Straight Answers to Real Questions
Question: I run a $100mm manufacturing business out in Mississauga. My CFO just quit and I need to find a replacement. Frankly, I’m not sorry to see this guy go, he never really added a lot of value other than keeping the accounting function going smoothly. He was with me ten years and I was paying him a base salary of $190,000, plus a bonus based on company profitability. I’m ready to take the company to the next level and I think a really sharp finance executive could help me get there. If I pay the next vice president of finance a whole lot more, will I get a whole lot more bang for my buck?
Answer: I’m a firm believer that you end up getting what you pay for. That being said, you shouldn’t have to overpay to find what you need. A base of $190,000 plus bonus seems reasonable for a company of your size; it sounds like you just weren’t getting what you paid for. Unless you’re anticipating that you’ll be experiencing exponential growth, you don’t need to up the ante significantly to recruit a really effective vice president of finance.
The market for financial executives is fairly evenly traded – people tend to get paid what they’re worth. There are two common factors in the recruitment process that lead to overpaying for an underperforming asset: a) not having well thought out, properly defined expectations for the position and b) looking at too small a field of candidates.
If you take the time to really nail down what you need this position to accomplish and benchmark what the market for financial executives in this space looks like, you are much more likely to hire a financial executive who will give you proper value for money and help you take the company to the next level.