How to Get the Most Bang For Your Buck When Recruiting a CFO

In most walks of business, the customer has a pretty good idea of what to expect from the service provider, whether that provider is an internal resource or an outside supplier. If you go to your in-house counsel for advice on a contract, you can be reasonably confident that the opinion your lawyer offers represents current and relevant legal precedent. When you engage a firm of chartered accountants at year end, you actually see the audit team ensconced in your boardroom for weeks on end surrounded by last year’s financial records. When you finally receive your audited financial statements and the accompanying bill, both go into some detail as to what exactly was involved to produce those statements.

Recruitment Practices Can be Opaque

Unlike the practice of law or accountancy, the recruitment process is often quite opaque and companies that rely on in-house or outside recruiters don’t always know if they’re getting what they’re paying for.

Three Key Components

In order to judge if you’re getting value for money from your recruitment process, you need to look at the three key components that go into that process:

1. The size of the field of available potential candidates
2. The method used to approach potential candidates
3. The ability to triage and identify the best candidates

The first two components can be objectively quantified, while the last one is a bit more of a judgment call. Regardless, all three components of the recruitment process can be measured and managed by the hiring authority.

Size of Field

The field of potential candidates for any executive search is comprised of people who are actively looking for a new position and those who are relatively content, but would consider another opportunity if it were compelling enough.

Active candidates peruse job boards, pro-actively network and are usually on file with a few different recruitment firms. Recruiting active candidates is relatively quick and easy but what most hiring authorities don’t realize is that active candidates represent only 15% to 20% of the potential candidates available.

What are Passive Candidates?

The largest field of potential candidates on any search is comprised of passive candidates. Passive candidates can usually be characterized as people who are gainfully employed and relatively content where they are, but know that they’ll need to move sometime in the next couple of years in order to advance their career. They don’t make a habit of scanning job boards, usually don’t have an up-to-date resume, and are rarely on file with a recruiter.

Even though passive candidates outnumber active candidates by a factor of about 6 to 1, many recruiters, both in-house and external, tend to spend their time triaging the active candidate pool to make up their short lists. They usually give a nod to the passive candidate pool and do some recruiting in this space, but if they can put together an adequate short list from the people they already know are actively looking, that tends to be very hard to resist. The problem with this, of course, is that very few hiring authorities give their recruiter a mandate to find them an “adequate” candidate.

The Golden Rule

The size of the field of candidates being approached on any given position is the single biggest determinate of success in recruiting. The more people that are considered, the more choice the hiring authority has. The more choice one has, the better decision one makes. The only way a CEO can ensure that they hire the best possible CFO is to ensure that the entire field of potential CFO candidates, active and passive, is being considered.

The Recruiter’s Mantra

Any recruiter’s mantra should be: “Active candidates may be approached passively. Passive candidates must be approached actively.”

A passive approach is any recruitment channel or methodology that does not involve an actual conversation between the recruiter and the potential candidate. This includes job boards, e-mail blasts, media advertisements etc.

Attracting Active Candidates is Breeze

Why a passive approach is acceptable to attract active candidates should be fairly obvious. Anyone actively looking for a new position regularly scans the job boards and is pro-actively networking. They will almost always take notice of recruiters’ e-mail blasts and position postings and send in their resumes.

Attracting Passive Candidates is Much Harder

Passive candidates do not typically respond to a passive approach for a few reasons. Reason number one is that they’re not as highly motivated as their active peers so they’re not plugged into the job market, and most postings and e-mail blasts never hit their radar screen. The second reason is that unlike active candidates, they’re not geared up for the recruitment process. They usually don’t have an up-to-date resume and since they’re still very much committed to their current position, they’re disinclined to take the time to respond to anything that isn’t compelling (and most job postings and e-mail blasts are not that compelling, no matter how well-written). And last, but certainly not least, if a passive candidate is going to explore a new opportunity, they’re going to want to do that on a very confidential basis. They’re not going to send their resume to someone that they don’t know and trust.

The Power of Persuasion

A recruiter needs to have an in-depth conversation with the passive candidate detailing what exactly the opportunity entails, and how it may be (or may not be) something that person would want to pursue. This is the only sure-fire way of attracting these people. There is a step between passive and active recruitment – approaching someone specifically and directly by e-mail or LinkedIn InMail. Although this is better than most passive recruitment channels, unless you already have some previous connection to the person you’re approaching, it’s still not as powerful or effective as an actual conversation.

Look at a Benchmark Candidate Early in the Search

There’s no sure-fire way of assessing if your recruiter really understands what “the right fit” is for your CFO search until you actually give them the assignment. However, you can quantify how well they understand the fit equation relatively early in the process – ask to meet a benchmark candidate. The recruiter should be able to identify a candidate that’s a pretty close fit early in the search that can be used as a benchmark – something to compare what the client is expecting to what the recruiter believes is the right fit. Hopefully, they’re the same thing. Sometimes they’re not. So once you meet a benchmark candidate, you’ll either confirm that the recruiter gets it or you’ll have the opportunity to make adjustments before you get too far into the search.

Inspect What You Expect

Quality guru, W. Edward Deming, taught that if inputs and process were inspected properly, outputs could be better predicted and inspected less. In recruitment, defining the search properly and mapping out the entire field of potential candidates is the input. Intelligently approaching those people and assessing interested candidates is the process. Both of these functions can and should be inspected by the client. That’s how the hiring authority ensures that the short-list (output) they’re expecting is what they actually end up getting.