The CFO is one of the most important roles in companies today, and the stage at which to hire one, and who that person is, can be a defining moment in whether or not a young company is successful. The ‘when’ is now earlier than ever, and the ‘who’ is rapidly changing as a result of the evolving responsibilities in the modern business world. Whereas before, budgets and forecasts were usually set quarterly and it did not make financial sense to hire a CFO until the company had really significant turnover, modern technology - automation, Big Data, and the Cloud - have enabled finance functions to provide rolling forecasts and update risk mitigation processes in response to events in real time, influencing company strategy in ways far outside their traditional wheelhouse.
Today, the modern CFO must work in close partnership with the CEO. The key to hiring a CFO is therefore often finding someone who will work the best alongside company leaders - someone who holds similar values, understands the goals, and is a good cultural fit for the company. Of course, this does not mean simply hiring someone who will agree with the CEO on every decision. The best CFOs will compliment the CEO’s skill set, providing pragmatic, risk-focused interrogation of ideas, and they will not be cowed in the face of enthusiasm. Indeed, it is really important that the CEO is honest with themselves as to whether they even have the flexibility to accommodate a partnership with a CFO in the first place, or whether it’s better to work with a finance director in the background instead.
Aside from personality, the qualities needed from a CFO largely come down to the size of a firm and what it does. For companies who are turning over below, say, $5 million a year, and have less than 30 employees, it is probably more cost effective to outsource financial tasks. For startups and growing companies for whom it makes financial sense, however, it is important to hire someone with experience in dealing with rapid growth. Other things startups need to think about is not hiring too high. Startups often don’t need someone who is already at CFO-level (whose salaries often average over $200,000), but will be equally well served by someone like a controller or director of finance - and at a fraction of the price.
Larger, global companies, on the other hand, will obviously be looking for different qualities. A CFO in a multinational company is working within a far more complex structure, and must exert a considerable amount of influence over staff to be effective. Often, it makes sense for such companies to hire internally, as they will already have the networks and industry knowledge in place necessary to bring about real change.
The kind of candidate that a company should be looking at also depends on what skills the company already has. If your organization struggles with efficiently performing basic financial tasks,then it makes sense to look for a CFO with considerable experience working in a variety of finance roles. On the other hand, a company that needs more from a CFO in terms of developing strategy and managing operations will require more of a generalist - someone who has not necessarily worked exclusively in the finance function but has a wider range of experience.
Obviously, there are always factors to consider when hiring anybody, and what is needed from a CFO is changing so fast that, almost as important as getting in the right person, is ensuring that anyone who does come in has their skills and knowledge totally up to date.