Hunting for a new CFO can be stressful both for companies and incoming candidates, especially at a time when firms are leaning harder on their finance chiefs not just to balance the books, but to act as a strategic leader that can help them navigate through turbulent times.
While many tend to cast an exhaustive eye on potential finance leaders’ past experiences, “in my opinion I don't think that the profession of executive recruiting really digs into executive style,” said Ed Montoya, senior partner and global financial officer practice leader for executive search company Kingsley Gate.
“I think there's a lot of focus on track record, and kind of the assumption is, okay, if someone's been successful in their past in somewhat similar environments, that there's a really good chance they'll be successful in this environment because they've kind of done it,” Montoya said in an interview.
Creating a lasting fit
Montoya has served as senior partner for the New York-based executive search for two years, having logged two decades of experience in both executive search and private equity prior to his joining, according to a company biography.
Kingsley Gate’s approach focuses on prioritizing an executives’ decision-making capabilities during the hiring process, as opposed to the “old school” approach of simply saying, “let's look at who's gotten relevant experience, who's kind of done this before, and we can rely on that experience,” Montoya said.
That is not always the case, however, as an executive’s resume tells only part of the story — finance chiefs can “fail miserably” at new companies even if it is their third or fourth time in the CFO position, he said, which may be partially because there was not enough of an emphasis on decision-making style during the search process.
“I don't think enough attention is focused on empowering new executives from the outside to not only lead, but to be cognizant that their style is probably going to be a little bit different than the existing organization,” Montoya said.
Ensuring incoming CFOs are a cultural fit is becoming more important for organizations, which — especially as they juggle a murky macro economic environment — are searching for finance chiefs who already think like them, Jeanne Branthover, head of financial services and fintech practice at executive search firm DHR Global told CFO Dive in a previous interview.
However, both firms and potential CFOs need to give each other breathing room to get used to each other’s quirks, especially at a time when competition for top-tier financial talent is at a premium. Walgreens, for example, is searching for a new finance chief that already has healthcare expertise as it attempts an aggressive cost-savings plan in the face of continuing market pressures.
Being mindful that bringing in a new CFO will not be a “plug and play” experience is essential, therefore, especially as tapping a new outside senior executive can be a “high value, but potentially high risk proposition,” Montoya said.
“The failure rate can be quite high, higher than one would expect… and I think part of it is that there isn't enough attention paid on to how decision-making style really influences lasting fit,” Montoya said.
Executives can also become dissatisfied with their positions if there is a potential mismatch in this area. Over a quarter of executives (29%) have considered leaving their roles because they weren’t satisfied with the way their companies made decisions, according to a recent study by Kingsley Gate, while 34% actually departed their roles because of that lack of satisfaction.
Creating agility of thought
Casting a closer look at executive style can also help firms who are looking for an agility of thought from their financial leadership, which comes as more and more CFOs are moving to take on an active, strategic role at their organizations, CFO Dive previously reported.
That growing amount of responsibility makes it an exciting time to be a finance leader, Montoya said, but what that also means for CFOs — who are also tasked with helping their organizations deal with economic headwinds — is “that more than ever, they're being relied on not only to oversee a tight ship, so to speak in finance and accounting, but actually step into an influencing role with every aspect of the business,” Montoya said.
“The CFOs I talk to are both excited about their impact, but they're …kind of stressed out because there's a lot going on in the job,” he said.
When it comes to finding an external CFO candidate that offers the flexibility both companies and finance chiefs want, looking outside of relevant experience can be a key factor. In some cases, the CFO or executive with the most-padded or experienced resume may not be the best fit as “the more senior and seasoned the executive, the greater potential for blind spots,” Montoya said.
Those executives “tend to have a bit of a playbook,” he said, which can put them out of step in environments where companies may not want to do things by the book as “they tend to just revert to what's worked in the past,” he said. “So I think there's actually a sweet spot of candidates where they've got great experience and capabilities.”