Finance is integral to the operations of every part of the organization, making the Chief Financial Officer (CFO) role critical. The CFO provides clarity into the business and supports the goals of every department. Making a poor hiring decision here can have long-impacting consequences for the business that are difficult and costly to undo. Hiring the right CFO, however, can be the executive hire that secures your company’s position as an industry leader and opens the door to otherwise unavailable opportunities.
This article will discuss five best practices companies can benefit from considering before hiring their next CFO.
1. Understand the Role and Your Company’s Needs
The CFO should be the foremost finance expert in your company. They will know the answers to questions you don’t even know to ask. It is critically important that you research the responsibilities of a CFO before you begin your search. If your company already has a CFO departing on good terms, they may be willing to help evaluate the next candidate or help prepare you so you understand what to look for in a talented finance leader.
The specific duties of the CFO will vary depending on the company’s unique circumstances, but at its core, the role of the CFO extends beyond accounting. The CFO is responsible for financial planning, risk management, compliance, financial analysis, stakeholder communications, and more. In companies where a CFO has a Controller reporting to them, the CFO can delegate many of the financial reporting responsibilities to the controllership function, allowing the CFO to focus more on strategic activities.
Before interviewing CFO candidates, talk with your accounting staff to understand the requirements of your organization currently and which processes are consuming the most time and resources. This will help highlight the areas a CFO can contribute and redesign key processes. Identifying your company’s needs is as critical as understanding the CFO’s role. Are you looking for someone to lead a major financial restructuring? Or perhaps you need someone to drive aggressive growth strategies or prepare your company for an initial public offering (IPO)? Why do you need a full-time CFO? Is it possible that a Fractional CFO is a better fit for your needs? Be sure to assess the company’s current financial health and understand your short-term and long-term goals, looking for any potential future challenges.
2. Write a Clear and Complete Job Description
Finding candidates is a timely and costly endeavor. Writing a clear and complete job description can help ensure that you attract quality candidates, saving you time and money. The job description will serve as the blueprint for your expectations of candidates and how they will contribute to your company. The job description will screen for qualified candidates, but you are also selling them on the idea of working with your company.
When crafting your job description, include all of the following elements. Not all of these have to be a separate section, but all themes must be covered:
- Summary: The summary will make the first impression on the candidates for the role. Briefly cover the high-level responsibilities of the position but save the details for later. Instead, write more broadly about the company’s culture and how you anticipate the CFO contributing to the organization. Talk about some of the direct reports the CFO will manage, and indicate whether or not a controller will report to them.
- Duties and responsibilities: Here, you want to list the specific duties expected of the CFO in bullet format. Include all of the core responsibilities inherent in any office of the CFO, including financial reporting, treasury, and financial planning & analysis. Also, list the duties unique to your company. You may, for example, expect the CFO to oversee the HR function. Be sure to include that here.
- Qualifications: Make sure your job description lists the prerequisites for the role. List any required software knowledge, industry experience, education, credentials, licensure, and more here.
- Personal Traits: Your company culture is unique; you will want a CFO that aligns with the personalities in your management and company more broadly. Make sure you discuss the leadership and communication styles you believe will make the best fit with your organization.
- Advantages and opportunities: Talk about why your company is one the CFO should be excited to work with. If there are exciting milestones or opportunities your company is currently pursuing, talk about them. At a minimum, candidates will want to see some of the benefits package the role offers. If you can, including some general details about the compensation package will also help attract more interested candidates.
3. Hold Multiple Interviews, Each With a Different Goal
When evaluating candidates for one of the most important roles in the company, you would be taking a great risk to hire one after a single conversation. Prepare your candidates for several rounds of interviews, each with a different objective and topic in mind. In the first interview, for example, a great strategy is to get to know the candidate better as a person. Try not to make the conversation feel like a rigid interview; instead, help them feel comfortable and discuss how they like spending their days outside of work. In future interviews, you may dive deeper into their background to evaluate specific expertise in areas critical to your business and discuss other expectations of the role.
4. Evaluate Leadership Capabilities and Fit
You should continually evaluate the candidate’s leadership capabilities and style throughout the hiring process to ensure alignment with your company culture. When you have a list of finalists, consider issuing leadership assessments to provide you with more insight into the candidate’s behavioral profile and fit with your company.
The CFO is not just a financial expert but also a key executive team member. They must interact and collaborate with other leaders in the organization, manage the finance team, and communicate financial information and strategy to different stakeholders. Your Modern CFO‘s success as a leader will help determine the future of the company’s culture, impacting employee retention, growth, and other critical factors.
5. Verify Background and References
Hiring a CFO is a significant investment with both time and resources. Taking the time to verify the CFO’s background is a best practice that no hiring company should ignore. When looking at their background, double-check that their experience aligns with your company’s needs. It’s hard for anyone to admit where they may have gaps in their skill set, so you will need to verify that they have the necessary experience to handle the role. When requesting references, indicate that you want to speak with unrelated parties. Speaking to a candidate’s family member will not give you the unbiased review you seek. Confirm with the candidate if you can contact some of their prior employers.