We are frequently asked to recruit Chief Financial Officers (CFO) and have compiled a short guide on how to approach your next hire at this level. CFOs can typically have a wide range of skills that vary significantly depending on the size of the business. I.e. a $10m turnover business would require a very different skill set from their CFO to that of a $10bn business.
Having the right CFO is very important for any organisation at whatever stage of its journey. The following high-level guide is an indication of the process more specifically for companies up to c.$100m. Typically the methodology for hiring a CFO will be tailored depending on several factors, including (not limited to) the complexity of the business and the role, growth plans, team size, industry, other areas of oversight, etc.
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Below we have set out the key stages of successfully hiring your next CFO.
Is it someone to guide the business through strategic acquisitions and growth, or is it a process-driven CFO who needs to keep the Finance team ticking along? They are quite different skill sets.
First up, have the Executive team agree on the required profile before the process begins. It’s very frustrating for everyone if the candidates are receiving mixed messages as they move through the interviewing process if each stakeholder has their own views on what is needed.
It’s important that the JD isn’t just a ‘dusted-off” standard HR form but is updated in conjunction with either the incumbent CFO or someone with intimate knowledge of the role. It should be an accurate description of what the role ACTUALLY does, not just its objectives.
How do they fit within the Executive teams’ bandings? How much flex can you have for an exceptional candidate? What sort of bonus can be offered and how will it be structured? This can include both STIs and LTIs, car spots, share plans etc.
Who will be involved? And are there likely to be any disruptions? Make sure the key decision-makers aren’t taking off on holiday halfway through. As much as you would like to get everyone’s opinion, that may derail the process. No-one likes a long process, much less the candidate going through it. If it’s efficient and well organised, your candidates will stay engaged and more likely to choose the role over one with a company with a drawn-out, confused process.
This will determine the quality of your candidate shortlist. Whilst advertising on Seek or LinkedIn can be a great way to save money, you ultimately will have to dedicate serious resources to screen, interview and manage the process.
The other consideration is you will only attract candidates that firstly see your advertisement, and secondly are very active in the market meaning they are probably applying to multiple other roles.
By far the most efficient process is to retain a specialist agency to run a dedicated, targeted campaign for you. That will ensure you get access to their extensive networks that sit outside of candidates who just apply through job boards. They will also act as a trusted adviser that you can consult throughout the process as they will know the shortlist intimately.
Now the hard part. If you choose to advertise, as a general rule you can expect between 100-200 applications of varying suitability. Whilst it will be easy to set aside the complete mismatches, narrowing down a shortlist to 5-6 interviews can be rather daunting. And of course, resumes only tell part of the story. Often the best candidates do not come from the best resumes, but you have to start there.
When we at Richard Lloyd assess resumes, amongst other things, we are looking for ‘stickability’. At the pointy end, we expect candidates will show 2-3 year stints in each of their roles before promotion. Frequent stints of less than that can be a sign of impatience. Or worse.
Some key areas that you may want to focus on when designing your interview questions for your prospective CFOs include:
Leadership skills – A CFO needs to be a leader in the organisation as well as a leader in the finance function. Ask interview questions about their leadership style, and how they harness ideas and lead best practices across an organisation.
Communication – Both written and verbal skills are necessary to manage relationships with internal and external stakeholders, articulate ideas, and present those ideas to all levels.
Technical Accounting Skills – A CFO needs to have a broad skill set with exposure ranging from taxation to strategic planning. They don’t necessarily have to be a tax expert but you do need someone who can talk to tax experts and achieve the best outcome for the company.
Commercial/Business Acumen – Many CFOs are at the heart of all commercial decision making and they are often referred to as the ‘glue’ in the organisation. Providing support to Sales and Marketing to ensure you have healthy margins, providing cost control to Operations, providing financial advice in developing a new product or initiative – the list is endless and you want a CFO that can provide rigour and this sort of commercial acumen to your decision making.
Technology Skills – In finance functions, technology is playing a bigger role these days than it ever has done, similarly to the rest of business. So your next CFO must have a curious interest in how to get the best out of your systems and understand what technology will make a real difference to your business and why.
Finance Skills – Some companies will require a CFO who is skilled at funding growth plans with exposure to raising funds, be that working with banks, investors, or an overseas parent. Having the ability to talk their language, prepare a business case for the new investment, or be involved in restructuring the business can all fall into the lap of a CFO.
Being clear and well-planned on the right questions to ask to ascertain levels of competence across the above areas is crucial.
Now the tricky bit (or hopefully not). Having hauled yourself and half of the Executive team through the process, you need to assess who is the best fit for the business. This is where skills and resumes aren’t half as important as the cultural fit of your new CFO, and in particular how they will balance out the ELT. Reference checking especially around personality and leadership can help your decision-making.
The final piece is the offer. If you have been transparent and consistent the whole way through the process, delivering an offer that will be accepted shouldn’t be a problem. Never low-ball offer a candidate – it’s a horrible look and unless the candidate is desperate, you will have to restart the process, or even worse, you will be onboarding a resentful CFO who still has one eye on the market.
The CFO role is especially critical as it is in charge of the company’s financial situation so finding the right person is key.
For the recruitment of any role, it is important to partner with professionals who take the time to understand your business and what you are after. One of our clients did just that and here is what she said about the experience:
"The key to any business is to find the right talent for the right seats. And if you do that, you're unstoppable. We've hired two roles with Richard Lloyd, a Finance and Operations Manager, and our CFO. The initial step was to get clear on what it was that we wanted from the talent and that they did a very good job of trying to understand who we were as people, what the culture of the business was, and what we needed in terms of that seat. The genuine interest in trying to find that puzzle piece that was the exact fit to what we needed was just something unique."
- Anneke Van den Broek, Owner and Founder of Rufus & Coco and the Fur Salon
If you are in the process of looking for a new CFO, Richard Lloyd can help. Our recruitment experts know exactly what to look for in a CFO, and we are committed to making sure we find the right fit for your organisation. Contact us to learn more about how we can help you.
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