Executive Finance: Mastering The CFO Hiring Process

As your business grows and your company processes become more and more complex, you’ll have difficulty dealing with all the financial processes in your enterprise. For this, you need a specialist who is more than just an accountant. You need an executive in the form of a CFO (chief financial officer). Naturally, hiring a specialist is always a challenge, so here are a few tips to help you in this process.

Define The Role

Don’t just assume that the title of CFO means the same thing in every company. Not only is the paycheck different, but so is the list of responsibilities. You need to start researching what CFO usually means in your industry (and in businesses similar in size and structure) and compare it to what you need.

First, however, you need to make sure that your business needs a CFO to begin with. Most small businesses don’t have the complexity of financial tasks requiring an actual CFO. Instead, a regular accountant might do. Still, how do you figure out when to hire a CFO, and how do you use this in your process?

Generally speaking, a CFO is in charge of things like:

• Financial planning and strategy development
• Financial reporting
• Risk management
• Budgeting and forecasting
• Cash flow management

Now, this last item may sound like something you don’t need an accountant for (even a bookkeeper would do it, or you could even do it yourself). However, this is not the case when you step up the complexity of the task. Namely, what happens when you have too many revenue streams or when your income comes from the most remote locations in the world?

They’ll be the ones in charge of your debt management and solvency issues, which means that they’re the person in charge of your company’s survival.

To clearly define the role of a CFO, you must first understand it.

Hiring Strategy

While posting a job listing sounds like the most intuitive way to handle these things, the truth is that when the stakes are so high, you usually want a strong referral. We’re not suggesting that you poach someone’s CFO, but knowing first-hand that someone is doing a great job in the industry can be a great start.

You also need to have your list of requirements.

While you don’t want to be unrealistic, you don’t want to set the bar too low. Why? Well, mostly because if you do so, you’ll automatically repel the most serious candidates. For CFOs, this is not just a job; it’s supposed to be a significant step in their career, so they can’t afford to be too reckless. They need to see from the start that you’re taking this as seriously as they are.

You must also look for their expertise in a specific product or industry. This is invaluable. While they’ll still need onboarding, this step could cut it a lot shorter and ensure they understand your business needs better immediately. Still, while this is important, finding someone who fits this exact description may be a bit difficult, so don’t make it into too strict of a requirement.

Also, set some minimal level of shared values to ensure they’re a great company culture fit.

Learn How To Negotiate

Most of the time, even when hiring specialists, it’s the company that’s hiring that has all the power. This is not necessarily the case when hiring an executive like a CFO. You must be ready to negotiate salary, benefits, career progression, etc.

The biggest problem with negotiating with the specialist or an executive is that the power dynamic shifts in their favor. Since they’re the ones who have so many options, they’ll often feel like you need them more than they need you, and this will shift the power dynamic drastically in their favor.

Also, remember that you don’t want to be just another stepping stone for them. It’s in your best interest that (should you hire them) they stay with you for the long run. With that in mind, you aim to give them a reason to stay for as long as possible. Therefore, you can negotiate with them about their potential salary progression. You could also offer them some equity in the company. This way, they’ll have a direct material incentive to give it their best in your company and won’t be as quick to leave.

Following some general negotiation tips can help you out here, as well.

Handle An Interview Well

You also need to learn how to handle the interview since it will differ from what you’re used to. You need to ask the right questions and prepare for the cross-examination. You need to prepare your questions in advance but also be ready to answer any question they may have. Remember, they’re trying to evaluate if you’re worth their time just as much as you’re trying to figure out if they’re the right fit for your business.

Another thing you need to do is discuss performance metrics. Tell them what you expect of them and ask for their feedback. How realistic is what you’re asking of them? This way, you’ll both be on the same page from the start and have a lot easier job establishing a relationship based on transparency and trust.

When negotiating with someone who will assume that high of a position in your firm, you must display some flexibility, so be open to this type of negotiation, as well. If they have specific requirements detrimental to their work-life balance, you might want to do them a solid and start this relationship with a favor.

Also, you need to understand that you’re not just looking at their track record in your industry. You’re also interested in finding out if they’re the right cultural fit. This is best figured out in person.

Wrap Up

You need to understand one thing – finding a great CFO will take work. They need to have a clearly defined position with high enough financial incentives and some trust in your enterprise (to see it as worth their while). Also, not everything can be turned into data. How you conduct yourself in this process will sometimes make all the difference. Make sure that you’re ready for what’s to come.