When owner-managers are confronted with the need to recruit for a new VP Finance for for their organization, their first reaction is usually to try to fill the position through referrals. They put the word out to their friends and fellow owner-managers, they’ll ask their public accounting partner to see who they might know and they’ll often post the position on job boards.
Networking can be Hit or Miss
If the position is very straightforward and if they go to the market at a time when there happens to be a glut of qualified VPs of Finance looking for a new position (like a major recession), they’ll probably do pretty well with this approach. However, in most cases, when a company needs to hire for the top financial job, referrals and advertising just don’t generate the kind of numbers necessary to reliably result in a good hire.
Working the Numbers
Hiring well for any executive position and especially for a VP Finance is a matter of working the numbers. And for the numbers to work well, they need to be large numbers. Referrals will only generate a very small fraction of the potential candidates that may be available. Advertising is more effective at generating candidates than referrals, but there are two issues with relying on advertising to hire. Advertising only attracts candidates who are actively on the market and active candidates only constitute about fifteen percent of the potential candidate pool. Second, depending on how long they’ve been on the market, active candidates can sometimes be less discriminating than passive candidates when considering offers. If someone takes a job because they need a pay-cheque as opposed to loving the opportunity, that often leads to trouble down the road.
A Hypothetical VP Finance Search
The key to consistent, successful recruitment is canvassing a large number of candidates, most of who will only be passively on the market. Let’s consider a hypothetical search for a vice president of finance for a machinery manufacturer in Mississauga. Over and above the standard skills and experience most financial executives would bring to the table, the CEO has a few must-have criteria we need to factor in. This is a company in a hurry and they want as short a learning curve as possible so the candidate needs to come from the machinery manufacturing sector. In addition, they’re contemplating a major ERP implementation project and want to build a new manufacturing facility in the next couple of years so they’d like someone with significant experience in both of those areas.
Step One – Map Out the Target List
Step one of the search is identifying companies in machinery manufacturing or analogous industries that are of a size to have the same or greater level of complexity and sophistication as the client. And to ensure that we come up with VP Finance candidates that will be willing to commute to Mississauga if they don’t already live there, we’ll only recruit from companies that are headquartered in Mississauga and environs. When I plug these criteria into Scott’s Industrial Directory, we get a list of 150 companies.
In recruitment terms, 150 is not that big a number to start with. Even if each and every company on that list has a vice president or director of finance that I could talk to, I know that once I start applying the filters, a big number like 150 becomes a very small number very quickly.
Applying the Filters
The first and most obvious filter we need to run is how many of those 150 may be interested in looking outside of their current employer for a new opportunity. In a normal economy, that number is traditionally 15%. So if I reach out to 150 potential candidates, 25 of them will be willing to consider another opportunity. My next filters are my client’s must-have criteria. Of those 25 people willing to discuss a move, I’ll probably find that two thirds have strong ERP implementation experience.
150 to 25 to 17 to 9 to 4
Of the 17 candidates with strong ERP experience, I may learn that about half of them have had experience with major capital projects or new facility build-outs. So now I’m down to 9 possible candidates. Once I start to start to screen for personality fit, management style, ability to maximize enterprise value and so forth, I’ll be fortunate if I’m left with a short list of 4 strong candidates.
Choosing from Enough Good Fits = Hiring the Right Fit
The biggest determiner in finding the best fit for any position is having enough good fits to choose from. The best way to reliably generate a reasonable number of good fits is to select from the entire field of potential candidates, not just the relatively small pool of active candidates that job boards and referrals generate.