There are any number of factors to consider when hiring a member of your executive team. Hiring the top financial person for your team, whether you’re hiring a CFO, Director of Finance or Controller, can be especially challenging.
Your final decision will ultimately hinge on “fit”, but step one is to establish the criteria that ensure that everyone you interview is qualified for the position you want to fill. The following are five key criteria to consider any time you’re recruiting for your top finance spot:
1. Accounting Knowledge
Table stakes for any senior finance position is a strong technical background. Although there are a (very) few exceptions, any candidate you consider should be a qualified CPA. In some situations, their original designation (CA, CMA, CGA) could be criteria in itself. For instance, if you run a publically listed company, you will probably want someone who’s gone through the Chartered Accountant program. If your company is a manufacturer and your issues tend to revolve around inventory, costing and similar themes, you may want someone who’s come up through the CMA route. In any event, all candidates should be thoroughly versed and competent in all aspects of accounting and finance.
2. Industry Experience
The more senior a finance professional gets, the less they are defined by their accounting knowledge and the more they’re defined by their industry knowledge. Bio-pharma, software, auto part OEM and many other industry segments all have operational and accounting issues that are particular to their industry. For example, as much as someone from outside the automobile OEM industry can in time figure those issues out, at the executive level it makes much more sense to hire someone who’s already had first hand and extensive knowledge of whatever those issues happen to be. Not only will they get up to speed quickly, they may be able to bring some fresh operational insights to the table.
3. Trusted Advisor
The top finance person in any company should be able to act as a trusted advisor to the CEO and the rest of the management team. They should be an integral part of a company’s strategic planning process and be able to assist line managers with operational issues and decisions. Your CFO or Director of Finance should be able to advise on realizing cost and corporate efficiencies, systems changes, vendor selection, contemplated capital expenditures and new business initiatives.
4. Represent the Company
In many ways, your CFO or Director of Finance is the face of the company to your stakeholder community. This is the person that deals with your bank, the CRA, your suppliers, major customers, auditors and shareholders. They need to have the ability to deal equally well with a whole range of stakeholders and present themselves in a positive, professional light. Above all, they need to be, and be perceived to be, competent with a high level of integrity.
5. Can Grow with the Company
In many cases, the reason a company decides to recruit a CFO is in response to the company’s growth. Small businesses with a good idea tend to morph into mid-sized companies that need an increased level of financial stewardship and sophistication. And unless there’s compelling evidence to suggest that a company has plateaued in terms of growth or complexity, it’s reasonable to assume that the company will look as different five years from now as it does from five years ago. All of which impacts the criteria for hiring the CFO.
First and foremost, if your company is experiencing rapid growth and the attendant issues that rapid growth brings, make sure that you hire someone experienced and comfortable with that kind of growth. Secondly, in terms of skill set, sophistication and overall aptitude, if your company is currently $40mm in revenue and has been growing at a rate of 20% a year, don’t hire for what you are today, hire for what you’re going to be three to five years from now. At a 20% rate of growth, your company will be a $100mm business five years from now. You should hire someone who can help you achieve that milestone and be comfortable as the CFO of a company of that size.