You are the owner, CEO or Executive Director of a small company. You just learned that your current CFO/Controller, your top accounting & financial professional, has decided to leave your company. This person has been with you for over 10 years and has done a reasonably good job. During that time, you’ve received timely and accurate financial reporting. Supervising a staff of 4, your CFO communicates well and has successfully worked with your managers and department heads. This individual has possessed the ability to explain technical accounting terms to you and the rest of your management team in language that everyone understood. And now, because you run a lean, small firm, there is no one in the accounting department with enough experience and expertise to be promoted to the top.
What Do You Do? This can be a scary and overwhelming situation. But if a few key guidelines are followed, the process to find the new CFO/Controller can be organized and successful. Here are 5 important tips.
- Have the outgoing CFO do a “brain dump.” As soon as you know your incumbent is leaving, have them make lists of everything they do. This should be categorized on a daily, weekly, monthly, quarterly and annually basis. These lists should be as detailed as possible. It is more important to be all inclusive than to be neat and presentable. The idea here is give the new arrival a “data bank” of all things that have been done in the past. Be sure that these lists include all areas: A/P; A/R; Sales Reporting; Cash Flow; Budgeting; Financial Reporting; dealings with outside auditors, accountants and other professionals; Tax returns and other regulatory filings; communications and meetings with other department heads; employee evaluations etc.
- Meet with the remaining department employees and let them know they will be an important part of the evaluation process. Listen to their concerns and let them state the characteristics they would like to see in the new CFO. If at all possible, they should meet with the leading candidate before an offer is made.
- Meet with your management team and get their input.
- Listen and list the characteristics and experience they would like to see in a new CFO.
- Are there areas that need improvement? Any list might include things such as: more structured and informative meetings, new reporting formats to provide better information for decision making and better use of technology to provide key information quicker.
- Assure management that they will be part of the interview and evaluation process.
- Develop a Job Description. This document should contain the typical things one sees in a Job Description: Duties and Responsibilities of the position and the basic required experience needed to qualify. But it should also include:
- A listing and explanation of the top three or four areas on which the new CFO should focus.
- Lists of goals to be accomplished by the new CFO over the first 6-12 months for their initial tenure to be consider a success.
- A cleaned up version of the prior CFO’s “brain dump.”
- Establish the hiring process. This should include:
- Who is going to coordinate/lead the hiring process?
- How are we going to try and identify potential candidates?
- Ads on Job Boards and publications.
- Postings on website
- Social media.
- Networking and referrals
- Use of a Search Firm. If it is decided to use a Search Firm it is important to:
- Select a firm that has proven experience in this type of position. See my earlier article on How To Pick an Executive Search Firm.
- Treat the selected firm as part of the hiring team. Allow them to gain as much understanding of your firm by providing them information and access to meet with your key employees.
- Come to agreement with the firm as to what you expect them to do regarding such things as reference checks, background checks, testing and fee structure. Reduce this agreement to a written document.
- What will the interview process be and who will participate? Because this employee will report to the CEO, I recommend a top down approach. Please refer to an earlier article on Hiring Processes for more information.
If a small business follows the above guidelines, it will help insure an orderly and successful search for their new CFO.