As a recruiter and executive coach, this is a question that comes up a lot. Deciding whether you need to hire a CFO, Controller or Director of Finance is a critical component to your success. The answer I typically provide is this: it depends on where you are and where you are trying to get to, and most importantly, in what time frame.
Let's say your current situation looks like this:
Your current revenue is $20M, and you have 170 employees. Your finance department consists of 3 people: one is responsible for AR/AP, one does payroll, taxes and employee benefits administration, and one who is responsible for reporting, everything else and the other two. You’re having trouble getting timely and accurate financial reporting, you need another credit line or some type of financing, you're not getting any strategic input, and you have lost your confidence in the current supervisor and staff, so you want to hire someone who can get the job done and help you grow!
You want to roll out a new product line, open 2 new national locations in other states and double your company revenues over the next three years to $40M.
Do you hire someone who can manage the current $20M responsibilities and challenges, or do you hire someone who can manage the current situation and can also manage the responsibilities and challenges of opening multiple national locations and $40M in annual revenues?
The Talent Gap: I define this as the margin (gap) between your performance objective and the abilities of your current people to execute on those.
Background: The research conducted in Malcolm Gladwell’s bestselling book Outliers shows that it takes about 10,000 hours to achieve "mastery” in any profession. This is assuming that you are starting from scratch, with no experience whatsoever. Unlike those in Gladwell’s book, you are starting with an employee or candidate who is already educated in finance and who has already developed a set of skills, and therefore has a head start on the 10,000 hours. This person is already considered a top performing accountant. They have become experts in their respective fields; they know your industry products, services, etc.
The problem: While the person I described above may be highly successful in their current role, the role of an effective leader is a new one for them that requires mastery of a new set of skills, which doesn't include being the best finance person. It requires skills such as knowing how to assess your existing staff to identify their stregnths and weaknesses, how to hire new top talent, how to develop their people to be the best they can be, how to communicate and motivate based on individual needs and styles and how to help their people stay focused on the right things (accountability) to achieve an end result.
The research we have done has proven that in this case, it can still take an average of about 3 to 6 years for this new manager to develop the necessary knowledge and skills to consistently produce results from others in a positive manner (i.e., the Excelsior definition of a successful manager/leader).
Option #1: You can lower your expectations and compromise on your business strategy to fit the existing talent capabilities of someone who can just manage what you have today.
Option #2. You can improve your talent capabilities by assessing, finding and developing the talent required to not only manage your current situation but someone who can also help you reach your performance objectives in a timely manner.
The person who can best accomplish this is someone who has done something similar in the past, so there is no learning curve, which means there's a greater chance of success in achieving your objectives within the stated timeline. Having the same title is not as important as having the specific knowledge, skills (mastery of the application of the knowledge) and behavioral traits (strategic thinker, attention to detail, etc.). Once you define specifically what success looks like, you can source and screen candidates that already posess all of those, and they will most likely already have the title you require.
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