You are disenchanted with your current CFO and you decide the time has come to replace him. Yes, he has brought you some terrific new board members, has worked closely with the new controller to completely overall finances and the accounting department and, when you needed a new investment round, he was one of the critical players in getting you what you needed.
But – he has some personality flaws. His style is a little too rough for some of the newer people on your executive team. A few have complained directly to the board demanding his replacement. After suggesting he get some executive counseling, which he refused, you decide you want to replace him.
Maybe your scenario is different.
Perhaps your current CFO has superb people skills, but she isn’t the most effective with your bankers and venture capitalists.
I’m going to focus on the first scenario, because these issues are probably more challenging to resolve. However, I will also make some comments about the second scenario, to give you some additional food for thought.
Whatever the scenario, the tendency is to make this lack the key ingredient in your next search. I’ve seen this tendency in government agencies, religious organizations and corporations with global enterprises just like yours.
Don’t do it.
Instead, get serious about a new job analysis and job description before you contact your executive recruiter. It might even be time to go outside the usual channels to find the right person for this phase in your organization.
Here are some things to consider:
1. First and foremost, don’t look at what your current CFO is lacking and then make that shortcoming your highest – or even one of your highest priorities. As I said, this is a tendency I see all too often when boards consider hiring a new executive to replace the one they no longer admire.
2. Next, seriously consider the phase your organization is in and what your most significant needs will be over the next five years. This helps you determine your highest priorities for the new CFO. Will you be in a growth phase? A downsizing phase? A major change in accounting procedures and software implementation or update phase? Do you anticipate needing another round of funding?
3. Now, have someone external to the organization interview each of your individual board members and other members of your executive staff. The reason for suggesting someone external your organization is because with a stranger doing the interviewing you will have a better chance to have an unbiased look and a more candid set of answers.
4. What you want this neutral party to learn from speaking with your board members and C-suite executives includes:
a.) What each person considers to be the most significant needs in the new CFO,
b.) How each person describes the current corporate culture,
c.) What changed that led to a belief that the current CFO no longer fit in,
d.) Is the current CFO worth saving, and if so what needs to be done? Is it that the people complaining need some diversity training? Is it that your current CFO has become ill, or has a family crisis and is currently more short-tempered than he was in the past? If so, isn’t it time to intervene in ways that allow you to keep an executive who has been valuable to you in the past, one who is already familiar with your corporate culture?
e.) What personality and character traits does each person you interview believe will fit best with the existing board and executive team? Can they articulate these traits in a manner that will allow the executive search team to pre-screen candidates effectively? This is crucial to getting the right cultural fit.
f.) Why do some members believe the current CFO lacks the clout needed with investors? Perhaps it isn’t her fault. Perhaps it is the state of the economy. Perhaps it is that your executive team needs to re-assess the strengths and weaknesses inside your organization. In other words, it’s all too easy to blame the CFO – and this needs to be considered before moving ahead with your plans to replace her.
g.) Determine whether they have any CFO candidates in mind, and if so who, and why? The “why” part is very important because you want to balance neutrality with loyalty to someone who already exists on the team.
5. Another thing to consider is whether you want to recruit someone from “two degrees of separation” which is the tendency when hiring executives, or whether you want to reach out to find new and perhaps even unusual talent.
6. If you want new talent, you might also consider using other sources than your current executive recruiter.
7. It is common to believe you must find, and need, someone who has specific experience in your industry. But think about this belief – what interaction does your CFO have with your manufacturing groups? If you have a good controller in place does your new CFO really need intimate knowledge of the specific accounting tools required because of the nature of your business in electronics manufacturing?
8. I also suggest you think about age, gender, and cultural diversity. This could be a two-edged sword, but is critical. The more diversity you bring into your organization, the more robust and creative it can become. On the other hand, cultural, age and gender styles differ, and it is this difference that might have been causing the discomfort with your current CFO and the rest of your team.
9. Finally, consider the compensation package. While you want to be competitive, you also want to make sure that both you and the person(s) you are considering have a way to terminate their relationship without doing harm to either side. Times have changed. The package you offered your current CFO may or may not still be relevant.
I’m sure there are other questions you can ask yourself, but hopefully these tips are starting points to get you to re-think your hiring – and firing – policies.
Good Luck!
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