Hiring for any position in your C-suite requires an in-depth understanding of the role you’re looking to fill and how the candidate you ultimately choose will move your company forward.
With that said, as you move to execute your CFO hiring strategy, you and your team will likely have a lot of questions, ranging from knowing when to hire a new CFO to understanding a candidate’s qualities and abilities, to grasping how you can set that individual up for great success.
Simply hiring a CFO doesn’t automatically guarantee that they’ll benefit your business; you must learn how to hire a CFO appropriately to maximize your success.
While most CFOs simply provide financial data and reports, that isn’t the true essence of the role. Understanding the full role of a CFO is crucial to the success of your chosen candidate and of the business itself.
To that end, an effective CFO uses the information they gather and distribute to provide a path forward for the business they represent. They’ll develop a business strategy and then inform leaders on where to spend their capital based on that strategy. They’ll also articulate their vision to investors so they can raise capital to find strategic initiatives.
In the beginning stages of your business, a CFO can help you devise a strategy to scale it while building your financial infrastructure and processes.
You may have trouble attracting high-level talent early on, as many experienced CFOs don’t wish to devote themselves to hands-on work each day. For most companies, though, hiring a CFO is most beneficial in stages of growth. If a liquidity event is near, you’ve experienced rapid expansion, or you’re ready to grow through mergers and acquisitions, a CFO can help lead your company through such transitions.
When it comes to the role of a CFO, the most important thing is understanding who you are hiring and what you’ll need to have in place to make each type of candidate thrive.
With that being said, companies often consider candidates with a variety of different backgrounds, including the following:
Instead of finance backgrounds, these candidates typically have broader experience in business strategy or operations. They’re great at strategic advisement, and given their hands-on involvement, they know what to do when issues arise. However, hiring such a candidate may also necessitate hiring a certified public accountant to ensure the technical aspects of your finances are properly handled.
Hiring a CPA negates the need for a controller, as you’ll already benefit from the CPA’s technical background. Risk management and regulatory compliance are their strengths, though you will likely need a strong FP&A or operations team to make a CPA candidate provide the most value to your business.
With their strong background in mergers and acquisitions, these CFO candidates are the strongest at raising capital from all types of sources and can execute on all sides of the deal. As such, they’ve often built great relationships, especially in the banking industry. However, their lack of internal operating experience means you may need to hire a Chief Accounting Officer or controller alongside your chosen candidate.
A traditionalist candidate may have started in investment banking or private equity but has since spent their recent years as a finance executive. They are the most complete package, with FP&A experience and an understanding of managing key functions. If you’re in the growth stage, a traditionalist candidate might be the right choice.
It’s important that you map out the expectations you have for your CFO, understand the outcomes that you are expecting, and be able to assess whether a candidate you’re interviewing can fully deliver.
As a general rule, your CFO should take care of the following tasks:
They’ll also be taking care of financial operations such as :
As you consider candidates, you must also assess what is most important to your business. Determine whether you want someone with experience in your industry or your business model, and ascertain whether you need someone who has worked in a particular international market. While standard criteria are certainly available to base your decisions on, you must make sure that you incorporate the needs of your business.
A few ways in which you can set your CFO up for success once you hire them are as follows:
Ensure that the CFO and the CEO work well together. CEOs push visions, and CFOs are responsible for validating them and providing pathways for their companies to achieve them. As such, your CFO and CEO must be able to work together and trust each other throughout the process.
Your CFO must also know how to build relationships with external financial partners. You should be able to ask your banks and investors for recommendations on a candidate they like, as these relationships help tremendously in raising capital.
Keep your general counsel and your CFO separate. If general counsel is required to report to the CFO, they may feel they cannot speak up if something is threatening the business.
Consider bringing the board of directors into searching for a CFO. Your investors know the company well and will, therefore, have great insight into whether a candidate is the right fit.
A CFO has the potential to change the trajectory of your company. They will not merely report numbers but provide a viable financial pathway to your strategic vision.
That said, your team must have solid expectations around tasks and outcomes that a CFO is responsible for. While some things are typical, it’s important to consider your particular industry, business model, and needs.
Once you’ve found your ideal candidate, ensure they can work well with your CEO and build strategic relationships. Your CFO — and your entire company — will experience the most success when everyone works together to keep them accountable and help get the job done.
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.
Our hands-on CFO 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.
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