NEW YORK — The market for top-flight CFOs is at a peak, but make sure you do as much due diligence on a potential employer as it does on you, an executive recruiter who specializes in CFO placement said yesterday at the CFO Live conference.
The demand for experienced CFOs far outweighs the supply, so you can expect to be courted by companies. This is especially true if you have operational experience, have taken a company through an IPO, or managed a successful exit, said Barry Toren, a placement leader at Korn Ferry.
Toren said the COO role is becoming obsolete as companies try to create efficiencies by handing off much of the COO duties to CFOs. That gives CFOs the chance to become more operationally experienced, increasing their attractiveness.
Job hoppers may apply
Because of the premium companies place on experienced CFOs, they no longer see it as a negative if you’ve jumped from job to job over the years. To a certain extent, they expect you to, as you pursue opportunities and gain experience.
Unlike in years past, he said, "it’s not unusual for a CFO to have five jobs in 15 years, because they take a company to a certain level, then go somewhere else."
He said he's seeing CFOs "get addicted" to the challenge of helping to grow private-equity-backed companies that promise a big upside if it succeeds.
The good market for these skills makes it a tough environment for companies looking to hire. Those companies are under pressure to be nimble; otherwise they risk losing out on top candidates, Toren said.
In the past, a recruiter would bring 200 resumes to a company, which would whittle that down to 20, then to five, then to two, and then pick the winner. That doesn’t work anymore.
"Today, after you get to the remaining five, three will have taken another opportunity by the time you get to the selection point," he said.
Vet the company
Given their strong negotiating position, CFOs should be thorough in the due diligence they do on the company, but that can be a challenge, because many companies don’t want to reveal everything about their financial health until after they get a commitment.
Toren said he’s talked with CFOs who’ve complained the company they joined did a bait and switch to get them, painting a rosy picture about attracting private equity or getting to an IPO only to learn, once they see the actual financials, the company was being overly optimistic.
"There’s nothing worse than, you’re at a place because of the upside on equity only to learn after a year there’s no chance of getting there," he said. "So, you have to really look at the place." At the same time, he added, "the company doesn’t want you to look under the hood until they have their hooks in you."
He also cautioned against joining a company for the money or the mission if it’s not a good fit. "You’ll have greater success finding the right role for you rather than the right role on your resume," he said.
Meanwhile, the CFO-to-CEO growth trajectory remains murky. Boards consider CFOs far better candidates for CEOs than COOs, CTOs, CMOs, and other c-suite executives. And Toren pointed to an industry survey showing 65% of CFOs wanting to move into the CEO role.
Despite this, only about 8% of CFOs actually make the leap from CFO of one company to CEO of another. The more likely route is through internal promotion. Toren didn't share a statistic on how many are making the internal transition, but it's not a huge number, he said.