Are You Really Hiring a CFO?

Let’s face it. The people that hire CFO’s are not CFO’s. It’s usually various members of the executive team pulling the trigger on the hire.  Hmm…executive team –  CEO, CRO, COO. A group of people that need to work with the CFO, but may not be completely sure what a CFO should and shouldn’t do. Their decision making rubric is most likely skewed based on their individual roles in the company.

Here’s what I’ve observed:

• The CFO role is very often confused with a Controller role.
• Executive teams are confused about their own roles in conjunction with the CFO.
• Misperceptions about the CFO role are supported by hiring the wrong person into a CFO role – someone who is not working at a CFO level.
• Paying less for a CFO is not really saving money. Paying more for someone that works at the right level can pay for itself many times over.

Let’s use a car as an example. Each component of an engine plays a very distinct role in making that car move. Cars that are prized for their engineering and performance have component parts that are very specific to high performance and cost more than lower performance vehicle parts. And each part works independently at a very specific task to produce the overall effect of high speed with stellar handling and comfort. That car wins the race – gets there faster – is revered by professionals that recognize the gold standard performance.

Let’s jump to the four points outlined above and run them through the engine test:

• The CFO has a very distinct role that doesn’t involve producing financial statements, although they supervise the staff that does. They generally hire a CPA for financial reporting and use financials to paint a picture of the greater financial whole.
• Executive teams may have proficiencies on the financial side. There are lots of MBA’s that end up in non-CFO executive roles. Will they stay within their own roles (roles and proficiencies are different – hiring issue) and give the CFO proper control.
• Hiring a Controller for a CFO role may feel OK to the executive team because the Executives continue to bleed into the CFO role when they should be focused on their individual roles.
• Good CFO’s can restructure, optimize, educate and even save your corporate bacon. But you have to be willing to pay for it. Generating financials statements is valuable but doesn’t keep you shooting straight.

Executive Team and an Engine:

CEO: Determines what the car looks like 3 years down the road and how the parts change to accommodate the new vehicle design.

CFO: Makes sure the computerized alert system works. Constantly compiles diagnostics generated by the system and decides when to give off warning signals when the engine starts to fail. Warning signals have a suggested path for fixing the problem as suggested by the CFO. The CEO can decide whether to adopt the suggested “service” or not.

CRO: Generates enough fuel to make that car run. Also plans for future fuel needs based on the CEO’s vision of the car of the future and new components that will run at even higher efficiencies (but need even more fuel?).

COO: Make sure the engine has what it needs to operate day-to-day. Is the engine maintained so it doesn’t break down. Is there scheduled protocol for preparing maintenance logs, making sure there is enough  oil, spare parts and snow tires for the winter season (higher seasonal volume).

Some of you learned the hard way…saving a buck or hiring someone who’s fun and will play well with the team. This is an engine, folks. It’s about component performance so the car MOVES. Believe me, when you’re #1 at the finish line, everyone in the company is happy.

Action items: make sure you’re hiring for a pure CFO role within the company. Hire a CFO professional to help you hire your CFO. Educate the executive team on the role of the CFO and then let the CFO do what they do. If the “part” starts to fail, find a replacement – fast.

“Experience breeds wisdom, and wisdom breeds vision – Dalai Lama XIV”