By Monica Foster
The role of the CFO has been gradually changing over time. The modern CFO is no longer just a number-crunching, spreadsheet-focused financial wizard (though they still certainly have a numbers-centric mindset). They are strategic, well-rounded business leaders who combine deep technical accounting and finance knowledge with soft skills like storytelling, team building, and humility. They also collaborate with company leaders across departments, to inform overall business strategy and decision-making with keen financial insights.
For many CFOs, their most important cross-department collaboration this year has been with HR and hiring leaders.
As economic recovery from the first wave of COVID-19 got underway, major shifts in the labor market unfolded. From accelerated hiring needs to changing employee priorities, the pandemic’s impact on hiring continues to reverberate across industries. In 2021 so far, the US Bureau of Labor Statistics has reported a twenty-year high in employee resignations in April and a twenty-year high in job openings in July. By August, the number of job openings in the US outpaced the number of available candidates by over one million.
This has led to a historically competitive hiring market where job seekers have more leverage than they’ve had in over 20 years.
Candidates are now commanding higher salaries and receiving multiple job offers at a time. To prevent employee turnover, companies are offering high counter offers. And these trends aren’t projected to slow for the foreseeable future.
In a labor market this tight, a company’s hiring process should be benchmarked with financial data and strategy to ensure your organization is poised to compete. The CFO is front and center to this strategy and can help play an integral role in hiring outcomes.
Let’s explore some of the key ways CFOs can partner with talent acquisition experts in their company and how those efforts can pay significant dividends.
How can CFOs engage in attracting top talent to their organizations?
For a CFO, becoming a valuable recruiting resource for their company means learning, collaborating, and influencing areas of the business that aren’t traditionally associated with the finance team.
Be active on social media
The social media space is usually associated with a company’s marketing department. In today’s world, however, it’s an essential resource for CFOs. This is especially true during periods of recruiting and hiring. Why? Because the vast majority of candidates for virtually any position are active on at least one social media platform.
CFOs who embrace social media can use their platform to build a personal brand, become a thought leader, expand their peer network, and make personal connections with potential candidates. Perhaps most importantly, they can drive brand recognition for their company itself.
When it’s time to hire for vital positions, in-demand candidates are less likely to apply to companies they haven’t heard of. CFOs who elevate their organizations on social platforms can help draw in a greater number of applicants for hard-to-fill positions and amplify hiring campaigns to their loyal followers.
Help drive an outstanding interview process
CFOs have access to financial data that can help organizations (in collaboration with HR, of course) build a more strategic, cost-effective interview process.
For instance, many CFOs understand how costly a lengthy interview process can be—both in company resources and in losing top candidates to faster-moving competitors. Data showing the financial and HR benefits of a shortened interview phase can drive positive change in a company’s hiring strategy.
Create a world-class candidate experience
Benefits and compensation are two areas where CFOs and HR leaders can work together to transform a candidate’s and an employee’s experience.
CFOs can collaborate closely with HR to identify hiring trends in the market and create or revise the company’s budget to ensure they can afford in-demand talent. If the hiring budget is too low from the beginning, the hiring timeline will be delayed. An additional way that CFOs can help attract and retain talent is to structure attractive, yet cost-effective benefits packages.
Employee development and training programs, for instance, are attractive to job seekers who have an eye on the future. Remote work options, competitive PTO, and flexible work hours may also turn candidates’ heads.
Here are some other ways CFOs can help create a world-class candidate experience:
- Stay connected with benefits vendors to learn about the most current trends in employer coverage, and consider shopping around for different plans to ensure that your company is working with the most complementary vendor for your employee population.
- Fund reward, recognition, and promotion programs that encourage employee performance and bolster employee engagement.
Examining the cost of mis-hires in today’s labor market
Because human capital is most businesses’ biggest expense, the high cost of a bad hiring decision is a huge concern for CFOs. In the current hiring market, where salaries are increasing and timelines for hiring have shortened, these concerns are only growing.
Dr. Bradford Smart, an internationally renowned management psychologist, has done extensive research on the true costs of hiring the wrong person.
According to Smart’s research, the cost of a mis-hire ranges from 5 to 27 times the employee’s salary. This cost incorporates more than the dollar amount spent on recruiting, compensation, training, and maintaining the employee. Mis-hires also cost money in missed business opportunities, mistakes and oversights in their work, and disruptions they cause to other team members.
Perhaps unsurprisingly, Smart’s research also shows how the financial burden of a bad hire gets exponentially worse as the employee’s seniority level goes up.
The cost of a bad hire in a sales rep role is about 5X the employee’s annual pay. For a middle manager role, that cost goes up to 15X their annual salary. For a bad hire in an executive position, the costs skyrocket to 27X the employee’s base salary.
What do those numbers add up to?
Consider this: a sales rep hired at $75,000 per year can cost a company up to $375,000 if they’re a bad fit. A senior manager making $150,000 per year can cost a company $2.2 million if they don’t work out. And if you make a bad hire at the senior leadership level, you’re talking about a truly significant financial hit that can affect a business for a long time.
As salaries increase at the fastest rate we’ve seen in decades, the financial risks of hiring the wrong person are increasing, too. As the financial stewards of their organizations, CFOs can and should take an active role in their companies’ hiring strategies.
By building a strong personal brand on social media, taking an active role in recruiting strategies, and helping build a compelling place to work, CFOs can become key players in attracting world-class talent to their organizations. We encourage you to take action and keep us posted on your results!
This article was created for CFOs of The Focus Forum, which is a community of mid-market CFOs interested in keeping their skills sharp by receiving access to curated content, peer-to-peer networking, exciting events, and much more.
Focus Search Partners can help you make your mark in this new era of CFO leadership. We build teams that grow companies, and together, we can create new opportunities for your personal growth and advancement.
Monica Foster is a Managing Director who leads Focus Search Partners’ Interim Executive Services business.