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: moc.srentrapdlonra@evad. 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: moc.srentrapdlonra@evad 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 moc.srentrapdlonra@evad or call 408-205-7373.
In the ever-expanding complexities of the modern world, some things in the field of corporate financial leadership don’t change.
A lot has been written about the changing role of the CFO in a technology company over the last few years. From my standpoint, the role has become more operational in nature, more integrated into the business. But what about the qualities of the person in the seat? Does the nature of what makes a great CFO—vs a so-so CFO—change with the demands of the job? I’d say in some ways, yes. An operationally-oriented CFO needs more tools at her disposal than a purely financial CFO. But some personal characteristics never go out of style or need.
Last week, while meeting with a new client for the first time about the CFO search we were about to embark on, we discussed his thoughts about what was needed in the new CFO. Many of the qualifications were predictably present. Then he surprised and delighted me with one word: “Grit.”
My client wanted his CFO hire to demonstrate the personal quality he defined as grit. Great word. But it caused me to pause and dig into it a bit. His was not a troubled company, and my mind immediately went to the 1969 movie “True Grit” with John Wayne and Glen Campbell. Did he want a gun swinging cowboy?
No, he calmly explained that to him grit meant perseverance. It meant sticking to the plan when everyone else was chasing the new shining object. It meant resolve and strength even if it meant going against the group think.
As I think about many of the CFOs I’ve met over the years, it seems that the ones I hold in the highest regard do possess this quality. They can cite examples of having to stand up to a CEO who wanted to take the company off course on their latest whim. Or having to fight for terms and conditions favorable to the company, not a vendor’s head of sales. Or taking a firm stand on an accounting treatment (ring any bells, CFO friends?).
The CFOs I respect the most have all had to persevere on multiple fronts over many years. It’s a hard job because in many instances the CFO is the one person in the C-suite who must keep the team on task and focused on the long-term strategy. The CFO is the one person who has the fiduciary duty to say “No” at times, without pissing everyone off. This not only takes a master’s degree in diplomacy, but I would also argue it takes grit.
Most of the CEOs I meet are visionary, brilliant, self-assured and at times very stubborn. They need to be. The role of the CEO can be very lonely one, and the antidote is having a great CFO at their side. The CFO is the CEO’s confident, and most likely the only person in the C-suite who can be trusted with every tidbit of information. This is why I liken the CEO–CFO relationship to that of a marriage. The trust needs to be deep and dependable. The two-some must persevere, working together through thick and thin to help ensure the company’s success. In a word, both parties must have grit.
It’s not totally exclusive to technology companies, but I do think grit is a musthave for a technology CFO. The landscape on most every front changes faster than in other industries. What funding is available today may disappear tomorrow. New competitors appear from thin air. Apple decides to get into the business you are in. The list goes on. So as my client so insightfully believes, among the many qualities of the successful CFO, grit has to be high on the list.
If you are seeking an exceptional CFO with true grit for your company, that’s the kind of hire we can bring to fruition. While we don’t take on impossible to fill mandates, we like a challenge. We’ve been creating tremendous value for our clients through attracting strategic CFOs since 1998. To learn more about what we can do for you, give me a call at 408-205-7373 or email moc.srentrapdlonra@evad.
Until I read the “Smarter Living” column in a recent New York Times, I did not know there was such a thing as “unconscious bias.” But after reading about it, I knew I had some learning to do. Not only for my own take-aways for “smarter living” in my personal life, but also to explore this issue relative to how I serve my clients and candidates alike when doing searches for top CFO talent.
Article author Tim Herrera explains, “Unconscious biases are shortcuts our brains take to reach certain conclusions.” They are both necessary for everyday living (because we cannot analyze every stimulus and sight we take in), and they are potentially dangerous (because if we get too cozy with our preconceptions they may come to haunt us).
Bias starts with the resume
This is a fascinating topic when it comes to the hiring process. Starting with reading a resume, what do we immediately deduce about someone we have never met? Many things! We start forming conclusions based on where someone went to school, the level of education they achieved, what companies they worked at, and what accomplishments they chose to convey. These are all reasonable things to consider when deciding whether we want to meet someone. But how many of our conclusions come from an unconscious bias? How many times do we pass on a meeting because someone’s resume does not seem to fit what we may consciously or unconsciously hold as important?
Beware the big talker
The article also points to a study published on the American Psychological Association website that showed that people who talked more in working environments were perceived to be “more influential” than those who talked less. In his article, Herrera concurs: “Your brain can instinctively trust people simply because they sound as if they know what they are talking about.” And of course, “influential” goes hand-in-hand with executive presence. People with executive presence are more influential than those who lack it. The study also points out that when people are using a lot of words, those listening may not scrutinize what is said, and the listeners can be lulled into a false sense of thinking that the speaker must know what they are talking about! This issue brought to mind how many times we are sold something we really did not need. That could be a case of “unconscious bias” as well.
Power of first impression
When we meet someone for the first time, particularly in an interview situation, the potential for bias of all kinds is very high. In fact, the whole purpose of an interview from both parties’ standpoint is to determine fit. We determine fit by making judgments about one another—some of those judgments will be conscious and others unconscious. It is critical in my opinion to be keenly aware of the conclusions we make about a person, and how some of those conclusions will be influenced by unconscious bias. We can put an extreme amount of confidence in our ability to trust based on things like confidence and extroversion rather than digging into the real, factual details of a candidate’s abilities and accomplishments.
Trust but verify
Herrera further points out that in order not to fall prey to the downside of unconscious bias, he says we should always verify the truth. In the case of hiring, we rely heavily on references. Recently, I was working on a search with a candidate and asked her for references as we were getting close to the offer stage. I was a bit worried because she already had a couple of offers and I thought her references might be a little burnt out. Truth is, she told me no one involved in the other searches has asked her for references. That is crazy. References serve a lot of purposes and we need to verify our impressions. “Trust but verify” is not a bad motto. Equally important: We should verify or un-verify any biases we have developed about the candidate.
Some people do really well in an interview. They may be a trained salesperson or full of gravitas. But do not let unconscious bias lead to hiring a stuffed shirt. Verify your opinions through thorough reference checking—both on list and off list.
I have been meeting CFOs for a long time and feel I have an ability to identify the winners, but I will always check references whether my clients ask it of me or not. Getting lulled into overconfidence from experience is just not part of the Arnold Partners way of doing business.
Economic and Employment Outlook for 2018 (i.e. How Long is the Commute?)—and Impact on CFO Demand
It’s not just the CFO market that is RED HOT in Silicon Valley, it’s the entire economy. According to the California State Employment Development Department, as of March 7, 2018 the overall unemployment rate in Santa Clara and San Benito counties is currently at 2.9%. That’s the overall rate. For degreed professionals it is under 1%. That means more jobs, including CFO jobs, are out there.
For those of you commuting anywhere in the Bay Area, you instinctively know this. A look at the unemployment rate from 2010 to 2018 is telling — it’s a straight down and to the right line:
What’s Driving All This?
The economy in Silicon Valley is firing on all cylinders. It’s a very different expansion from what we saw with the dot-com bubble in the late 90s. For starters, the push is extremely wide in terms of the industries within tech: AI, Autonomous Vehicles (can you guys hurry up with this, we need them now!), SaaS, Consumer, even Semiconductor is seeing some revival due to the AI boom. On the Life Science side of things, CFO jobs are opening as both Biopharma AND Medical Device companies are getting funded and doing very well. This expansion is about revenue generation —- real dollars (not just ICOs, which is a whole other topic).
From everything I’m reading there’s still a lot more fuel to throw on these flames. Where we’ll house and transport additional workers is a real problem, but the epicenter of tech is still here and not disappearing anytime soon.
IPOs Drive CFO Demand
There are a number of high profile IPOs that really will happen in 2018 and 2019. DropBox, Zscaler, AirBnB, and Uber have all announced. IPOs directly affect the CFO market in that when high flyers go out into the public markets with success, others will follow. We saw this happen in 2012 in the Biotech market with dozens of IPOs, some of which probably should not have gone out. Most companies will not go public without a CFO, and those that do soon realize they need one.
What does this mean specifically for the CFO market in 2018? It means competition for employers. It means candidates for CFO jobs can be picky. It means there are very few people on the sidelines. It means if you are seeking to hire a CFO it will be hard work and you will need to dig deep into your contacts and or work with an executive recruiter who can really help.
Changing Demographics Impact CFO Availability
There’s an additional factor facing the CFO market this year and the coming years as well — the Baby Boomers are retiring. This is noticeable at the CFO level and will force companies to look at planned succession and look at candidates who haven’t previously been in the CFO seat. Our clients have been more receptive to looking at “step-up” candidates than ever before, and I think this is at least part of the reason.
So enjoy the ride as slow as the traffic may be, it’s going to last a while. And take stock that full employment is a lot better than the alternative. Remember 2003?
When the CFO market is this tight, you need a search partner with proven success in this type of environment. Contact me at moc.srentrapdlonra@evad to discuss your objectives and we’ll work together to land your ideal candidate.– Dave