To hire or not to hire (a CFO), that is the question
A colleague of mine at the Center for Values-Driven Leadership was recently approached by some CEOs with the following question – When do you need to hire a CFO? My colleague turned to me for an answer since I was a CFO for over 20 years. Of course, my initial reaction was: Right Now! Best investment you obviously could make.
In fact, this is a complicated question with no simple answer. I will start with this supposition: The key to determining when to hire a CFO is knowing that you, and the others in your organization, are ready to appreciate and value what a CFO brings to the table. This is initially far more important than focusing on whether the company can afford a CFO. A company will never get its money’s worth from a CFO without being ready to accept value the CFO’s role.
TIP #1: IT’S TIME TO HIRE A CFO WHEN YOU’RE READY TO TAKE A CFO’S GUIDANCE.
CFOs bring many skills to an organization as well as a particular way of thinking. I have always used a scale as a metaphor for the senior management team. On one side of the scale are the deal makers, visionaries and sales people of the senior management team. This side of the scale is heavy with optimism. On the other side of the scale are the members of the senior management team that focus on converting the dreams and optimism into organizational reality. This side of the scale is heavy with practicality. In order to balance this scale, equal amounts of talent should be represented on both sides of the scale. Further, the members of each side of the scale must respect and interact with each other closely. The chances of organizational success are optimized when the scale is in balance.
TIP #2: REVIEW YOUR ORGANIZATION’S TALENT BALANCE. DO YOU NEED MORE WEIGHT ON THE “CONVERTING TO PRACTICALITY” SIDE?
CFOs clearly reside on the practical side of the scale. They can bring realism to the grand plans born of optimism. However, good CFOs are not naysayers. They do not disdain optimism. Instead they embrace, but temper optimism. In doing so, the organization’s strategic initiatives are strengthened and the chance of success is increased. However, for this process to occur, the rest of senior management team must look to and respect the opinions of the CFO.
TIP #3: AS CEO, BE PREPARED TO “SELL” THE CFO TO OTHER TEAM MEMBERS
The senior management team may surprise you with their level of resistance to the hiring of a CFO. Some may question why the organization needs this new overhead burden. After all, a CFO does not create products or services that directly add to the bottom line. Unmerited (or merited) fear of scrutiny can create this resistance. Also, the company’s existing accounting and finance group may fear what a new boss may mean for them. As CEO, you need to fully show your support of the decision to hire CFO and be able to explain to others why this decision is in everyone’s best interest. Otherwise, the new CFO will not be supported or respected and may, in fact, be aggressively undermined by existing employees.
TIP #4: SEE A CFO AS AN INVESTMENT
The cost of hiring a senior leader for an organization is never inexpensive. Hiring a CFO is a significant use of the financial resources of an organization. The old adage of “you get what you pay for” is true when hiring a CFO. Thus, it is important to know what you want. You may be looking for less or more experience in your CFO. Hiring IBM’s CFO makes no sense for a fledgling software company. However, you want to make sure that the CFO you hire has the skill and experience necessary to help your company grow, and to grow with the company. In all likelihood, the investment in a CFO will be a six-figure annual investment. However, where on the six-figure spectrum is contextual to the needs of the company.
In closing, the following list of will help you determine if you are ready to hire a CFO.
- You have determined that the business will benefit from the CFO’s set of skills.
- You are prepared to openly listen to the advice of a CFO.
- You are prepared to sell the role of the CFO to organizational members.
- You are prepared to make an investment in the CFO role.
When you satisfy this list, you are ready to hire a CFO. More importantly, you are ready to enjoy a successful and fruitful relationship with your CFO. And your CFO will become a value-adding member of your leadership team. And your team’s scale will be a little more balanced.
Dr. Kevin Lynch is Leadership Executive-in-Residence at the Center for Values-Driven Leadership. As a practitioner, academic and consultant, Kevin specializes in assisting organizations that are experiencing rapid change, particularly with regard to strategic growth decisions, and the implementation of appropriate organizational infrastructure. Before joining the Center, Kevin was a senior executive in the real estate industry. He also is co-owner of Williams and Hall, a wilderness canoe outfitting business in Ely, Minnesota.
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