I had the pleasure of sitting down with one of the all-time great venture capitalists last week. By working with him on four separate successful CFO searches and now a Board search, I have come to respect this individual more than words can describe. He has not needed to work for financial gain for many years, yet he remains committed to his partners, his CEOs and the community at large.
My guess is that he is in the top ten most successful venture investors of all time.
As we were wrapping up talking about the new Board search, I asked him some questions about how he evaluates talent. We always read that a company’s success is more dependent on the people than the technology, and I believe that to be true. I wondered whether his ability to spot exceptional talent was the key to his success. I am sharing his answers to my questions below; I hope you find the interviewing advice he graciously shared of value.
What interviewing advice do you have for evaluating a potential C-level candidate?
“The first thing I look for is their track record. Have they picked winners? What are their specific accomplishments within that track record─how did they specifically contribute to the successful outcome? It is OK if someone takes a risk on a company that does not work out, but I do not like to see a series of loser companies on one resume. In the case of a CFO, he/she may not be to blame for a technology failure, but they should be held accountable for being astute enough to pick more winners than losers.”
What are the most important questions you ask a C-level candidate when they get to you?
“I always ask: ’What is your biggest success and what is your biggest failure?’ If I get a lot of hemming and hawing on the failure question, that is a big red flag. We have all had failures. If you have not, then you have not lived and you have not worked in technology! I am looking for transparency mostly. If this person is going to be on a team with me, in a Board meeting with me, I need to know they can be transparent to what is happening in the company. If they cannot be totally honest with me in a first interview, then I have no time for them.”
What else do you look for?
“Preparation. They need to come to my office prepared. It shocks me that someone who has been through several meetings before getting to me is not prepared with really intelligent, well thought-out questions. Are you kidding me? They should know the company through and through and be asking really deep questions about the strategy and the execution of that strategy. If they are unprepared there is no excuse.”
Final Interviewing Advice by the Legend
Bottom line for this investor is that the interview is only good for so much, and he never relies on his personal impression: “Anyone can put on a good act for an hour interview and I have been fooled before.” He says there is no substitute for reference checking. 10 plus references on a CEO are typically checked, and perhaps a few less on a CFO. After doing venture work in the Valley for so long, he has access to just about anyone he wants for a reference, and critical hires are never made without talking to people that he trusts. This tidbit does not surprise me in itself. Checking references is obvious. But what is refreshing is that here is a guy who has hired 100s of C-suite executives and he still is humble enough to not trust his own excellent judgment! Who are we to disagree? Do not make a hire without checking on-list and off-list references.
Some key interviewing advice takeaways: if you are a C-suite candidate, your track record should include successful companies, significant accomplishments and people to back you up. If you are CEO or VC looking for talent, Arnold Partners strategic executive search will find you candidates with these winning qualities.
What are the most important factors when embarking on a CFO search? More importantly, what are the most important qualities you should look for when selecting from CFO search firms to help you hire a CFO? Three quantitative measures are frequently cited as the most important: time to completion, longevity of the placement, and re-placement rate. I’ll give you my perspective on these measures based on many years as a CFO search consultant.
CFO search begins with a clear target
The process for a CFO search, or any search for that matter, must begin with a very clear understanding of what you are searching for. Fortunately when it comes to CFOs and Audit Chair Directors, the definitions are usually pretty crisp. Nonetheless, there are critical subtleties in the definitions for CFOs, the culture of each company is different from that of another, and the blind spots of CEOs will differ. These considerations must be weighed and sorted, so at kick-off we have a strong, common understanding of the specific must-haves and nice-to-haves.
Because of our long-time focus on the financial function, helping clients define what is needed in the role is second nature to Arnold Partners. We act as a management consultant specializing in executive search, adding value from day one, even in the pre-search process. The average time it has taken us to complete searches in the last year is just under three months, proof positive that this value creation also has the benefit of saving time as well.
Watch out for too much speed
Speed in search is important to most clients at the onset because some event is pending, or the client realizes that the decision to hire a CFO should have been made months before. Perhaps a budget was blown, or a market shift could have been anticipated if there had been a CFO in the seat. But moving too fast may result in a hire that doesn’t stick. Then you are back to the drawing board. After digging back into all of the CFO searches I have completed, I am proud to report that the average tenure of the CFOs I have placed is 38 months. This includes a number of placements where the companies ended up getting acquired in fairly short order. Of those companies that have not been acquired and are still in operation, the average tenure is 48 months. These CFOs are sticking in place because time was correctly invested, unlike some other CFO search firms who rush through the process.
So the averages are good, what about the mistakes?
Nothing is more demoralizing and costly than a bad hire. A bad executive hire is even worse. Can you expect success on every search? You can if you choose the right firm. To date, Arnold Partners has a 100% success rate, meaning the CFO was in place for a minimum of a year. We have been rehired to conduct replacement searches twice – once after the CFO was on the job for three years but developed a health issue, and once because the client moved from Seattle to the Bay Area. As we guarantee our work for a year, we are proud to say we have not had to employ that guarantee.
In Sum
All CFO search firms should have a score card on these three measures. If you like our top marks for quality, speed, and longevity, call me, Dave Arnold at 408-205-7373 or email moc.srentrapdlonra@evad.
I was in a client meeting this week and was taken aback by my client’s view of retained search professionals. Maybe he was burned a few times by executive search firms? Not sure, but out of our conversation, what differentiates my firm Arnold Partners from most other retained search firms became clear: some firms just don’t know how to correctly hire a CFO.
While at an investors’ conference the week prior, my client ran into a partner from a large executive search firm and they got into a debate about the relative value of the search process vs. the outcome of the process. The search exec. stressed the value of the process and the insight gained, but could not sway my client; the only value he saw in the search process was the end result – a great hire.
Gems Gleaned from the Process
I agree that the search process itself can provide a great deal of valuable information to a company, specifically discoveries about how the company is perceived by the professional community and how the specific role is received by the potential candidate pool. These are truly important things; the candidates you are seeing and the prospective candidates your search partner is approaching are not yet “drinking the kool-aide” as we like to say here in the Valley. If the response to the company story is not positive and needs to be re-tooled, this is valuable insight especially when the story is being presented to CFOs, who are by their nature conservative and a tad skeptical, in my experience.
Beware the Purple Squirrel
Another possible discovery that can be a real show stopper: the person you are looking for does not exist! I have heard this called the unicorn or the purple squirrel. This is a frustrating discovery, but it can also provide insight for the executive team and board. If the specification for the role is too far outside the lines or tries to combine too many “must-haves” there needs to be a reconfirmation with the search partner and the client to reassess the needs of the business and the goal of the search. I like to say, “In search, you cannot find what you are looking for unless you know what you are looking for, but, if you are looking for a purple squirrel, you may be looking forever!”
Where the Rubber Meets the Road: Completion and Stick Rates
My view is that process is important and discoveries can provide insight, but the real drive and goal is the successful hire ─ to find a CFO that who will create a lasting, positive impact for all stakeholders in the organization. A process without consummation is a failure. This is where I pride myself in our 100% completion rate. Yes, searches can be tough; in fact most of them are. But for the best outcome what should a CEO or VC look for in a search partner? Two metrics: completion rate and stick rate (how long the placed candidates stay in the roles). One national firm boasts on their website of a 77% completion rate, which means they do not complete 23% of their searches ─ almost a quarter! And yet their clients are out 100% of their fee for service.
If you are contemplating how to hire a CFO and seeking a search partner for your search, you will find Arnold Partners to be 100% committed to both a useful process AND a successful outcome with long-lasting results. If you would like to share your experience on how to hire a CFO, or want to learn more about how Arnold Partners hits its numbers, call me, Dave Arnold at 408-205-7373 or email moc.srentrapdlonra@evad.
Being in the search business of finding great CFOs for my clients, one thing rings true each year: CFOs along with everyone else make New Year’s Resolutions – including finding a new role.
The following is my primer, for not just CFOs, but anyone seeking new employment from a recent college grad to a CXO, on how to network so you can find a meaningful new career seat this year. I have given this advice on networking for job seekers to many over the years, and from their testimonials, I know it works.
Determine Your Criteria
The first step is figuring out the criteria for your next role. If you’re a recent grad that might be a job, period. If you’re a CFO who wants to get into a new industry, well that’s a lot more involved. However, the following guidance is applicable to any change including changing industries, getting your first Board seat, or a position at a faster growth company.
Identify and Get in Front of the Influencers in Your Network
The next step in networking for job seekers: write down the top 20 people in your world that are people of “influence.” These could be investors, lawyers, bankers, CEOs, board members, professors, audit partners, former bosses, or peers/classmates who may be just a step ahead of you. Brainstorm hard on this. Think outside the box. Once you have 20, rank them from most influential to least. Your goal is to have a face-to-face meeting with the top 10 people on your list over the next two or three months, depending on your urgency and work status. (Note, I didn’t include executive search consultants on the list of influencers.)
Come up with a game plan that makes sense for you. If you’re currently employed, maybe one meeting a month is realistic. If you’re actively seeking work, maybe one to two a week will do the trick.
Set Goals for the Meeting
Ok, so you get a 1:1 with Mr. Big or Ms. Big, now what? First off, you’re NOT THERE TO ASK FOR A JOB. You’re there to express appreciation for his time and how he/she has influenced your career to-date, and to tap into their network. Unless you’re particularly close with this person, you should ask for only 15 to 30 minutes, and don’t exceed what’s agreed to.
Your goal is to get introduced to one or two of the people of influence in his network. Obviously, you’ll need to explain why you’re there and that you’re considering a change, but be very brief in explaining who you are and what you bring to the table.
It’s critical that you ask Mr. Big who he knows IN THE SPECIFIC INDUSTRY you’re trying to get into. Consider these two dialogues:
You: “Hey, Mr. Big, I was hoping you could refer me to someone really important in your network.” Mr. Big: Blank stare.
vs.
You: “Hey Mr. Big, I’m laser focused on getting into the software industry for my next move. Who are the two people you know in software that you would feel comfortable introducing me to? Perhaps there is a CEO or an investor in that industry who you know? I’d like to get a 15-minute meeting like this one I’m having with you, with one or two well-placed folks. And a word from you would be of immense help in getting those meetings.”
THE MINUTE YOU GET BACK TO YOUR OFFICE WRITE A THANK YOU NOTE TO MR. BIG. You can do this via email, but if you have good script, a hand-written note is a remarkable thing in today’s digital age and is one of the most overlooked tools in networking for job seekers. Ask him to keep you in mind as he travels the hallowed halls of wherever.
Keep Your Own Scorecard
Networking for job seekers isn’t going to be accomplished in the same way for everyone. OK, so your goal is to get 10 meetings like this, which will lead to 10 or perhaps 15 or 20 more meetings if you are successful. The frequency of meetings is up to you, but stay with the plan. Keep checking your list of influencers. Be persistent without being pushy. Follow up with the original influencer to let them know you met with his referrals. Keep the circle of communication going. Reward yourself in a small way with each meeting. Make it a game to reach the highest placed people you can. Be honest with yourself and your goal, just like any resolution. Know your strengths and be crystal clear to the influencer who you are what you bring to the table. Be mindful of time and of follow-up.
If you do this well you’ll be in a position to hear about opportunities before they are posted, before they go to search, before someone even knows they need you. So happy searching! I welcome your success stories and comments. Contact me at moc.srentrapdlonra@evaD.
If you haven’t noticed, the market for CFO talent has become very competitive this year, at least in the SF Bay Area. Certain segments such as SaaS are too hot to touch! The bottom line is that top tier talent is scarce. A number of CFOs I’ve talked to recently said they can’t even think about looking at another opportunity because they’re already stretched thin by the opportunities in front of them. So, if you’re a company wondering how to hire a CFO, how to go about it? You need to work on your CFO recruitment skills, and I can help.
As the CEO or an investor, you believe in your heart and mind that your company is the greatest company on earth. The challenge is how to communicate this concept to the CFO marketplace.
Lessons from Your Own Experience
Thinking about the last time you made a major career decision may shed some light on the process of recruiting. First, think about how you came to make the decision. Was it spontaneous, or pondered thoroughly? What did you come to believe about the hiring company? Who made you aware of the opportunity? Now, put yourself in the shoes of the CFO you are trying to recruit. How will the initial outreach be conducted─the critical step to engage the prospect in your opportunity? Why should he/she respond to your siren? What key messages will engage him/her? Who will conduct the outreach? If you’re working with a search firm, who within the firm will make the call?
Executive Recruiting Skills – a Rare Commodity
Having trained recruiters and developed a proprietary process for the art of CFO recruitment, I can say that few recruiters, and even fewer non-recruiters, have the thorough training and expertise required to conduct a successful executive search from clarifying the objectives, all the way through the process to the offer and acceptance, to follow-up.
After working in executive search for over 22 years, I have some insights that many folks in my industry just don’t have. What many professionals don’t understand is that a number of so-called “headhunters” simply bring business in the door, but don’t necessarily fulfill it. My advice on how to hire a CFO: if you hire a search firm to partner with you, be sure to find out in advance how your opportunity will be being marketed, and exactly who is doing that marketing for you, and what are their skills and experience.
How Not to Make a Recruiting Call
Have you received a CFO recruitment call that started out like, “Hi Joe, I’m calling you because I have been retained by this great company that is looking for someone just like you!” Not a good recruiting call in my book. If you want to know how to make a great recruiting call, I’m happy to share what I’ve learned that works. Call me, Dave Arnold at 408-205-7373 or email moc.srentrapdlonra@evad.
Every executive search firm, including my own company Arnold Partners, promotes and emphasizes their executive search process. Having an orderly, standardized approach is the basis for a successful search. Without a well-conceived framework to start the search, the process will certainly fail. However, it has been my experience that once the music has started, it is the art of improvisation that leads to a successful outcome.
I have been studying Jazz and Blues music for the last six years. Each week I take a lesson on the tenor sax and practice a few hours, trying not to drive the household and neighbors too crazy! It has been an interesting journey in humiliation, dedication, and joy. It certainly has expanded my mind in a completely new direction. But interestingly, it has had a positive effect on the business side of my brain too, enabling me to add value to my clients.
What’s Jazz Got to Do with It?
[threecol_one][/threecol_one] [threecol_two_last]Like an executive search process, the creation of Jazz and music in general is based on some simple rules and involves a process that when successful, transports an audience.
Jazz starts with a melody written in a certain key that serves as the foundation of the piece. In executive search, the job description is the foundation for the work to be done.[/wpcol_1half_end]When a great jazz musician takes flight into improvisation, he doesn’t completely leave the melody behind. Great improvisation only sounds good if it is played in time and in the chords of the melody, and works with the rhythm section. This is very difficult to achieve as I very well know from firsthand experience. But when done right, it makes for a very successful and moving experience.[/threecol_two_last]
In an executive search process, there almost always comes a time in the process where improvising, the use of creative skills, is imperative. The search consultant must break from the score and think, act, and move in time to help land the desired candidate. This is no easy task and it cannot be taught in a training room; this skill can only be learned through years of experience.
How to Find a CFO? Think Outside the (Music) Box
In thinking about your search process, it is important to consider how your search consultant can bring creativity to the executive search process. Effective search takes more than an analytical approach; it takes a balanced, creative partner to help deliver the talent you need. As I find myself being able to improvise on the sax, my creativity is flowing and ready for orchestration in my clients’ next searches. Let’s get playin’!Contact Dave Arnold at 408-205-7373 or moc.srentrapdlonra@evad.
