The role of CFO has changed and expanded with the times. No longer is the role just about crunching numbers and reporting results.
The CFO of a family business is responsible for driving the financial success of the company. A good CFO will act as a strategic advisor to the business owners, providing insights and recommendations to support the family’s long-term goals.
In some larger family enterprises, the CFO might have unique responsibilities related to family dynamics, such as succession planning, estate planning, and managing the financial implications of ownership transitions within the family.
As one of the top two or three senior leaders in most businesses, it’s essential that you identify and hire the right person!
In this article I will share both a list of requirements to look for, along with an effective interviewing process.
8 Requirements to Look for in Your Next CFO
Any successful hiring process must begin with a clear vision and consensus of the critical skills, professional qualities, and personality attributes for the role.
This is especially important when searching for a multi-faceted role such as CFO.
Here is a short list of requirements to look for in a qualified CFO candidate.
1. Superb Communication Skills
Your CFO needs to be able to convey the primary concepts of finance, accounting, and business strategy to non-financial leaders and managers.
This means that they need to be able to explain – in the listener’s language – how the business creates value and what various drivers and levers are available to create positive outcomes.
In short, can you understand their advice? Or does it all sound like a bunch of financial gobbledygook?
2. Strategic Acumen
Your Controller can look after accounting and reporting past results. Your CFO is there to determine how best to strategically develop and execute the owner’s vision for their business’s total investment ROI.
The CFO must be concerned not only with which strategic investments have merit but in also deciding who is also best within the organization’s leadership and middle management teams to be included in making and executing such decisions.
This requires that the CFO collaborates at a strategic level with both the CEO and the Board of Directors.
3. Strong Interpersonal and Leadership Skills
Today’s CFO must be a highly visible leader who can comfortably and skillfully lead cross-functional teams that include inside teams (i.e.- sales, operations, marketing) and outside partners (i.e.- law firms, bankers, suppliers, risk managers).
This entails engaging with a broad variety of people with varying levels of work experience. It requires leading leaders, being an influential rather than an authoritarian leader.
These interpersonal skills will be most on display in regular huddles with non-financial leaders on progress toward key objectives and removing their obstacles for success.
4. Risk Management Expertise
The list of significant business risks exploded with the pandemic and the more recent regional banking crisis.
Now, more than ever, a successful CFO must identify and proactively manage risks – including greater liquidity, cybersecurity, and supply chain risks.
Effective CFOs implement specific risk management reporting tools around financial fundamentals like core cash flow, cyber incidents and related personnel training, and supplier concentration.
5. Technical Skills – Including Business Intelligence, Process, and Productivity
There is a plethora of digital analytical and reporting tools available to the CFO. These offer endless choices of digital dashboards, ERP systems and productivity enhancement tools.
Therefore, today’s CFO must champion the decision process to identify the most cost-effective solutions for the aligning the specific organization’s current and future needs with its growth strategy and employee’s aptitude level to ensure a successful implementation.
6. Financial Expertise
A family business CFO should have a strong background in finance and accounting. They should possess in-depth knowledge of financial principles, reporting standards, tax regulations, and financial analysis techniques.
A professional certification such as Certified Public Accountant (CPA) can be beneficial.
7. Experience in Family Business and Family Business Dynamics
Understanding the complexities, challenges, and opportunities that arise in a family-owned company can help the CFO navigate sensitive family-related issues and contribute to the long-term success of the business.
8. Integrity and Confidentiality
The CFO should exhibit the highest standards of integrity and ethics.
Confidentiality is particularly important in a family business, where sensitive family and financial matters may be intertwined. The CFO should be trusted to handle confidential information appropriately.
How to Interview Effectively
Once qualified CFO candidates are identified, the next critical step towards a successful hire is the interview.
Traditionally, most hiring interviews are a series of individual 1:1 meetings.
It’s been my experience that after the initial qualifying interview, a group interview can provide a significantly more informative experience. Both for the people conducting the interview and for the candidate.
Ideally, your group interview will include both senior and selected middle management. Choose people outside of the internal finance and accounting team who would contribute in cross-functional strategy and risk management implementation activities.
At the outset of the group interview the appropriate company representative should explain to the candidate the intent of the group interview: to give the candidate the opportunity to both ask questions and to receive feedback from each of the company interviewers.
The benefit of the group interview is that all attendees participate and learn at the same time. Everyone gets the takeaways from the Q& A and the candidate gains immediate insight as to where they can improve their interview skills.
After the candidate departs, each of the participating group interviewers should individually complete a standard evaluation. (You can download the one I use with my clients here: CFO Interview Evaluation Form)
This provides immediate data that may be quantitatively scored for comparison to all other candidates before memories of interview specifics fade or later sidebar discussions sway opinions.
Hiring the right CFO is crucial for the success and financial stability of a family business.
The role of the CFO in a family business has evolved beyond traditional financial management.
A successful CFO now acts as a strategic advisor to the business owners, providing insights and recommendations to support long-term goals.
When hiring a CFO, there are eight key requirements to consider: superb communication skills, strategic acumen, strong interpersonal and leadership skills, risk management expertise, and technical skills, financial expertise, experience in family business, high standard of integrity and ethics.
Conducting a group interview with a mix of senior and middle management can provide a more informative experience for both the interviewers and the candidate. It allows for a comprehensive evaluation and immediate feedback. Evaluating candidates promptly and quantitatively ensures fair comparison and minimizes bias.
Would you like some help with this?
If you’re a family business owner seeking to hire a qualified CFO, consider engaging the services of a knowledgeable advisor.
Ferguson Alliance offers experienced advisors who can guide you through the hiring process, ensuring you find the right candidate who meets your specific requirements.
We also provide interim CFO or fractional CFO services to support your financial management needs and help you navigate financial challenges and drive the success of your family business.