Osborne Financial Search’s Post

If you’re an owner-manager who needs to recruit a CFO, it will most likely be for one of these three reasons: You already have a CFO and that person has just resigned. You have a CFO that you’re dissatisfied with and want to replace. You’re hiring your first ever CFO. If you already have a good CFO in place and that person is moving on to greener pastures, you’re probably in pretty good shape on the finance / accounting side of things. But for every search I get to replace a well-regarded, outgoing incumbent, I get five searches where the owner-manager hasn’t had the benefit of a competent CFO and subsequently is in a world of hurt when it comes to their finance function. Inevitably, the issues that will need to be addressed by the CFO they recruit will revolve around Systems. Bringing in a new ERP, making better use of the current ERP or resuscitating a stalled implementation or conversion. Basic accounting. Getting the books closed in a reasonable timeframe, catching up on collections and receivables, improving cash management, etc. People. Getting the right people in key roles, training or replacing existing accounting staff. Process improvement. Ensuring people throughout the organization are doing the right things for the right reasons with clear lines of communication and minimum duplication. Dashboards. Acquiring real-time KPIs around costing, gross and net profit, operational cash flow, revenue growth, inventory turnover, etc. Planning. Putting together a planning process that relies on good data and information, modelling scenarios to better analyse the possible outcomes to feed the financial and strategic plan. You shouldn’t just recruit someone who happens to have already been a CFO. You need someone who’s had experience addressing and redressing the finance issues that are making you crazy (and putting the brakes on your company’s success). Since you have specific issues to be addressed, systems and processes that need to be overhauled, and a finance function that needs to be reengineered from top to bottom, you need to recruit someone who has a closet full of T-shirts that say “Been there, done that”, preferably in an environment that’s comparable to your own. Being an owner-managed business, you probably don’t have a lot of layers of management, so whoever you hire needs to be comfortable getting their hands dirty. In situations like the one I’ve described above, your new CFO will need to be in the weeds for months and months with limited resources to draw upon. So, they’d better be able to demonstrate that they’ve had success in that kind of environment and won’t get frustrated when the going gets tough (as it inevitably will). If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #business #CFO #recruitment

First things first – what do you need to pay them? This is usually a function of your size and complexity of your business. Here’s a decent rule of thumb: Revenues $5MM–$15MM – $80K-$100K Revenues $15MM–$25MM – $100K-$115K Revenues $25MM–$50MM – $115K-$140K These numbers are not carved in stone – they’re a guideline and there are a number of factors that apply which will influence the salary up or down. Expect to have to pay a bonus as well. Variable pay components for Controllers tend to fall between 5% and 15% and once again, it’s usually a function of the company’s size. Someone earning a base of $80K will usually be happy with a bonus between 5%–10% while a Controller earning $125K will expect a bonus between 10%–15%. If you decide to go the DIY route when recruiting a Controller be prepared to kiss a lot of frogs before you find a prince (or princess). Your job board posting is going to get a ton of responses, most of which will range from dreck to meh. If you decide to work with a placement agency, you may also see a range of less than stellar candidates. Placement agencies are in the business of placing the people they already have on hand. If they don’t happen to have the person you’re looking for, they’ll show you who they do have on file and hope that’s good enough. Another thing you need to know about Controllers in the mid-market space is that a lot of them will have had a lot of jobs. As in when you look at their resume, they seem to move every couple or three years. Sometimes this is just due to the vagaries of working for owner-managers (change of ownership, drop in revenues = layoffs, etc.) but more often, it’s a function of the candidate. Accountants can have a journeyman mentality when it comes to work and they’re not necessarily looking for a better career; they’re looking for a better job. So, they move because the next job is closer to home, has better hours or pays a few bucks more. One last thing you need to know about Controllers is that most of them are fairly (or very) linear in their thinking and approach to the job. Which is actually a good thing. A well-run accounting department is all about good organization, schedules and check lists. A leads to B, leads to C, leads to…etc. So, if that’s all you need, most of the Controllers you interview will fit that bill. However, if you live in a world of curveballs, slapshots and Hail Mary passes (when was the last time you saw three sports analogies mashed together?), then the linear thinker may not be able to handle the ongoing need to adjust their routine. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #business #CFO #recruitment

Hiring a CFO in a small town brings its own set of unique challenges. Hiring a top-notch CFO, someone who will advance your company’s agenda and business objectives is at the top of most CEOs "To-Do" list. This is especially true for private companies where the CFO can have a significant impact on the overall success of the business. But companies based in small towns located far from major population centers face unique difficulties. They find it especially difficult to recruit qualified executives. Here are 4 challenges of recruiting a new CFO in a small town. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #ExecutiveSearch #CFO #BestAdvice

Almost all finance and accounting recruitment firms make some claim to being able to find the “right fit” for their clients. However, as much as every placement agency advertises their mystical ability to find the “right fit” for their clients, what they don’t advertise is that their business models often preclude them from utilizing the single biggest determinant in finding the right fit. Contingency fee recruiters are incented to place the people they currently know and although they will usually make some effort to source additional candidates, their business model favours expediency over thoroughness. Experience, market knowledge, technical expertise, proper interviewing technique and all the rest certainly play a role in determining the best fit CFO. However, before any of those factors come into play, the single biggest factor in finding the “right fit” for one’s clients is having enough good fits to choose from. I’ve found in my thirty years of recruiting experience that one in six gainfully employed CFOs are willing to seriously consider another opportunity. In order to get a decent number of candidates to interview I need to contact at least 100 CFOs who I think fit my client’s preferred candidate profile. So, after I contact those 100 potential candidates, I’ll end up with about 15 people who’ll be interested in talking about making a career change. Right off the hop, I’ll rule out five of those people for various reasons – location, spotty resume, personality not a fit etc. Then we’ll do a first pass interview with the 10 remaining potential candidates where we screen for technical expertise, relevant industry experience, management style and so forth. Out of those 10 interviews, we’ll probably decide that six candidates are generally a good fit and should be interviewed again. This time we’re mapping back specifically for all the points on the client’s preferred candidate profile. If we’re lucky, we’ll find that four of the six are a very good fit and that will comprise our short list. And the only reason we have four candidates that are a good fit is that we started with a long list of 100 potential candidates. Everyone recruiter pays homage to the notion of the “right fit”, but in practice, most placement agencies settle for the “good enough” fit or the “this is what I’ve got” fit. Since they work on a contingency fee model, it just doesn’t make economic sense for them to invest the time and effort to generate enough good fits so their client can hire the right fit. If you’re really serious about finding the right fit, make sure that you’re working with a firm that has a business model that incents them to do the legwork and work the numbers that will actually produce the right fit. And generally speaking, no firm that works on a contingency fee basis has the incentive to go that extra mile. #business #CFO #recruitment

I was recently asked this question: "I was most recently CFO of a mid-sized food manufacturer in Mississauga. Due to a change in corporate ownership, I’ve been on the street for the last six months or so. I haven’t actually kept track but I’d estimate that I’ve responded to more than two dozen CFO and VP Finance open positions posted on LinkedIn, Indeed Jobs and the rest. I like to think that I’ve had a pretty marketable background but I haven’t even had a nibble from all the positions I’ve applied to. Is there any way of increasing the odds of getting some action from these job boards?" To which I replied: "I’ll address your question generally because I don’t know the specifics of what positions you’ve applied to and how you’ve responded to these postings. There are a few basics you should know that may help you increase your odds of getting a response and if nothing else, at least help you manage your expectations. This may seem incredibly obvious, but when you apply to a LinkedIn posting, attach your resume. You’d be surprised by the number of people who don’t include their resume with their online response. Have a good head and shoulders, professional photo on your LinkedIn profile. Even if you apply to a job board other than LinkedIn, whoever is giving you a closer look is going to check out your LinkedIn profile. If you’re applying for a position far outside your particular industry (i.e. a food service CFO applying to a Tier 2 auto part manufacturer), the odds of you being called in for an interview drop quite a bit. Don’t assume that because you know the headhunter posting the job that he or she is going to call you on that particular position. As much as the recruiter may like you, they have to be professionally ruthless about who goes on their shortlist. If a position had been posted by a headhunter, the responses they get from the job board will be only a small part of the number of potential candidates they’re actually looking at. A good headhunter does just that: they headhunt. So unless your resume is dead solid perfect, you’re not going to be a candidate for that particular job. The bad news about online job postings is that generally speaking, the odds of you finding your next job through one are relatively small. The good news is those online jobs postings only represent the tip of the iceberg when it comes to the number of CFO and VP Finance positions actually available. If you’re willing to be proactive and think (and act) outside the box in your job-hunting campaign, you’ll have a decent shot at being considered for some of these non-posted positions." If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #ExecutiveSearch #BestAdvice #Success

Once in a blue moon, I’ll get a call from an owner-manager who wants to hire a CFO to replace the incumbent CFO who was hired a year ago to replace the incumbent CFO then. So basically, they’ve already made two bad hires, and now they’re looking to hire the third CFO in a four-year period. It’s improbable that the fault lies entirely with the candidates. Sometimes the fault lies with the owner-manager. And that’s because the owner-manager doesn’t disclose that there may be specific issues associated with the position they’re trying to fill. No two organizations are the same. Some companies have flex hours and beer bashes Friday afternoons and some companies expect their executives to put in sixty-hour weeks and check in with the office when they’re on vacation. Some bosses are hands-off, big-picture delegators, and some bosses are micro-managers. But hands-off, big-picture delegators know that they’re hands-off, big-picture delegators. The problem is that the micro-managers often think that they are too. Everyone would be a lot better off, including and especially the hiring authority if they hired for who they actually are, not some idealized version of who they wish they were. A CEO who habitually puts in sixty-hour weeks is never going to be happy with a vice president of finance who needs to be home in time for dinner with their family every night. And if a company is family owned and the entire fractious clan needs to approve any and all operational changes, that’s going to be a continual source of frustration for their freshly hired CFO who was given a mandate to help take the company to the next level. To avoid this disconnect in the recruitment and hiring process, the first step is to make an honest assessment of the company’s culture, the various stakeholders’ needs, the hiring authority’s management style, and the challenges associated with the position. If sixty-hour weeks have been the norm for the past few years, then that’s part of the culture and it’s not going to change anytime soon. If the company has fallen on hard times and part of the CFO’s job will be to stave off anxious creditors, make sure prospective candidates know that upfront. If the owner-manager likes to have the final say in all decisions, make sure that’s acknowledged and factored into the recruitment and hiring process as well. It may take a little longer to fill the position, but in the end, the position will be filled by the right candidate and that will save the company a lot of grief and expense down the road. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #ExecutiveSearch #CFO #BestAdvice

Why Do CFO Hires Go Bad? I’ll often get a call from an owner-manager who wants to recruit a CFO to replace somebody they recruited maybe a year ago. Now, obviously, if they’re calling me a year after they just hired a CFO, something has gone wrong. And when I meet with the owner-manager, I always want to know about their process and if there are some consistent red flags that come up that anybody recruiting a CFO should be on the alert for. So here are 3 red flags you should look for when you’re looking at CFO candidates… One is references. A CFO candidate should have a fairly extensive list of people that they can call on that they worked for in the past. If they’re a CFO candidate, they are probably in the world of 15 to 20 years of experience, and they should certainly have at least 1, 2, or maybe even 3 people that they have worked for in the past that you can reach out to. If a candidate only offers references from peers from previous employers and makes excuses on why they can’t provide references from the previous bosses…that’s a red flag. The other thing is, a candidate may have a spotty track record and they’ll have all kinds of justifications on why they’ve made the move that they made. Why they were a year here, two years there, a year and a half at the next place. And when they’re interviewing with you, they may be saying, “You know, all that’s behind me. I’m ready to settle into the next job for years to come.” I think you should just look at the track record because what they’ve done is probably what they’ll do in the future. And the third thing that can happen is the candidate asks no questions about the job, the company, the culture, or the particular challenges that are associated with the position. All they’re doing is kind of nodding yes, I want the job, I want the job. When a CFO hire goes bad, it’s bad for everyone, It’s bad for the candidate, it’s bad for you, the owner-manager. So next time out, really know what you’re looking for, what the problem is you need solved, what the person that is going to solve it looks like, And make sure that you and the candidate do all the due diligence necessary to get the job done. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #ExecutiveSearch #CFO #BestAdvice

Let’s say you started a company five years ago that designs and manufactures the proverbial better mousetrap. And let’s also say that the old proverb proved right and the world is indeed beating a path to your door, clamouring to buy your better mousetraps. All of a sudden, your start-up now has revenues of $25 million and you anticipate that sales could reach $50 million or more in the next five years. So, is it time to bite the bullet and hire a finance executive? If any of these statements apply to you, you probably need to hire a finance executive. If more than one of these statements applies to you, you definitely need to hire one. I spend more than 25% of my time on accounting and finance matters. I don’t really know what’s going on in every aspect of my business anymore; I’m afraid we’re dropping balls and don’t know it. I think we can grow the business by 50% plus over the next few years, but I don’t really have a comprehensive plan on how to achieve that growth. I want to exit the business in the next five to ten years. If you own a $25 million company, your finance function probably isn’t complex enough to justify hiring a VP of Finance. What you probably need is someone who can both oversee the day-to-day accounting function and give you insights and guidance into the future. And that person usually goes by the title of Director of Finance. One big consideration for this hire is how that person will keep up with your company’s growth plans. Remember, one of the reasons you’re hiring this Director of Finance is because you think your $25 million company is going to be a $50 million – or even a $75 million – company in the next five years. So, you’re not actually hiring for who you are today. You’re hiring for who you’re going to be five years from now. If you’re on the fast track, the finance executive you hire needs to be able to run as fast as you do in order to keep up with and help facilitate your growth into a $75 million company. Also, keep in mind that as your company grows, the complexity and sophistication of the finance function will grow in lockstep with your business. When you’re a $75 million in revenue business, your Director of Finance is probably going to be too busy with strategic initiatives and activities that are helping you grow the business to really keep up with the controllership side of the job. At which point it’s a natural segue to promote your Director of Finance to VP of Finance and hire a Controller to look after the day-to-day accounting. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #business #CFO #recruitment

Every now and again… I’ll have a finance executive ring me up and ask me to find them a new position when they’ve only been with their current employer for a period of six to eight months. They’re almost always well-regarded professionals who’ve never precipitously jumped ship before. When I ask why they want to move after such a short time, the answer is invariably the same: They were not given the full story when they joined, and in some cases, they were outright lied to during the interview process. Of course, one could chide the Finance Executive for not having done enough due diligence prior to taking the job. But the real question here is why a company would fudge the truth about a position it wants to fill? Usually, the reason the hiring authority doesn’t disclose that there may be specific issues associated with the position they’re trying to fill is that those challenges are usually a function of the company culture or with the hiring authority themselves. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #cfo #executivesearch #bestadvice

There’s an old saying, “There’s never time to do it right but there’s always time to do it over.” And this especially applies in situations where an owner-manager goes to the looking for a VP of Finance or a CFO, and they’re under pressure to hire someone, perhaps to replace an ongoing incumbent. Because they feel they need to find a solution right away, the owner-manager will often not conduct a thorough search process and as a result may not be very happy with the quality of the candidates that they’ve been seeing. So, they interview a bunch of candidates who range from "meh" to "not exactly what I was looking for but I can probably make it work". As this scenario plays out, the hiring authority runs a real risk of incurring a bad case of buyer’s remorse. And that buyer’s remorse can take on two versions. Version number one is the outright bad hire that you have to terminate within the first year or so. Version number two is the person who’s not bad enough to fire but not good enough to keep. This is worse than an outright bad hire because with the outright bad hire, 12 months down the road you fire that person, hire who you should have hired in the first place and you move on. With version number two, that person’s still going to be there five years from now, dragging down the organization, or at least not adding the value that you should be getting from your CFO. My best advice as you start the recruitment process is to trust your gut. Stick to your guns and don’t pull the trigger on anyone unless you’re sure they’ll meet the criteria that you originally set out for them to achieve when you started the search. If you haven't seen the person you've been looking for, it doesn't mean they're not out there. It just means you're going to have to look a little harder for them. If you think you may be in the market for top financial talent in the next few months, send me a DM for a no-obligation consultation. #ExecutiveSearch #CFO #BestAdvice