At 33, Michael Petrullo knew he was still a little too wet behind the ears to take on the permanent CFO role at Kroll Inc., a New York- based security consultancy. The company had just emerged from a messy divorce with an ill-conceived merger partner, and although Petrullo had been instrumental in putting together a turnaround plan, the former-controller-turned-acting-CFO was not tapped for the permanent job.
What the firm needed, he says, was someone who could sell the new vision of the company to investors. "At the end of the day, Wall Street is reassured by the gray-haired type that has 'been there, done that,'" he admits. "That's not me." So Petrullo was happy to take a job as deputy chief operating officer when the company landed Steven Ford, a finance executive with 25 years of experience.
In general, companies are taking longer to fill the CFO position -- usually six months to a year. But since the job is too crucial to leave open that long, companies like Aetna, New York Life, Sapient, and Citrix Systems have, for varying amounts of time, gone the interim CFO route.
"It makes a lot of sense for a company that is going through a transition to hire an interim CFO," says Del Netjes, who was acting CFO at Onvoy Co. before accepting the permanent role as CFO of the Plymouth, Minnesota-based $100 million regional telecom. "It gives management a chance to sit back and evaluate where the company is, and then take the time to find the (right) CFO."
It also gives the finance executive time to decide if the job is a good fit. Netjes wasn't planning to remain at the company permanently, but he realized that he wanted to take the "acting" out of his "acting CFO" title during a marathon weekend spent overhauling the company's five-year plan. Working on a tight deadline with CEO Janice Aune, he realized that they worked well as a team and had compatible ideas about how to address the challenges in their industry.
"It's hard to tell a person's true skill set through the interview process," says Netjes, who is taking the interim approach to hiring a new controller. Nor does an interview reveal much about how a person behaves during difficult times. Furthermore, says Netjes, "it's easier to sever the relationship if it's not going the right way."
Not All Positive
From the finance executive's perspective, however, the interim role can be tricky. Because it doesn't always come with the full authority of the permanent job, "it can be difficult to motivate people," says Tom Poe, an interim CFO at a Twin Cities-area computer hardware company that he declines to name. "They will say, 'I don't have to worry about this guy, because he's not in for the long haul.'"
Poe also notes that acting CFOs typically aren't listed as officers, which means they might not have the authority to sign checks, move funds, and do transactions. "All the same stuff needs to get done, but often you don't have the authority to complete the transactions," he says. "You're constantly relying on other people."
Another drawback is that interim CFOs are often left out of high-level strategy sessions. "Top management doesn't always dial you in," says Poe. "They don't want to share the intimate company details." The interim CFO, who has held three permanent CFO positions in the past, considers that a huge departure. "Usually, the CFO knows everything."
He contends that it's hard to develop the department from the interim position. "You're not building; you're maintaining," he says. The best interim CFO is one who concentrates on fundamentals like collections and cash management, adds Poe.
That's not always the case, though, says Sue Johnson, acting CFO at Sapient, a Cambridge, Massachusetts-based business and technology consultancy. She says that an interim CFO can't be complacent and just maintain the finance department: "You need to invest in the organization and make the right changes and get the right people in."
Easy for her to say -- she held the permanent CFO position at Sapient for six years before moving on to business development. Now she is involved in searching for a permanent CFO for the company. Although Johnson hopes to get back to business development, she says the company is not in a hurry to find her replacement. "We want to make sure we find the right person," she says. "It's a hard position to change."
Joseph McCafferty is news editor at CFO.