Hiring a CFO is a huge decision that will impact the lifeblood of your company: its financials. You want to get this decision right and do so efficiently.
Here are 7 tips you need to know about filling the CFO role the right way. This guide will help you pick the best candidate for your company and avoid the dreaded mistake of a mis-hire.
What is a CFO?
First, let’s define what a CFO is and what they do.
CFOs oversee the financial health and decisions of your company. They manage all your financial staff, from accountants to controllers to bookkeepers.
CFOs manage everything related to cash flow, financial planning, pricing strategies, etc. Their goal is to maximize revenue, return on investment, and strengthen and grow your company’s financials.
Tip 1: In-House or Executive Search Firm?
The first step in hiring a CFO is determining whether to do it in-house or outsource. This decision is personal based on your company’s needs, but here are some reasons you may use an executive search firm.
Executive search firms specialize in finding the best top-level talent out there. They generally have decades of industry experience placing CFOs and have access to candidates the general company wouldn’t be able to find. A search firm is the way to go if you’re looking for access to a broader and more qualified talent pool.
If you’re concerned about the time hiring a CFO will take, it’s best to outsource to an executive search firm. These search firms are also adept at filling openings quickly. Their talent network allows them to source and vet candidates fast and present only the best options to you as the company.
Ultimately, outsourcing is your best bet if you lack the time, resources, evaluative skills, or network to hire a CFO. Not sure which firm to choose? Jennings Executive has you covered. Learn more today!
Tip 2: Define CFO at Your Company
Hiring a CFO means clearly defining what that role is at your company. Take an in-depth look at your company’s financials and its needs. What is a CFO at your company?
The role of the CFO is evolving. 58% of finance leaders note that they need to build an understanding of sophisticated data analytics, smart tech, and digital technology. Another 71% say that CFOs are increasingly responsible for supporting their company’s purpose and the ethics behind their decisions. Consider your industry and its evolution. How can you hire a candidate who’s ready for the future?
More traditionally, since a full-time CFO oversees all company financial management, they are likely to interact with legal, HR, IT, and many other departments. Incorporate this into your role definition, and look for someone with cross-collaborative experience.
Once you’ve clearly defined the role, its responsibilities, and culture fit, figure out which career path you’d like to pull from. Do you want a candidate who’s been a CPA, investment banker, or company accounter?
Tip 3: Tap into Your Networks
Before looking at hiring boards, you’ll want to tap into your network. Are any of your contacts currently a CFO? Do any of them have the relevant experience that would make them a good fit for hiring a CFO at your company? Using your network allows you to make a more personal hire; you can also more easily vet candidates if people you know and trust recommend them.
Use LinkedIn as a jumping-off point. You’ll also want to talk to friends, family, previous coworkers, people at meetups, and more.
Ask your employees to dig into their connections, too. You can even offer a hiring bonus to any employee who finds the candidate you ultimately hire for the role.
Tip 4: Look Internally
Another place to look when hiring a CFO is within your company. Internal hires are already familiar with your company; they’re also someone whose performance you can evaluate directly.
See if there’s anyone at your company with the qualifications for CFO who might be ready for a promotion.
Tip 5: Find Candidates With Industry Experience
Hiring a CFO means finding candidates with direct industry experience. Someone who thrived as CFO in one industry may not be successful in your vertical. Consider specific regulatory requirements or other technical components to your industry and make sure candidates are familiar with these.
You’ll also want to look for candidates with experience at companies in similar stages to your own. If you’re an established company, your CFO needs will differ from a venture-backed, high-growth startup.
Overall, finding someone with industry experience ensures they’re qualified and know the ins and outs of your vertical. This helps avoid costly mistakes.
Related: 6 Steps For Recruiting Executives The Right Way To Create Maximum Impact
Tip 6: Determine the Decision-Makers for Hiring a CFO
On your journey to hiring a CFO is figuring out the decision-makers. Too many opinions may create gridlock, but too few can result in oversights. Who’s going to be involved in this crucial decision?
The CEO will be heavily involved, but consider including these people, as well:
- Board members
- Other leadership members
- Owners or investors
- Heads of departments
Tip 7: Above All Else, Find a Good Fit
Hiring a CFO is incredibly costly, especially when you hire the wrong candidate. Considering a bad hire can cost as much as 30% of the person’s first-year earnings – which are particularly high if you’re hiring an executive – you want to prioritize finding a good fit.
The job of an executive search firm is to find the best fit possible. Consider a search firm if you don’t want to risk all the damage associated with hiring the wrong CFO.
At Jennings Executive, we have over two decades of combined industry experience matching companies with the CFOs they need. Learn more today! We’d love to help you on your journey.
Related: Diversity In Finance: Why It Matters & How To Improve It