Building a strong management team: how to hire the right CFO
By Matthew Owen, Partner
We’re frequently asked by the leaders of growing businesses what the difference is between a Chief Financial Officer (CFO) and a Finance Director (FD). While both positions are responsible for financial management – the clue is in the name – the CFO plays a more strategic role in helping the company make and understand the impacts of long-term financial decisions.
It’s a position with a wide range of responsibilities. Obviously, every company is different and will have their own needs and methods, but a CFO could be responsible for acquisitions, growth plans, new site developments, funding, internationalization, and pricing strategies. An FD on the other hand would typically focus more on the day-to-day financial operations of a company, such as managing accounts payable and receivable, payroll, and bookkeeping.
While not all companies need a CFO, those that do should consider several key factors when making their first appointment.
- Financial leadership and management experience. A successful candidate should have a proven track record of managing budgets, forecasting, financial reporting, and risk management. Experience in mergers and acquisitions (M&A) and dealing with external funding parties (such as private equity funds like us), can be particularly valuable as it requires specific expertise.
- Independent, strategic thinking. A CFO should be able to analyse financial data and provide insights that help shape the company's future direction. They should have a forward-looking perspective and be able to identify opportunities and risks for the business. And they should know when to say ‘yes’ and when to say ‘no’ to other senior leaders.
- Communication skills. More critical than many think. A CFO needs to inform and persuade a range of stakeholders, including shareholders, board members, senior executives and, sometimes, clients. They must be able to translate complex financial data into easy-to-understand language and build relationships with stakeholders.
- Leadership. The ability to manage a team is crucial. A CFO should be able to provide guidance, motivation, and support to their team and, crucially, work collaboratively with other departments to achieve the company's overall objectives.
- Cultural fit. As a senior member of the management team, the CFO will play a key role in shaping the company's culture and values. They need to be aligned with the company's mission, vision, and values, and able and willing to contribute to a positive and inclusive workplace culture.
We know that hiring a new CFO can be daunting. We also know that a strong and effective management team is key to unlocking the full potential of a business. That’s why we work so closely with the leadership teams of the companies we back, to help them identify and recruit top talent helping them achieve long-term success and sustainable growth.
If you would like discuss any of the issues raised here, please contact Matthew Owen.