Executive search is, at its heart, a service business – you’re paying for the specialized knowledge, experience, and skill of the recruiter you’re hiring. It’s not unlike hiring a lawyer, architect, or accountant.
It’s also an information management business. Thanks to LinkedIn, Facebook and other web-based research tools, executive search firms have access to pretty much any executive they need to find.
Understanding CFO Recruitment: Expectations vs. Market Reality
It’s not unlike the real estate market where the hiring authority is the person looking to buy a house and the recruiter is the realtor who has access to all the mls listings supplemented by their local knowledge of the market.
To extend the metaphor, the real estate market at the time the buyer is looking for a house is static; if there are fifty houses for sale in the prospective buyer’s desired neighbourhoods at that time, that’s all there is and it isn’t going to change much within the buyer’s search window.
It’s the same when you’re looking for a CFO. There are only so many qualified individuals, either actively or passively interested in making a move at any given time. If you live in a large metropolitan area, this will be a candidate rich market so there should be appropriate, qualified executives for any CFO search.
Except sometimes there aren’t.
And the reason this happens is usually because of a mismatch between the hiring authority’s expectations and market reality.
Going back to our real estate metaphor, suppose someone moves to a large metropolitan area from a relatively small town where they lived thirty minutes from downtown and sold their four-bedroom home for $500,000. If that person isn’t already familiar with the market they’re moving to and they stick to their guns that they want a four-bedroom house within a reasonable commute of downtown for close to what they sold their house for, they’re going to still be looking years from now.
What to Do When Your CFO Search Comes Up Empty
So, if you’ve engaged an executive recruiter who has exhaustively canvassed the market and you haven’t seen anyone who fits the bill, it probably means that your search parameters are not in sync with the market (which is another way of saying you may be looking for a unicorn).
Btw, I’m predicating this argument on the assumption that the hiring authority is using an executive recruiter and not a placement agency. As I’ve noted in previous articles “What’s the Difference Between a Recruiter and a Headhunter?“, for the most part, placement agencies are in the business of placing the people they already have on hand; they are not set up to conduct exhaustive searches.
If this is you, and your executive recruiter hasn’t been able to show you what you’ve asked for at the compensation level you’ve specified, the bad news is that you’ve spent a couple of months on the search with no results.
The good news is that there are three things you can do to get your search back on track:
- Raise the Money: Hiring authorities who haven’t been in the market for a while commonly base their compensation range on either what they used to pay for a CFO when they last hired some years ago or on the compensation band their other executives are at. The thing is that in these days of rapid inflation, the general market is often making quite a bit more than those executives you hired five or ten years ago who’ve been getting COLA + type raises during their tenure with you.
Just like the real estate doesn’t care what you paid for your house eight years ago, the labour market doesn’t care what you initially paid for your previous CFO eight years ago.
I get that hiring an executive at a higher level that your existing executive team is currently earning has an internal inflationary effect. But the fact is that if your executive team is significantly underpaid as a whole, you’re at risk of them finding more lucrative opportunities elsewhere anyway.
- Lower Your Expectations: When I start a search, the client and I agree on a set of criteria that we’re going to be looking for in a candidate. Inevitably, there are must-have criteria and there are would-be-nice criteria.
How Over-Specifying Can Derail Your CFO Search
Where hiring authorities often go astray is in insisting that all their criteria are must-haves. In my experience, if the client is specifically looking for ten criteria in someone’s experience, about half to two thirds are those criteria will be key and the rest will be would-be-nice.
Of course, you shouldn’t compromise on things like personality/cultural fit and perhaps direct or analogous industry experience but if a candidate checks all of the major criteria boxes but doesn’t have specific experience with the client’s ERP, that is not a reason to reject the candidate. No doubt they’ve worked with other ERPs and will be up to speed with that particular system within a couple of months
- Change the Specs: Sometimes a company goes to market for an executive looking for a solution that doesn’t necessarily solve the problem. There are various iterations of this, the most common being hiring one person to solve two disparate problems.
Let’s say a company has been growing rapidly and their accounting/finance function is an absolute mess and requires massive remediation. Let’s also say that the owner-manager is thinking about retiring or selling their company in the next five years.
So, they go to the market looking for VP Finance who will be able to totally overhaul the accounting function/processes/systems etc. and will also have the experience to quarterback a liquidity event sometime in the next five years. The issue with this mandate is that the person who can look after the sale of the company probably isn’t the person to spend two years in the weeds cleaning up the accounting function and conversely, the person who is qualified and willing to spend two years fixing accounting function probably has no experience in running a company sale.
The immediate problem is remediating the accounting function so the fix is this case is to change the specs to focus on finding that person who can implement the changes needed in that department and address the other issue (someone to drive the company sale process) at a later date.
Theres’ an old saying that there’s never time to do it right, but there’s always time to do it over. This is especially true when you’re looking for a new executive. I counsel hiring authorities to get as much intel and insights into the labour market as they can before they start the search so when they do go to the market, their expectations are in sync with market reality.
