When it comes to hiring financial leadership, CFOs have a vested interest in choosing the proper candidate. Yet, despite this goal, they often don’t take a meticulous approach to the process. Adam Akbar, founding partner of Bronzegate, explains his rationale behind the planning, processing and placement phases of hiring in the finance department.
Through working with CFOs from a diverse range of industries and geographies for almost 15 years, typically with the mandate to enhance their leadership teams, I have observed a nuance that is worth sharing: Despite the relative consistency in hiring requirements, there is little consistency in hiring approaches.
In a world where CFOs face increasing demands to drive successful strategic management and improve investor relations, day-to-day financial management is often delegated. CFOs are therefore increasingly reliant on having the right balance and profiles of direct subordinates to effectively manage their wider financial responsibilities. Yet, on many occasions, CFOs are guilty of either not investing enough time in the hiring process for these key leaders or taking a somewhat unstructured approach to it. Too often, I have seen talented CFOs with real strategic expertise who are bogged down in a mire of standard finance process due to a weak supporting team.
Research suggests that staff replacement costs can be as high as 50%-60% of an employee’s annual salary with evidence also linking high turnover rates to a decrease in organisational performance. Consequently, CFOs can minimise the impact and cost of staff turnover and maximise retention by first adopting the right hiring strategy for their finance leaders.
Given that attracting and building the right finance leadership team (FLT) is critical to the success of a CFO, what then is the methodology to ensure the best possible hires? In truth, every CFO has their own answer and this can range from gut-feeling and “chemistry” to a rigorous assessment process utilising every psychoanalysis tool available.
Establishing a template that standardises and enhances the hiring process for key leaders is an important step and begins with effective recruitment planning. CFOs should, in every instance, undertake key hires as projects that require a clear agenda, a project team, an agreed-upon process and designated timeframes.
We can outline the 3 phases for an FLT hiring project as follows:
The planning phase is often underestimated by busy CFOs, but is critical to ensure a successful conclusion i.e. the placement of a new FLT member. The first step is to identify what the organisation actually needs and, more importantly, not just something that would benefit the finance function.
Once a CFO has clearly identified and articulated the business case for a new finance leader, a campaign team should be assembled. This team should always consist of an HR lead and, where appropriate, the external search agent who then work together as a collegiate team sharing the same explicit goal. From the start the core objectives for this team are to jointly produce a well-written job description, an agreed-upon budget, defined timeframes and a clear interview and feedback process. Too often, this initial phase leads to poorly defined role definitions, widely variable budgets or other such issues which can derail the process later on.
The pitfalls are many and varied. I have seen overly verbose job descriptions which fail to strike the right note to none at all. More frustrating for a prospective candidate are long-winded recruitment processes or limited meaningful feedback. An example where both scenarios occurred is a recent experience I had working with a prestigious business which, after a period of months and a number of different assessments, failed to give an impressive candidate any specific feedback other than assurance that she was still in contention. The candidate lost her initial enthusiasm and finally decided to pull out of the process, eventually securing a role with another group where she has excelled.
Apple Inc. is famous for its “collaborative hiring” process and a key consideration for any CFO is which additional stakeholders will be involved in their recruitment process. Given that finance leaders are increasingly viewed as commercial leaders and expected to be an interface throughout the organisation, it is surprising how few newly-appointed finance leaders get to meet non-finance stakeholders during selection. The astute CFO will ensure that any potential new hire will meet a broad spectrum of relevant employees and garner their feedback accordingly. Anecdotally, a CFO contact of mine insists that any hire into his leadership teams meets sales & marketing, HR and operations before a final meal with the wider FLT.
When evaluating the best process for assessment, the CFO has a variety of tools at their disposal and should seek advice and support from their HR and search partners on this front. For formal assessments, there are 3 core methods that exist: competency-based interviews, business case appraisal and psychometric evaluation. When working with CFOs on business critical hires, I advise an approach that incorporates all of these methods into the selection process to minimise the risk of hiring. However, it is the business case study, remarkably the least commonly used tool, which really brings an assessment to life. There is a huge amount to be gained from this exercise, from evaluating communication and presentation skills to the candidate’s commercial judgement and ability to synthesise information.
As the pressure on CFOs to make the right appointment has increased, an unfortunate by-product is that many organisations fail to invest time in “selling” either the role or the corporate vision. A series of screening interviews alone will not attract the most talented finance leaders, who invariably will have other options. It is fundamental that CFOs, HR and other stakeholders allocate the time within the process to outline the vision and how the role being recruited fits into that wider strategy. CFOs need to inspire potential new recruits through their passion and clarity of purpose whilst offering opportunity and a rewarding challenge.
Last of all is the placement. Assuming all of the above has been followed with aplomb, this should naturally lead to a beneficial hire – the placement. However, lest we forget, this is where the work actually starts! The placement begins a new process where induction, career management and retention begin. Leading CFOs will know that building a world-class team is one thing, keeping them motivated and inspired quite another.