Have you ever done this? Or had a CFO candidate do so?
In my 20+ years as an executive recruiter I have never heard of nor experienced such behavior. Until now.
Is it a sign of just how overheated our market for talent has become?
A little backdrop: Our client came to a negotiated agreement with a sitting CFO to join them as their new CFO. However, the candidate needed more time than normal before leaving their current employer. (Red flag #1) Given this situation, I encouraged my client to treat the candidate more as a new employee during this interim period rather than someone starting in eight weeks, and to hold regular meetings and provide them a constant stream of information so the relationship would take hold and a strong bond would start to form. I could not control what happened during this interim period, but my understanding is the client did make an effort to bridge the signed candidate into the CFO role.
I was very confident the candidate would part ways with their current company given the circumstances that led to their interest in leaving in the first place. Nonetheless, my client and I were collectively holding our breath a bit and I think we both felt a sense of relief when the candidate announced their resignation. We were all feeling pretty good at this juncture. Signed offer letter from four weeks earlier and now a public resignation. What could go wrong?
Because of the unique qualities of this person, their phone began to ring with additional CFO opportunities as soon as the resignation hit the wires. I believe the correct response to these incoming inquiries is quite simple: “Thank you for your call, but I have already accepted a new position and will be starting shortly. Good luck in your search.” Since I call on recently resigned CFOs all the time, I have heard this response and respect it. In fact, I think it would be not only ungraceful, but also in bad taste to push a person in this situation for more information or for them to entertain what it was I was calling about. That is not what happened in this case.
I suppose the candidate was pleased, surprised, and or even flattered by the attention the resignation ignited. Given the volume of purported calls this person received it is another sign of how overheated this market really is. So, the calls came in, but rather than simply offering a simple no, they apparently entertained the new inquiries. Now in my book this is a black and white situation; just say no. Am I wrong? Once you sign a contract that was negotiated and evaluated in good faith you stick with it. There was nothing negatively affecting the new company the individual was joining. If the company had produced bad news or the CEO announced they were departing or some such other major event had taken place, I would understand. Things were actually headed up and to the right, so backing out at this point seemed unthinkable and in my book unethical.
But backing out is exactly what this person did. I was speechless when told. Dumbfounded. What exactly changed in their mind? What happened between the time of signing the contract and now? They said it just did not “feel like the right fit.” Well frankly, that is what the interview process is for. That is the purpose of due diligence. We are all supposed to make sure the “right fit” exists before we make an offer and we did.
Never a dull moment in the recruitment business!
If you read my blogs regularly, you know it is rare that I write about a deal gone bad. But honestly, I do believe lessons can be learned out of every experience, good or bad, and I do write about such experiences. This one stung. Now that a bit of time has passed, I can look back and see a few red flags early in the process. I will take the experience I have gained to my next client and the next. That is the silver lining of this experience. What about you? I am curious to hear from you whether have experienced such behavior and your thoughts on ensuring that it does not happen again.
If you are in a company seeking a CFO, please know that yes, the market is red-hot for talent. You need an experienced recruiter at your side to take all precautions who has a laser focus on any red flags and employs a well thought out methodology to land the CFO you want and need. Give me, Dave, a call at 408-205-7373 or shoot me an email: email@example.com. I look forward to hearing from you.
I recently met with a CEO who is a potential client in need of a new CFO. He is in a name-brand company that most people in technology circles would recognize. He is also one of the most network-connected people I have ever met. Part of the value he brings to his company is his deep and wide network of connections to influential people; this helps him recruit exceptional talent and drive customer and vendor relationships.
However, because his network of CFO talent is not the deepest and widest, he is considering engaging Arnold Partners to help him identify and land the CFO. It is pending while he reaches out to a few folks before engaging a full search. I always encourage my prospective clients to work their network prior to engaging a search; it just makes sense.
On my soapbox again
For frequent readers of my blog, you will recognize the soapbox upon which I stand regarding the importance of a strong network. As I emphasized last year in my video on the importance of networking and ways to do it effectively, I am constantly in awe of the power of a great network. Most folks in full-time jobs may only occasionally think about networking, but for me it is a daily priority. One of the greatest assets I bring to my clients is the depth of my network and my ability to tap into long-term relationships based on mutual trust to deliver exceptional results. When I entered the executive search business over 20 years ago, it was clear to me that building a trusted network of people of influence was truly the goal each and every day.
What also surprises me about my own network is the breadth of its reach and its value personally as well as professionally. When I needed sold-out U2 tickets for my friend’s 50th birthday celebration I had someone to call. When my client needed to set up their first European operations I had someone to introduce them to. When my client was looking to move office space I had top-tier folks to help them. When there have been personal medical issues beyond my control, my network was there with well-connected referrals. When my good friend started an HR consulting business and needed help setting up a website, I introduced him straight to excellent vendors. All these significant relationships have come from years of networking.
In the last week I have received inquiries about partnering on two separate CFO searches—one in Florida and one in New York City. Both are successful SaaS companies and will need seasoned CFOs to help chart their next stages of growth. With a quick look into my contacts database I have confidence that we have an excellent jumping off point to help these clients efficiently and effectively. Our research team will supplement our existing network with additional introductions as needed.
Brand-building and networking go hand-in-hand
I just read an article about executive branding. Building a personal brand is important, but if you do not have a network to share it with, what good is it? For most CFOs, and up-and-coming CFOs, building a network is not on the top of the daily to-do list. So, how do you do it? It does take time. And the time is worth the effort. As cited above, a strong network is more than about finding your next career opportunity. It is about being a knowledge resource for all sorts of solutions. It is about knowing who to tap to find the answer for both personal and professional challenges.
Taking time to assess the marketplace
One of my favorite high-profile CFOs said in a Business Journal article last year that he takes the time once a quarter to step back from his current job and assess the marketplace. Not only to assess what is happening with specific opportunities for himself, but check out what is happening in the broader pulse of technology and in the tea leaves of the economy. If there is a certain item or trend that grab his attention he will make the time to explore who he knows in that new vertical or emerging industry. This is a good practice for all of us. Get out of the weeds of our daily roles and take a look at the macro. When something in the larger field grabs our attention, it’s the perfect opportunity to explore it and become networked in that new universe.
My personal new year resolution is the same every year: keep building the network. I encourage you to do the same. If you are looking for a top-notch CFO or Board Member to join your team, call me at 408-205-7373 or email me at: firstname.lastname@example.org and we can have a conversation about taping into a deep, wide, and continually expanding network.
2018 wraps up with the strongest employment market in memory. While the stock market took a bit of a dive at year-end, as 2019 springs up so does the Dow. There is definitely a shortage of “been-there-done-that” technology CFOs, but will it matter if companies do not need to hire one in 2019? We are at a pivotal moment with China and China with itself. Indeed, we seem to be at a pivotal moment in the US economy and with politics. The proverbial unstoppable force is headed for the unbreakable barrier. Who will win?
In regard to finding exceptional CFO talent and diversified Board members, there is reason to be optimistic no matter what happens politically. As noted in my blog, “Gender Diversity on your Board of Directors and California SB826,” in California at least, there is reason to believe that corporate boards will need to act to bring gender diversity into reality.
On the CFO front we are still in a shortage situation and I believe the shortage is systemic as noted in my article, “The Dawning of the C-Suite Candidate Scarcity” presented on Recruiting Trends & Tech Talent’s website earlier this month. The proof of my theory was in evidence at the end of 2018 with Airbnb, Uber, and RobinHood—all Mega-Unicorns who were all hiring first-time CFOs.
So, we have in a way two parallel hiring universes facing us in 2019. On the Board front the need to appoint women is absolute. On the CFO front even the most valued private companies are waking up to hiring first time CFOs to take them into the public markets. I have not heard the proverbial “must have previous IPO experience” from a founding CEO in some time. As we look back at 2018 maybe it really was a turning point in the demographic.
The impact of political and economic decisions in Washington are real and could put a dent in these market realities, however. If China’s economy continues to slow it will impact technology companies. Apple has already demonstrated the domino effect; when Apple sneezes their huge supply chain catches cold. If we cannot solve our domestic squabbles there will be a direct hit to the economy, which will affect hiring. Already, IPOs are at a standstill with no one at the SEC to even review submissions. Shall we boycott paying taxes since no one is at the IRS to collect them? (Good news IRS, I already sent my payments! LOL)
My advice for clients on the Board front is to move thoughtfully and quickly. The best and brightest women will be picked up fast and once on a board or two that is probably it for most. My advice for clients on the CFO front is to continue to think creatively around the critical skills needed in the role rather than the pedigree or specific experiences on a person’s resume. To facilitate either of these hires it helps to have a passionate, knowledgeable partner at your side, and I hope you will consider me.
If you are a female executive reading this and feel you are right and ready to serve on a public company board, please feel free to reach out to me; I would enjoy getting to know you better. If you are a CFO or CFO in waiting I am cautiously optimistic that 2019 will remain an employee’s market over an employer’s market. As you can see from my “Recent Searches” PDF accompanying this blog, I am not a high-volume shop. I meet 200-300 people every year and place about 10. That is just the nature of executive search, but I welcome these meetings because they are what excites me the most about getting up in the morning: talking about your career!
So, we shall see…I choose to be always optimistic and 2019 is no exception. I look forward to hearing from you, email me at email@example.com or call 408-205-7373.
New Year’s resolution: diversify? No, it is a mandate. California SB826 demands your attention now to attract a diverse Board of Directors in 2019. New Year’s resolution: get help? Yes, Arnold Partners has the experience and the relationships to help you achieve a successful transition to a more effective, inclusive, and compliant Board.
The new law of the land
The California legislature passed SB826 in Oct 2017 with the requirement that public companies include at least one female director by the end of 2019. If your Board has more than five members, two will need to be female. One report indicates that 377 companies need to add at least one female director in 2019. Follow this Link to Read the bill.
Is the law merited?
Some say it is a shame to have to legislate this (agree), others say hooray it is long overdue (agree), and there are those who say it will put female members into a compromised role on the board because they are there only because of the mandate (disagree). To this last point I argue that there are many, many more highly qualified female candidates than needed to fill those 377+ openings. And given the high-quality nature of these professionals there is no way they will not make immediate and positive contributions to the companies they will serve.
However, finding the right female candidates for your Board is the key: a professional who can contribute from day one to numerous key strategic and operational issues.
Finding qualified candidates
Okay, so qualified candidates are out there, but how do you find them? This is where Arnold Partners is uniquely qualified to help your Board identify, assess, and ultimately attract excellent candidates for you. The proof? Just in the last year alone, half of the CFOs we placed are female, and in every search we delivered a high quality and gender-diverse slate of candidates.
The easiest way to gain gender diversity on your Board is to look to the financial community—CFOs, CAOs and the like—to find top tier talent who will make important contributions right out of the gate for your company. While female CFOs are still in a large minority in total, there are many current public sector and retired female CFOs to consider. Arnold Partners has a unique relationship with this community. These financial experts can adeptly serve on the Audit Committee, the Governance Committee, or the Compensation Committee while concurrently make contributions to the larger issues facing any company.
Do quotas work?
Forbes magazine contributor Kim Elsesser wrote about California SB826 in her October 2, 2018 article, “California Mandates Women on Boards, but Do Quotas Work?”:
“The quota law is not going to solve all gender issues in organizations in California, but it doesn’t have to. The quotas will certainly increase the number of female directors, and that’s good enough for me. It may not bring greater corporate profits or shrink the gender pay gap, but that’s okay. It makes a clear statement that organizations that don’t take gender equity seriously are not welcome in California, and that alone makes it valuable.”
I agree with Kim. I would add that the quality of new Directors you want to attract to your Board is of the greatest importance. Partnering with a firm that can help you get the right candidates to the table with a sense of urgency and accuracy is also key. To talk about how Arnold Partners can help, contact me at firstname.lastname@example.org or call 408-205-7373.
I met with a new client this week who is the CEO in a very exciting technology company that is initiating a CFO search. The company is on a path towards an IPO, so this was a large focus of our conversation.
My client is very experienced, having brought a couple of companies public and sold another. When we discussed priorities for the CFO role, my client specifically dismissed IPO experience as not being that important. Instead, he stated that he wants a person who had run a successful, growing, publicly-traded technology company as CFO, or as a number two finance person in a larger organization.
During our conversation my client received an urgent text about his daughter’s upcoming wedding. He broke off our meeting for a few minutes, then shared what was going on. A light bulb went on for both of us as we realized that a wedding is a lot like an IPO!
A wedding is a big event. The best ones are well planned and managed by a host of people with a really good coordinator in the middle of all the moving parts. Being married is a lot of work, largely around agreeing on expectations and then living up to them. An IPO is a big event. Being a publicly traded company is a lot of work. The big challenge of a company looking to succeed is around setting expectations for future results and performing to those goals.
When it comes to a CFO hire, I agree with my client that placing a lot of importance on “event” (i.e. IPO) experience is the wrong way to go. Actually, the skills that successful CFOs have acquired along the way can be transferred to running an IPO. Instead, emphasizing experience running a complex business over many quarters of meeting and beating expectations in a public company is a much better filter for future success. The qualities of successful public company CFOs have to do with their ability to accurately read the tea leaves of their businesses and communicate effectively to their shareholders as to what they can expect in the short, medium, and long term. In one word— predictability. Similarly, the most successful marriages are based on understanding the needs of your partner and good communication.
When I meet a CEO who is intent on hiring a CFO with IPO experience it is usually a CEO with less experience or no public company experience. As a search consultant my job is to find what they want, for sure. But is also to help educate them about the role the CFO plays in an IPO, which is in fact a lot like a wedding planner. It is critical for the event to go well. It is like running any other event, financing, or project. Like a wedding, the planning process involves a host of talented individuals: bankers, lawyers, accountants, and IR firms, and the CFO is the central coordinator.
Even in a private company fostering a culture and systems to support predictability are essential. The many elements that go into having a predictable business model could also be useful in a successful marriage. I think I’ll leave the further analysis of that to the marriage counselors though! That said, going on 30 years in my own marriage I think I know a thing or two…so while I am not in the marriage business I am in the business of “finding exceptional CFOs.” If you need help finding one, contact me, Dave Arnold, at email@example.com or call 408-205-7373.