How to know if you need a CFO

Bringing on a new senior manager is a high-stakes, time-consuming venture

How do you know if your company’s ready for a chief financial officer? You need one if you want to:

• Build your company’s capacity to manage its finances as it grows 

• Realign the workloads of your chief operating officer, especially in the areas of finance, legal and administration

• Augment the skills of your controller or finance team so you have a proactive approach

Most importantly, a CFO brings a strategic, high-level perspective to your finances and accounting, enabling your senior team to make business decisions through a sophisticated financial lens.

The right CFO will educate your entire staff in financial literacy, ensuring that the company as a whole operates in alignment with its goals and challenges.

If you already employ a controller or finance director, do you still need a CFO?

Controllers tend to focus on the technical aspects of accounting and finance, running the day-to-day accounting operations and producing financial statements. A capable CFO, however, offers an array of strategic and analytical skills that will bring your business to the next level.

A CFO will partner with your leadership team to: 

• Track and interpret pivotal financial data

• Allocate company resources to maximum effect 

• Create financial forecasts that will shape your operations and your goals with precision and clarity

In today’s business world, your CFO should, above all, play a hands-on role in steering your company toward its goals.

Whether you’re replacing an existing CFO or adding a part-time CFO, how should the search begin? 

The right candidate

Bringing on a new senior manager is a high-stakes, time-consuming venture. Prior to posting an opening for a CFO, the management team should precisely define the CFO’s role. 

While your first impulse may be to narrow your search to candidates with industry experience, it’s worth taking a flexible approach to this requirement. A skilled CFO from another industry can make a persuasive case for why his or her experience will serve you best. Either way, once on board, your CFO should engage with professional organizations in your industry, so that your business is consistently benchmarked against the overall industry’s best practices.

Hiring would be so much easier if all we had to do was line up our business needs with the candidate’s credentials. But as every manager knows personality, temperament and work style matters. A rewarding executive-level search is always informed by the leadership team’s self-knowledge – the company’s articulated understanding of what it takes to succeed in its unique culture.

The senior team, and the CEO in particular, must carefully consider the traits that harmonize with their priorities and work styles.

The CFO work style tends to be detailed, highly analytical and risk-averse, a set of traits your current senior team may lack. A promising candidate should demonstrate the leadership skills necessary to navigate your existing culture and effectively promote new perspectives, priorities and practices. 

A strong CFO candidate will make everyone comfortable with the numbers. Some companies, especially if they’re in financial pain, rush to hire the candidate they’re most impressed with. But sometimes “impressed” is code for “intimidated.” Translating financial data – to colleagues, the board, potential investors or junior employees – is key to the CFO role. If the candidate relies on unfamiliar buzzwords or acronyms, it’s not you: it’s them. 

Don’t be afraid of hard questions – make sure to ask them, and expect to answer some, too. Being open and honest with candidates, and candidly discussing business challenges, enables them to find the right fit. Hiring someone who flees after a month is a painful waste of resources and time, not to mention a hit to morale. Within the constraints of confidentiality, share in-depth financial information about your company, and be ready to answer questions about its financial health.

Make sure your senior team is committed to an unhurried, deliberative hiring process, involving all relevant employees.

Does your CFO job description fully reflect your company’s needs in the areas of finance, communications and leadership? Has your senior team honestly assessed your work culture, and determined what sort of match it’s seeking? Are all stakeholders involved and committed to a thorough interview process focused on both professional credentials and personal fit? If the answer to all of these questions is “yes,” you can expect a fruitful hiring process that will bring your company a new level of financial acumen, strategic planning and leadership. nhbr

Peter F. Pike, CPA, of the Manchester-based J. Edgar Group can be reached at 603-606-5164.