Knowledge Center: Article
How to Prepare for Your Next CFO Job (Even if You’re Not Looking)3/27/2014 Alyse D. Bodine and Jeremy C. Hanson
This article was first featured in the Wall Street Journal in Deloitte's CFO Journal section. The original article can be found here.
How should CFOs considering a career change―or remotely thinking about it―approach the search process? Jeremy Hanson, managing partner of the Global Financial Officers Practice at Heidrick & Struggles, and Alyse Bodine, principal-in-charge of Heidrick & Struggles’ Philadelphia office and core member of the firm’s Global Financial Officers Practice, describe what companies are looking for in a CFO. They also discuss how CFOs can position themselves for a new opportunity and address tough questions along the way in this first in a series of articles focused on CFO career challenges from executive recruiters’ perspectives.
Q: What should CFOs consider first when starting a job search?
Alyse Bodine: First, they should stay in their current position until they land a new job, if possible. It’s easier to find a new job when employed, and leaving one’s current position is a common mistake I’ve seen senior executives across various functions make.
Jeremy Hanson: On the other hand, if a CFO has been asked been to leave an organization, that’s OK, too. Being fired is a common experience. Very talented people are terminated for reasons that can be explained and understood. Anyone in this position should just acknowledge as much, and have a believable, referenceable reason for being in transition.
Q: What skillsets or experiences are companies looking for in a CFO these days?
Alyse Bodine: About 90% of our clients place a strong understanding of operations at the top of their list, along with organizational leadership skills. The focus on operationally capable CFOs, who have worked at the business unit level, transcends industry sectors. I don’t want to over-generalize, however, because what organizations seek in a CFOs is often company- and situation-specific. A highly leveraged company, for example, may prefer candidates experienced within highly levered environments, who can address the various treasury-related issues. Business partnering, leadership and experience interacting with the board are also among our clients’ frequent “must haves.” Companies look for CFOs who have worked with functional and business unit leaders on driving and positioning the business. Finance executives with that kind of experience, and who have rotated through operational or divisional finance positions, are highly sought-after.
Q: How can CFOs who don’t have an operational background address their lack of experience?
Jeremy Hanson: Go get it. Raise your hand when opportunities come up to get more involved in the business. Of course, there are CFOs who create enormous value for their companies through their focus on M&A and capital markets, and there are those who are valued for their focus on the accounting and control side.
But, if you want to be a CFO at a major company, you have to get business unit experience. And for CFOs with their eyes on a CEO spot, they should consider moving into an operating role at their current company.
Q: What other experiences or skills are highly sought after?
Alyse Bodine: With so many companies increasing their global presence and moving into emerging markets, CFOs with international experience, particularly those capable of understanding how business is transacted in emerging markets and the risks to look out for, are highly valued. Having experience working cross culturally, living in international locations and dealing with the various challenges of global business are very important.
Jeremy Hanson: If CFOs can show they’ve been involved in driving value through the effective use of customer data and analytics, that’s a big plus. Especially with consumer companies, there is a need for CFOs who are adept at taking customer data and analytics and using that information to improve business and the way they market products and services. There simply aren’t enough of those executives on the planet right now. For CFOs whose organizations have made some progress in data analytics, they should make sure they’re involved in that work.
Q: Is it difficult for CFOs to move from one industry to another?
Jeremy Hanson: There are exceptions, but generally the CFO role is highly transportable across industries. A lot of our clients are open to looking outside their industry when it comes to finance executives. I can think of many examples of people moving from one sector to another, and they’ve been enormously successful as they tend to have strong discipline in analyzing the business, identifying key levers and driving results.
Alyse Bodine: The biggest exception to transferability across industries that I’d note is financial services, which has such a distinct business model. A CFO from the manufacturing sector, for example, most likely won’t be familiar with the issues and operations of a financial services organization and vice versa.
Q: Are there qualities or capabilities that boards want in a CFO that differ from what the CEO seeks?
Jeremy Hanson: We find the board and the CEO usually aligned on what they want in a CFO. We also see an increasing interest from boards in CFOs who’ve demonstrated that they have commercial and operational abilities and may be able to run part or all of the company one day.
Boards also may be more focused on risk issues, such as data privacy, so they tend to be comfortable with executives who have a strong controls orientation. We’re seeing a strong interest from boards in expanding the diversity of their leadership team. According to our firm’s research, in the Fortune 1000 less than 15% of executives in the top CFO role are people of color or women. That figure hasn’t changed much in the last 20 years, so boards are making diversity and inclusion a greater priority.
Q: When seeking a new position, when and how should a CFO approach search firms?
Alyse Bodine: Unless executives already have a relationship with a recruitment firm, their first call probably shouldn’t be to an executive recruiter. Rather, they should start with their professional and personal network to get referred in. People in their network might have relationships with recruiters, or might know of positions recruiters are seeking to fill. When an individual is referred to us by someone we know and trust, it’s like a mini-reference or endorsement.
Jeremy Hanson: I advise executives to get on file with several recruitment firms. If we’re working on a project, it means none of our competitors are, and vice-versa. This is the nature of retained search. Sometimes people worry that if they’re on file with multiple firms, they’ll be perceived as being scattered in their approach or desperate. Nothing could be further from the truth.
Q: What’s effective when discussing a job with recruiters?
Alyse Bodine: Be transparent and be an open book. Say, “Listen, there isn’t anybody I’ve ever worked for or with who I wouldn’t want you to talk to as a reference. Not all of them are going to be uniformly positive, but I think you’ll get a consistent view from them.” Being transparent with respect to references is critical, particularly if you’ve been fired or there are several moves on your resume. It shows you’re comfortable with who you are and who you’re not and that you expect the references will bear that out. It’s a big red flag for us when someone says, ‘l wouldn’t want you to talk to my last boss as we didn’t get along so well at the end.”
Jeremy Hanson: CFOs should be prepared to talk about why they want to make a change, what’s compelling about the opportunity and why the move makes sense for them personally. Show interest and enthusiasm for an opportunity, but don’t pretend to be perfect for the job if it’s not the right fit. Being objective about job performance, strengths and weaknesses is the strongest selling point. We’re impressed when a candidate recognizes they may not be the best fit for a position and offers alternative candidate ideas. This demonstrates self-awareness and confidence. Although we may be discussing a specific position, the conversation is also an opportunity for us to get to know an executive, and there might be another position we’re working on that may be a better fit.
Q: How should CFOs use social media in their job search?
Alyse Bodine: CFOs should keep to professionally oriented social media platforms and use their investor relations training to guide decisions about where to communicate and how. They should ask themselves, “Would I share this information on social media if I were formally representing my company?” If the answer is “no,” then they probably don’t want to share that information as a private individual.
Q: What are some lessons learned from CFOs when interviewing with a potential employer?
Alyse Bodine: Some people struggle with questions about their job history, so it’s important to prepare a blunt, believable, fact- based explanation for transitions, however painful. Don’t offer vague explanations. Saying “I had philosophical differences with my boss,” won’t cut it. CFOs also should be prepared to answer in concise, clear terms questions around their organization’s performance while they were leading it. Explain the metrics used to measure and describe performance, including revenue growth, profitability and market share. If there isn’t a positive story to tell, a CFO should say so, but be able to follow that up with a comment such as, “Let me tell you about why I’m proud of the way we managed through that challenge,” and briefly make clear other successes.
Jeremy Hanson: Take time do your homework. CFOs should go into the interview having researched the organization they wish to join. They should understand not just the organization’s financial performance, but also the markets the organization is pursuing and the challenges it faces. Know what issues have been brought up on investor calls and be prepared to discuss them. The board and the CEO will go to the mat to hire candidates who demonstrate their interest in the company and understand its challenges.