin your search, it’s good to be mindful of some of the factors that help determine how much a CFO is paid:
- Geographic location
- Past experience
- Any special areas of expertise
- The performance of companies the CFO has worked for
- The size of your company
- What industry you’re in
- What responsibilities the CFO will have when working with your company
Some business owners and CEOs may balk at the average salaries of CFOs. However, bear in mind that a CFO does much more than just manage the day-to-day processes of the finance department. They also serve as a strategic partner to the CEO when it comes to growing the company and steering it in the right direction.
CFO Salary Ranges by Company Size
Of course, the above factors aren’t the only thing to take into consideration when setting a budget for hiring a CFO. Your company size matters, too — a tiny company with a handful of employees doesn’t have the budget to pay its CFO half a million dollars each year.
A recent survey found that CFO salaries can vary dramatically based on company size. Here are the estimated salary ranges based on the number of employees a company has:
- Up to 500 Employees: $192,143 to $258,157
- 501 to 2,500 Employees: $255,172 to $325,737
- 2,501 Employees or More: $325,737 to $567,637
These salary ranges only include base compensation — they don’t take into account bonuses, benefits, or perks.
Typical CFO Salaries in Major Metro Areas
When you’re considering the average CFO compensation, it’s important to distinguish between the base salary and the salary plus bonuses and benefits.
If you want to attract a quality CFO, you generally need to offer a competitive base salary as well as a suite of benefits like the following:
- Health insurance
- Disability insurance
- Life insurance
- Pension
- 401(k) matching
- Paid time off
- Stock or equity in the company
- Use of a company car or private plane
However, what “competitive” means depends on your company’s size and location.
Here’s a list of typical CFO compensation in some of the top metropolitan areas of the United States (as of the end of 2023):
- New York: $508,878 base/$701,510 total
- Los Angeles: $486,228 base/$670,285 total
- Chicago: $456,865 base/$629,806 total
- Dallas: $430,273 base/$593,149 total
- Washington, D.C.: $482,114 base/$664,613 total
- Houston: $440,667 base/$607,478 total
- San Francisco: $541,360 base/$746,287 total
- Philadelphia: $459,593 base/$633,568 total
- Boston: $487,960 base/$672,673 total
- Atlanta: $425,375 base/$586,396 total
Why is compensation so high in New York? New York’s high cost of living means that even six-figure salaries don’t necessarily go very far. New York also has very high taxes (individual state income tax can be as high as 10.90%), and many areas of the city collect local taxes in addition to state taxes.
Tips for Hiring a CFO and Setting Compensation
Hiring a CFO isn’t a decision to be made lightly. Give the process the respect it deserves by doing your research and planning ahead. Here’s how to get started.
Look at Competitor Salaries
Before you start deciding what to offer a new CFO, look at what similar positions are paying. Make sure the compensation you offer is in line with that of similar positions. If you offer a much lower salary, qualified CFOs are going to look elsewhere. If you pay far more than competitors, you’ll be making an unnecessary expenditure.
Define the Role
The responsibilities of a CFO can look very different from company to company. Outline which responsibilities are within the scope of the role and which are outside of it.
Decide What Factors Will Impact Compensation
Most companies set a range when deciding what to pay an employee. Take the time to determine which factors will lead to a higher base compensation.
You’ll also need to consider the benefits you’ll offer with the position. Are there opportunities to earn bonuses? What kinds of insurance will you offer? Is there a pension?
Consider How You’ll Find Your Candidates
There’s nothing wrong with listing the position on job boards. But because the role of CFO is such a specialized one, you might find it’s more efficient to intentionally seek out candidates. There are a few different ways you can do this:
- Look Internally: If any current employees seem like a good fit, you can approach them about the opportunity
- Use Your Network: You might have professional contacts who would excel at the job — or those contacts might know someone who would
- Use an Executive Search Firm: Seeking out and interviewing candidates can be very time-consuming, and an executive search firm has plenty of experience finding candidates who are a great fit for your company
Of course, you can always use a combination of these strategies to find your next CFO.
The Right CFO Is Within Reach
No matter how large or small your company is, recruiting the right CFO is a major undertaking. However, when you take the time to decide what you want, how much you’re willing to pay, and how you’ll go about choosing your newest executive, you’ll be well on your way to securing a brighter future for your company.
Get The Ultimate Chief Financial Officer Hiring Guide
This insiders’ CFO hiring guide, put together by the nation’s leading CFO search consultants, details the issues that can arise when hiring a CFO, from CFO job descriptions and qualifications to average CFO salary ranges, when to use interim CFOs, how CFO compensation compares to the rest of the C-suite, and more. Make your next choice the best yet and get the CFO you need with the Ultimate CFO Hiring Guide.
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