Taking the Average (and Bad) CFO Hire Out of Play

Companies going to market to recruit a financial executive can trip over any number of small snags. Recruiting an executive tends to be more complicated than most business endeavors due to the large human component involved in the transaction. Even after all the tangibles have been addressed, like education, technical qualifications, and industry experience, you still need to understand the intangibles, like personality and cultural fit.

Most snags don’t cause the search in question to go off the rails; usually, they just add extra time and expense to the process. However, there are three mistakes that companies commonly make that often result in an average hire, and too often result in a bad hire.

Mistake # 1 – A Muddled Mandate

Replacing an incumbent is usually a fairly straight forward proposition as long as the company and position mandate remain essentially unchanged from the last time the position was filled. However, companies need to be cognizant of the possibility that their organization may be very different from when they last hired for the position. In which case, the profile they need to hire will be materially different than the criteria used to hire in the past.

Where companies most often encounter a problem is when they’re trying to fill a new position. It’s especially true when a small to medium-size enterprise (SME) gets to the stage where they need to step up their game and hire their first vice president of finance. CEOs of SMEs often have a sales, engineering or operations background and although they’re usually functionally fluent in financial matters, they often don’t know what they could and should be asking from the vice president of finance function.

Unless a hiring authority knows exactly what they need, it’s very hard to parse the candidates they’re looking at and decide who would be the best person for the job. Indeed, the hiring authority could end up having to choose from a field of candidates that aren’t really qualified at all. A lack of hard and fast criteria with which to judge the candidate pool often leads to the hiring authority relying solely on gut instinct to make the final decision. While this doesn’t necessarily result in a bad hire, it usually doesn’t result in a very good hire either.

In either case, whether replacing an incumbent or filling a new position, it is essential to ensure everybody involved in the hiring decision is on the same page. Sometimes it’s just a case of broken telephone, or the various stakeholders involved have competing priorities, but if all parties don’t know or agree on what they want to hire and why they need to hire that particular profile, it’s a recipe for the dreaded never-ending search.

Mistake # 2 – Not Inspecting What You’re Expecting

As much as recruiting can be an art, it’s actually a science. There are protocols and procedures that need to be followed in order to produce a long list, and eventually a short list and successful hire. Companies that don’t know what to expect from the recruitment process will have no idea if the right recruiting protocols have been followed and if candidates they end up meeting represent a cross section of the best candidates that were available at the time.

The first step is to know what you should be expecting. Every hiring authority should have a grasp of the fundamentals of the recruitment process (for more information on this particular area read “How to Get the Most Bang for Your Buck When Recruiting a CFO”). Whoever’s conducting the search for you – whether an in-house talent acquisition specialist or an outside recruiter – should be able to lay out a detailed plan outlining the steps they plan to follow in the search for your ideal candidate. These steps should be specific and quantifiable. While matching candidate with corporate culture is important, it can only take you so far in the process. The best predictor of finding the best fit is having enough close fits to choose from.

Once you know what to expect and the recruiter you’re using has outlined and committed to a recruitment strategy, drill down periodically during the search and examine exactly what is being done on your behalf. Find out what kinds of potential candidates are being approached and in what numbers. Ask what the market response has been to the search, using the feedback to fine tune the search if necessary, and get an idea of the quantity and relative quality of the candidates the recruiter expects to place on the short list. Every search will yield candidates almost right away and it’s all too easy to settle for good enough. Just remember that active candidates only represent about 20% of the actual candidate pool available to you. If you want to find the best candidate, all potential candidates need to be considered, not just the ones responding to the recruiter’s job board posting.

Mistake # 3 – Fitting the Job to the Candidate

Mistakes # 1 and # 2 often lead a company to make mistake # 3 – fitting the job to the candidate instead of fitting the candidate to the job.

Companies that go the market with a very clear idea of what they’re looking for – who insist on a rigorous, thorough canvassing of the potential candidate market – should end up with a short list of candidates who all fit the position to a greater or lesser degree. Of course, any hire requires some compromise, but the adjustments companies (and candidates for that matter) accept will be on their “would be nice” items, not their “must have” criteria.

Companies that go to the market with a muddled mandate, who accept whatever short list happens to be presented to them, often find that none of the candidates are a good fit for the position. In this scenario, what often happens is the hiring authority builds up the aspects of the position that happen to play to that candidate’s strengths and either minimizes or deals off the parts of the job that the candidate is weak in.

If you’re not getting your must-haves in your current tranche of candidates, don’t let expediency compel you to make the wrong hire. Sticking it out until you get what you were originally looking for or even starting the search over is a much more economical approach in terms of time and money than hiring the wrong person now and replacing them with the right person later.