06/03/2013 09.05 EST
Over the past 15 years, I have had the privilege of assisting in the selection and placement of a good number of Chief Financial Officers for a diverse set of clients. Throughout this experience, I’ve seen senior financial executives make successful transitions from industry to industry, from public to private companies and back, as well as adapt to wildly different cultures from company to company. By and large, top-notch CFOs are a smart, flexible and pragmatic group of professionals. However, in my experience, there is one divide that very few seem to successfully bridge – the transition from a large company to a small one.
By “small” I generally mean a growth-oriented company, usually backed by venture capital or private equity, which has designs to grow exponentially (i.e. not $25 million looking to grow to $50 million, but $25 million looking to grow to $500 million or more, usually followed by some type of exit via sale, IPO or some other transaction). These companies present a unique challenge to a large-company CFO: they require not only a high level of financial and business sophistication to handle the complexity of managing rapid growth but also a high degree of self sufficiency and a strong hands-on orientation. Regardless of how well these companies are funded, their resources are constrained relative to the level of support a big company CFO is accustomed to.
Therein lies the rub. Finding a financial executive who can operate on both those levels and, as importantly, is motivated to do so, is a three dimensional challenge for the company, the search firm and the candidate. As a result, the growth company landscape is littered with the bodies of CFO casualties who, despite their previous successes, fail to make this transition. What then differentiates the CFOs who do make the leap and are able to thrive in small growth companies? Common attributes that stand out based on my experience include:
To put it succinctly, the CFO most likely to make a successful transition from a large company to a small growth company possesses strong strategic and tactical skills and enjoys working at both of those levels. Why couldn’t I have told you that earlier? Well, that would have been a very short blog entry.
Unfortunately, it’s not a simple task to tease these qualities out of a resume or interview. In most interviews I conduct, I start by telling the candidate that I’ve thoroughly read his resume and have a good understanding of what he has accomplished during his career. My goal for the interview is to find out how he accomplished it; it’s important to obtain a step by step understanding of how a leader accomplishes goals and overcomes obstacles. It’s also important to ask for clarification and push for specificity in the candidate’s responses. At the end of the interview, a candidate should feel like they’ve been put through their paces, in a good way, of course.
This sort of due diligence is essential. I’ve seen too many venture partners and CEOs become enamored with a resume bursting with leadership roles in marquee companies only to find that their new CFO got to his or her results by making use of an infrastructure simply not available to them in a small growth company. So, what’s the best way to do your part in avoiding adding to the growth company CFO graveyard? Research the candidate with the blue chip resume to make sure his qualifications are specific to the goals and operating model of your company.