Straight Answers to Real Questions
Question: I’m the CFO of a $100mm automotive services company and I recently had to go to the market to find a contractor to fill in for my Director of Finance who’s going on maternity leave. Our company has been growing very rapidly so I really needed someone who could get up to speed right away and pitch in on all the various new initiatives we’ve got going on.
I interviewed a few candidates, found one that I really liked and before I made him an offer, I stressed that this was a twelve month (and possibly longer) contract and I needed someone who could commit to that length of assignment. He asserted that he could commit to at least a year so I ended up giving him the contract.
He was in the role for less than three weeks when he waltzed into my office and informed me that he’d just been offered and was accepting a full time position that he’d been interviewing for at the same time he was initially talking to us. Besides being extremely ticked-off, I’m also that much further behind on all of the projects I wanted the contractor to help me out with.
I need to go to the well again to find someone else to fill this contract. Is there any way to avoid getting blindsided again?
Answer: Whenever someone has a generalist type contract to fill (as opposed to a technically specialized contract such as an IFRS, ERP implementation), you can go one of two ways. Option one is to hire a professional contractor. This is someone who has decided to take their career off of the fulltime VP Finance / Director of Finance / Controller track and spend their time as a hired gun.
The good news with professional contractors is that you know exactly what you’re getting and when they take a contract, they stick with it. Your contract isn’t their second choice, and they’re not prone to better offers. The bad news about professional contractors is that they usually come to you through an agency in which case you’re going to pay through the teeth for them. Agency mark-ups range from 70% to 100% so you could end up paying $150 an hour for someone filling the equivalent of a $150,000 a year ($150/hr = $300,000/year).
It sounds like you went with the second option, someone who’s not a professional contractor but rather someone who was between full time jobs. The good news when hiring this kind of person for a contract is that you’ll pay a fair price for their services. The bad news is what happened to you. That being said, I think you picked a particularly bad apple as your contractor. Most professionals won’t accept a contract if they’re in the running for a fulltime gig. To accept your contract and leave you high and dry after three weeks says a lot about your former contractor, none of it good.
The only thing you can do to ensure that someone stays the entire length of the contract is to include a penalty clause into the contract that makes leaving prematurely very costly. However, very few people would accept a no escape long term contract if they still have aspirations of landing a fulltime job.
I believe it is reasonable to ask for two or three months’ notice on longer term contracts. At the VP Finance/CFO level, in many cases, the company is hiring their first CFO (not replacing an incumbent) or is replacing someone who’d retiring; in both cases the firm is usually happy to wait a few months for their new hire to start.