By Heather Johnson, Managing Director, Focus Search Partners
This article, the second in Focus Search Partner’s ongoing CFO Insights series, continues with details that explain the financial upside of a strategic and successful CFO hiring process and steps to incorporate it into your next CFO search.
Given the broader role today’s CFOs are expected to fill; the stakes couldn’t be higher when searching for a new executive to lead your finance organization. Aside from the typical duties of overseeing the organization’s financial health, the CFO will be the CEO’s right-hand partner in managing the overall business, developing and implementing strategy, and communicating with the board of directors, owners, and investors.
Organizations need a clear-cut hiring strategy at this level and magnitude of importance because the costs of mishandling the CFO search are high and often long-lasting. The solution to a more strategic and successful CFO hire is simpler and easier than you might think.
Can You Afford the Cost of a Bad CFO Hire?
A CFO may look great on paper and come with excellent references but placing the ideal finance leader goes far beyond these two criteria. If you hire too quickly and without a thorough vetting (which should include some combination of interviews, third-party assessments, and/or case studies), your new CFO could be an inaccurate fit for your organization on one or more of these fronts:
- Poor cultural fit who doesn’t match your core values
- Weak ability to mesh with the C-suite or board of directors
- Poor technical skills that don’t match the role’s requirements
- Indecisive strategy development that stalls forward progress
- Unorganized initiative implementation that wastes time and money
- Ineffective communication style that fails to inform, educate, or inspire
- Spiritless motivation and drive that limits excellence and performance
- Deficient in unconventional thinking and intellectual curiosity
- Incapable of building healthy, constructive tension with the board and CEO to drive performance objectives
CFO.com explains that the high price to pay in hiring the wrong CFO goes far beyond their compensation and potential severance; a bad hire’s effect on the company culture echoes beyond the employee’s tenure, no matter how long or short that may be. You must factor in the following opportunity costs, which reverberate further and broader when the wrong CFO is hired:
- Wasted time and money for recruiting and training
- Disrupted business operations
- Stalled initiatives
- Employee productivity decreases
- Sinking morale and potential employee disengagement
- Risk of losing key employees
- Dissatisfied customers
- Potential work burnout
- Poor work quality
- Damaged business or brand reputation
Why Engage a Retained Executive Search Firm for Your Next CFO Hire?
Despite the high stakes, many businesses don’t effectively initiate and complete a CFO search because hiring at the executive level is not an everyday recruitment event. However, it’s the primary purpose of a retained executive search firm, which is why engaging one comes with distinct strategic advantages that yield high-performing executives who drive better business results.
A proven executive search firm brings a myriad of solutions that not only identify an ideal CFO for your specific business but also deliver solutions to ensure that both short- and long-term business operations continue without disruption:
- Interim search capabilities: When a CFO resigns, their direct reports don’t always have the capability or capacity to manage the CFO’s day-to-day financial responsibilities and/or to continue to drive significant ongoing initiatives. In this case, the right search partner can identify and hire an interim CFO (link to Article 1) to fill leadership gaps within 10 days, limiting the departure’s immediate impact and facilitating a smooth transition for the next CFO.
- Larger candidate pool: Top finance talent can be challenging to find, yet time is essential during a CFO search, especially in the private equity space. A search firm that continually and consistently develops and maintains an extensive network of CFOs can more easily and quickly identify and connect you with the best candidates to lead your finance organization.
- CFO-specific expertise: Unlike internal HR generalists who typically lack significant exposure or knowledge of the CFO position, a retained executive firm specializing in CFO executive searches has a complete understanding of the role’s requirements and distinct CFO profiles and stays on top of emerging trends within the finance function. Equally important, a retained executive search firm’s experience, expertise, and reputation in an industry keep them connected, productive, and resourceful to attract and access a higher level of quality talent.
- Time management: Rushing the CFO hiring process leads to ill-suited hires, while overly prolonging it increases the chance of losing the ideal candidate. A search firm helps you avoid these traps by maintaining an efficient and effective process with proven methodology and framework in a tight time frame. It also brings a laser focus and intense pace to find the right CFO for your organization, which on average takes 90 days.
- Structured hiring process: According to CFO.com, “Companies that lack a standard process are five times more likely to make a bad hire than firms with a standard process.” High-quality retained executive search firms have a rigorous methodology and execution process that drives results.