My CEO clients are always asking me, “How long will it take to find a CFO, Dave?”
By industry standards, an executive-level search takes between four and five months to complete, on average. This is backed by search industry statistics, as well as data from our project management software provider, Clockwork Recruiting, as noted in a memo they sent their customers last week.
Clockwork Findings
The Clockwork memo stated: “Over the last two years, Clockwork has been growing fast. We’ve signed up a lot of new executive search firms and we’ve migrated over 7,000 search projects from other systems like Bullhorn, Encore, Invenias, and Filefinder. Over that same two-year period, you—our Clockwork users—ran over 7,000 search projects inside Clockwork. This gave us two large, similarly-sized datasets to look at. We looked at “Days to Close,” a top Key Performance Indicator (KPI) in our industry measuring how long it takes to run a search project from start to placement. Thanks to you guys and your great work, the data show that projects run on Clockwork close 48% faster than the other guys.”
Arnold Partners Beats the Clock
We discovered that Arnold Partners is running 30% faster in “Days to Close” than the average Clockwork user. So that puts us at the top of the industry for a key measure that almost every CEO asks me about. By the time most of my clients call me, they are feeling like they should have started the search to find a CFO months, or sometimes years, before. They generally have a strong sense of urgency and want to know that the project will be thorough AND timely.
One major reason we can move more quickly than our competition comes down to focus. We meet CFOs every day. When we are called on to find that needle in the hay stack, we probably know where it is, or only need to move a few straws to find it. It’s never a new search in the sense of having to build an entirely new database of connections every time—it’s really an organic outreach to people we already know, warm calls to people with whom we have influence, who gladly take our call. Even if the role is not for them, they are quick to make referrals. This is why we never outsource candidate calls to associates or third parties. The CFO community wants to hear from Dave. Period.
More Important than Speed: Accuracy
However, I want to emphasize: more important than speed is accuracy. In fact, I don’t really want to be known for being fast or the fastest if people associate that with recklessness, sloppiness or lack of lasting results. What I want to be known for is our accuracy when we find a CFO. The truth is, over the last 20 years of recruiting experience, we have placed only one CFO that did not work out—far less than 1% of all our placements. And honestly, the reason had nothing to do with our process.
The Bottom Line: Value Creation
Our placed CFOs are extremely well tenured post-placement, creating massive value creation for their companies and stakeholders. Over the last 10 years our placed CFOs have created over $11B in value and counting. (Did you see our client Roblox just raised $92MM?)
So if you want to find the right CFO—the right way—right away, email me at moc.srentrapdlonra@evaD or call 408-205-7373. I look forward to helping you with a successful, long lasting CFO hire with the help of Arnold Partners’ connections and experience.
When you think of the word “headhunter,” what comes to mind? I generally have a distaste for the cannibalistic title as it engenders a scene of a crowded, bullpen-type work environment with individuals working furiously to fill open job orders—like the penny stock operation in Wolf of Wall Street. “CFO Headhunters” fall short of the complexity of what a real search consultant brings to their clients.
I have always seen myself first as a management consultant, establishing a relationship of mutual trust with Boards and CEOs where valuable advice is shared, strategy is discussed, and technology is understood. I also see myself as a career counselor with multi-decade relationships with the CFOs I work with, helping them make great decisions while in the chair or choosing the next one.
One of the key differences between transactional “cfo headhunters” and a true search partner is the depth of understanding about the client situation, the nuances of what is needed, and the particular characteristics of each candidate and how they would contribute value, both short and long term. Creating lasting value is what it’s all about—creating value for our clients through the actions of the placed CFO or Board Member, and creating value for the placed individuals as well.
Having that deep understanding of the client situation enables us to do what might seem like shooting for the moon: reaching out to potential candidates whom the client may think are out of their league. As Dan Steele, president of influential.co recently attested: “We interviewed 10 search firms before deciding to work with Arnold Partners. Dave Arnold was the only search consultant that felt he could source and deliver a candidate out of our league, or at least go after those candidates. The other firms all thought we would just be wasting their time and ours in looking for a superstar. In the end, we got a CFO that hit on all of our must-haves, and all of our like-to-haves.”
As I pointed out in my last blog about my relationships with our CFO and Board candidates, our ability to fully prepare a candidate for the client meeting is crucial to our mutual success. By truly understanding both the client situation and the psychology of our CFO candidates, we will be on target with the match, and bring the search to a faster completion. We have a track record of doing so; an independent service provider reported that our time to close is running much shorter than the competition. While we never feel rushed or pushed by a “bullpen” environment, our clients benefit from our diligent and persistent laser focus on CFO search and Board search, delivering expedient results that create long-lasting value.
By truly being a thought partner in the search, together we can persevere though the challenges all search assignments face. Sometimes it takes perseverance, sometimes charm, most times just plain old hard work, and even Lady Luck may play a role. No matter the challenge, when you’re ready to have a real partner—not cfo headhunters—helping with your CFO hiring needs and select Board appointments, please contact me at moc.srentrapdlonra@evaD or call 408-205-7373.
Interesting conversation yesterday with a top-tier public company CFO. He was musing about the search process and about how UN-informed so many CFO recruiters are when they call with supposed opportunities. Recently he was called about a supposed “confidential” search for a public company. The CFO from this “confidential company” had already announced their departure and the company had already made the necessary public filings. After asking some questions about the opportunity, this CFO quickly figured out who the company was and wondered why the recruiter was being so coy?
Certainly there are times when we CFO recruiters conduct confidential searches and the company name needs to be held in check. However, the recruiter reaching out to this CFO was not helping his cause, or his client’s.Our conversation led to his revelation about the value that different CFO recruiters bring to the search process.
All things Not Being Equal
The CFO told me what differentiates me from other CFO recruiters when I’ve called him for CFO opportunities in the past is how thoroughly I understand and explain the client’s situation: from details about the CEO and the organization’s capital structure, to market opportunity and the challenges they face. He said few CFO recruitment calls are as informative as the ones he receives from me.
Creating Value on Both Sides of the Equation
It’s executive recruiters’ job to present to a CFO a detailed description of the opportunity in a convincing and truthful manner. If we can’t entice the CFO to the table to meet the CEO, we have failed in our duty; however, it’s not our job to oversell the situation. It’s equally imperative that CFO recruiters present the backgrounds of our CFO candidates to our clients in a similarly thoughtful, thorough manner. This is what I mean by creating value on both sides of the search process.
The importance of this balance to a successful CFO placement is why Arnold Partners doesn’t rely on outside research or junior staff for any part of our search process. We are boutique in our very nature—personally attending to every detail of the search process until it’s complete. The call to a CFO about a client opportunity is probably the most important one; I can’t imagine outsourcing that process. CFOs by their nature are skeptical and analytic and don’t want to be sold. In order to get their attention, we have to present a deep understanding as to why THIS particular client opportunity is tailor-made for them.
The Art of CFO Recruitment
What is not too surprising, we receive many “not interested” responses from CFOs even after this thoughtful process. Generally speaking, most sitting CFOs are not looking for new opportunities. However, birds of a feather stick together, and many CFOs who were not initially interested either come back a few days later for a “tell me a little more phone call.” Or more frequently, they are quick to make a referral. This is the art of recruiting that can’t be carried out by an outsourced or junior person. This intimate knowledge of the client, presented on point to a specifically targeted audience, is how Arnold Partners continue to create value for both our clients and our CFOs.
For those CEOs and HR folks who rely on salary surveys to help determine the right range of base and bonus pay for a new CFO hire…or for candidates who are looking for the right CFO compensation offer, consider the following.
Salary surveys are notoriously outdated and generally don’t reflect the current market. Most surveys use data that’s at least two years old by the time it’s printed or available on-line. If unemployment decreased in the subsequent months, which it certainly has in our current environment, there is upward market pressure on compensation. I know some of the government data on the lowest paid workers in our economy doesn’t reflect this trend, but for executives, there has been real wage gain in the last few years.
The Value of the Right Executive Search Partner
It’s one thing to look to a salary guide; even the best are only OK. But if you are using the right retained executive search consultant who understands the market and your value, shouldn’t you expect to be in the top quartile when you get to the offer stage?
I had an interesting call last week about this question with a CFO. She wanted to know what the current going rate is for someone with her abilities. I gave her some real examples of actual offers (client/candidate names removed of course!) presented to CFOs whom we’ve placed in the last 12 months. She was at first a bit surprised. Then, as if a bolt of lightning struck, it became clear to her that the salary data for CFOs we’ve placed shows they are consistently in the top quartile of the available salary survey range. Why? Because our clients want the top tier candidates through our search services, not the 50 percentile candidates. And we deliver!
The CFO Compensation Equation: Cost vs. Value
If our clients are hiring the very best, then they should expect the CFO’s performance to reflect that premium, right? Our placed CFOs, who are in the 90th percentile salary, have created over $10B in value in the last nine years. This far outstrips the minuscule difference between the 50th and the 90th percentile salary. In case after case, our client CEOs appreciate our ability to find CFOs who outshine their peers by not only running a tight ship, but helping to drive revenue and margin growth by innovating sales programs, and being personally involved in customer negotiations. We consistently take on client assignments that result in direct contributions by the CFO to growth, profitability and increased enterprise value.
A CFO’s Pay is Only One Measure
Of course most CFOs are only partially motivated by their annual cash compensation. Their pay needs to be in the ball park, but it’s usually not the primary driver to acceptance. (Although in a recent placement, the base pay changed upward by $50K from the initial offer to the accepted final offer.) When we think about what would motivate a CFO to make a change, the same considerations seem to come back time and again: The CEO relationship/reputation/personality, the ability for the CFO to make an impact and believe in the business, and pay is usually the third leg of the stool.
Finding the Top Tier
It’s not easy to find the best of the best, but when it comes down to it, the value a really great CFO delivers far outweighs the difference in hiring downstream, or the fee for service with the right search partner. If you want in on getting the right CFO compensation or finding a CFO that fits your company, contact me at moc.srentrapdlonra@evaD or call 408-205-7373. You can also see some of the companies we’ve placed CFOs on our CFO Placements page.
Very interesting conversation with a current board audit committee Director and a former Big4 partner last week. He currently sits on three boards: two public, one private. We had a far-reaching conversation on the role of an independent director, and his thoughts on how to get on a board of directors. Given his long career in public accounting and having faced many challenges, I was surprised to hear him say that landing his first director role was “the hardest thing I’ve had to do in my professional life.” Wow. What are the implications of this if you are a sitting CFO with board aspirations? Or a retiring partner from an accounting firm?
Landing a CFO Position vs Your First Seat on a Board
Making the leap to CFO is one thing; it can happen for a variety of reasons, either by planning your career very carefully, working hard and proving yourself. Or, as in many cases, it can be a battlefield promotion because of a business change or departure of an incumbent. It’s not a slam dunk to land your first CFO role, but getting your first director role is a degree more difficult for a number of reasons: the battlefield promotion is probably out. The role is not a natural extension of your current day to day duties. The dynamics of a board are completely different than that of an executive team. So just what’s the ticket for landing a seat on a board?
Strategy for Making the Leap
For frequent readers of my blog the answer won’t surprise you. The strategy for making a big leap in your career, whether you are planning out how to get on a board of directors or land your first CFO role for that matter, is really very much the same. You need to create a game plan to get in front of “people of influence” and consider taking a bit of a risk. (hint: executive recruiters are not the people of influence!)
When No One is Calling
In the case of this former partner, the aha moment was acknowledging that the likes of Apple and Google weren’t calling for him to join their boards. In fact, nobody was. He had been in a relatively strong position of influence, helping major public technology companies on important business strategies. As a sought after opinion leader, he was accustomed to getting calls from CEOs and investors. Once retired from that position, it came as a shock to him that no one came seeking his council any more. This turn of events could be disconcerting and even depressing for some in this position.
Putting Together a Plan… Who Ya Gonna Call?
So he put together a plan for how to get on a board, which sounds simple, but requires a certain amount of discipline and confidence to undertake. He began by identifying people in his former sphere of influence, including investors, board members, CEOs, and former partners. He then started reaching out to these folks to make his intention clear about joining a board. The initial response wasn’t what he wanted: he was invited to join a public company with business complications and a strategy that was not all that exciting. As he said, “It certainly was not an “A” company.” But by trusting his source who led him to this opportunity, he ultimately joined the board. As with anything in life, things suddenly become more attractive once you are involved! A second directorship followed after a couple of years at the invitation of a fellow director. Once his second seat with a more attractive company was secure, his phone starting ringing more often, and he was able work out of the initial seat.
Ready, Set, Go Boarding
So put your most influential and trusted professionals in a cohesive spreadsheet. Select the top10. With persistence, patience and professionalism, get a face-to-face meeting with those 10 influencers. Make clear what your goals are and why you are a compelling asset. Have your elevator pitch down to three or four concise sentences. Ask each of the 10 people for specific referrals within their network. Also, very importantly, offer your assistance to help them solve a problem on their desk.
Next up, a bit about the Audit Chair role as independent director and the relationship to the CFO and other members of the Board.
As always, happy to chat about the next steps in your career or to give more tips on how to get on a board of directors. Visit our site for more information on how we can help CFOs or, if you would like to discuss the ideas in this blog further, please contact me at: moc.srentrapdlonra@evaD.
