When Daniel Jang began reaching out to his network for a new job opportunity, he struck gold: One of his close friends happened to work at a company that was in the CFO search process.
“I had been in my last role for six years. We had just gone through two transactions, so I was starting to think about, ‘Do I want to stay? Do I want to think about doing something else?’” Jang told CFO Brew. And, so, the process to take on a new role began. He’s now CFO of CommentSold, an e-commerce company, but the process took two months and six interviews.
For companies and candidates alike, hiring, accessing, and getting buy-in from stakeholders—like the board of directors and auditors—for a new CFO can take as long as four months, according to Linda Barham, managing director for Russell Reynolds Associates’s Financial Officers Practice, a leadership advisory firm, told CFO Brew.
That isn’t to say that finding an adequate candidate list takes that long—Barham told CFO Brew that more than 85% of the time, Russell Reynolds has identified who the successful candidate is in the first 45 days of the search. What takes the most time is getting stakeholder buy-in. Jeff Constable, who leads the North American financial officers practice at executive search firm Korn Ferry, said the process averages around 20 weeks.
The process. Hiring a CFO for a private versus a public company can differ slightly, experts told CFO Brew. For public companies, due to the sheer amount of public information available that can impact public markets, candidates are often asked to sign NDAs and often only the CEO and CHRO of a company are involved in the process for the first few weeks, Barham said. But private companies, while somewhat shielded from the scrutiny of the public markets, aren’t necessarily posting CFO listings on job boards.
Companies will often turn toward executive search firms to help them identify potential candidates, but different stakeholders will usually bring candidates for consideration. “It doesn’t matter where the ideas come from—whether it’s us writing them, or it’s the client, the board generating them—they are still going to go through the same vetting process as to whether or not they’re the right finalist candidate for the role,” Barham told CFO Brew.
Once candidates are identified, the focus tends to be less on technical skills than past experience and culture fit; if a candidate is eligible for a CFO role, they’re expected to have some fundamental finance knowledge, such as what EBITDA stands for (if you forgot, here’s a refresh).
“Companies are not just looking for the CPA accounting type of CFO—some are—but…they’re looking for what they’re calling the strategic CFO,” Jang told CFO Brew. “The finance function is sort of table stakes…They’re looking for someone who has demonstrated the ability to reach across to other departments.”
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Zoom? Teams? Or in-person? The interview segment often adds the most time to the hiring process for a CFO, since high-level executives likely to be involved typically have very full schedules, Barham added.
Jang said that he first spoke with the private equity investors at CommentSold, who mainly appeared interested in his technical skills. When he later spoke with the internal executives and board, they seemed to be scrutinizing him to determine if he was a culture fit.
While companies are interviewing candidates, candidates should also be interviewing their potential employer, Barham said, and would-be CFOs are expected to come prepared with pertinent questions about the company they’re seeking to join.
“It can be quite obvious how seriously somebody is taking an opportunity, based on the level of research that they’ve done,” especially around things like the company’s business model, drivers in the industry, and current information, Barham said.
Public perception. Company leaders are mindful that a CFO change (or any high-level hire, for that matter) may spark concerns among investors and the wider marketplace. That makes the timing and wording of any public announcements an important part of the hiring process. But it’s unusual for a CFO departure to affect a company’s bottom line or its stock price unless the person is being replaced for fraudulent activity or other malfeasance, Constable said.
And even though the CFO is the person most likely to handle a company’s numbers, during the interview process, it’s not typical to talk salary in the first interview, experts told CFO Brew. Pay does come up “reasonably early” in hiring conversations, Barham said, especially if a candidate is being poached from another company. And for public companies, of course, an executive’s compensation is required to be disclosed via SEC filings.
But with C-suite executives, base salaries are only a piece of the pie—and typically a small piece. For finance chiefs, there’s usually a wider conversation around equity value creation (such as if they’re exiting while the stock value is low) and long term incentive plans. According to data from 2021, the median CFO compensation package was ~$393,000 annually. Total compensation for finance chiefs often refers to base salary, bonus, and equity.
Ultimately, a CFO will be a strategic partner for the company that hires them, so a thorough search is important, for both the hiring firm and the prospective candidates.—KT