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The Crucial Role of CFO

The Crucial Role of CFO

Economic Impact

The current economic state has prompted, or forced, in some cases, organizations to assess their financial health more closely. 

According to Helbling’s Executive Director, Jim Lord, when organizations experience the squeeze of an economic downturn, the need for robust financial systems and leadership becomes more apparent.

“It is crucial to have the right financial professional at the helm because by enhancing internal financial operations organizations stand a better chance of mitigating the need to downsize—an act that often affects operations negatively.”

Pivotal Points

Recording and reporting financial transactions related to short-term liquidity, profit and loss (P&L), and total value or equity, paints a necessary picture for the financial planning and direction of the organization; however, a Chief Financial Officer oversees much more than accounting and tax preparation. From a reactive standpoint, the leader in this role proposes corrective actions to address company weaknesses. From a proactive standpoint, he or she capitalizes on opportunities. There is a strategic vision associated with the role that pertains to investments, as well as possibly scouting prospects for potential merger or acquisition activity.

Facets of the Role

CFOs know how to leverage the assets that an organization has in order to make the most return on investment and shepherd their companies through difficult times. Additional facets of the role include:
  • The CFO advises on the ratio of debt to equity.
  • The CFO has an ability to gauge the appropriate ratio of internal financing, reinvesting profits back into the business. 
  • The CFO has the agility to adapt to changing economic climates and operational circumstances.
  • The CFO has a pulse on the market position and brand of the organization in order to propose initiatives that align with company culture.
  • The CFO can budget for additional staff needed to support growth initiatives.
  • The CFO has the foresight to analyze utilization rates of staff labor compared to billable hours.
  • The CFO evaluates real estate assets and recommends changes to the portfolio.
  • The CFO advises on what technology, including equipment, platforms, or programs, will have the greatest return on investment.
  • The CFO prepares earning models to illustrate where the company is headed or could be headed based on multiple scenarios.

In High Demand

Noting both the complexities and potential associated with the position sheds light on why CFOs are in high demand. Within the past month, LinkedIn Jobs advertised a need for more than 6,000 CFOs throughout the United States. Helbling search consultants have observed this increase in the amount of posted positions in recent months and in the amount of inquiries the firm has received to provide executive search services for the role.

The firm’s stance is that Human Resource professionals should avoid combining the role with Chief Operating Officer. There is a distinction between what insight a CFO offers and a COO’s oversight of day-to-day activities across multiple departments.

When Hiring a CFO

Companies looking to hire a CFO should consider candidates’ long-term goals and what motivates them professionally. Does one favor corrective action to address company shortcomings? Does another thrive on growth opportunities for startups? The hiring team should think about how long they envision this person in the role as there can be a clear correlation between goals and tenure.

The CFO has to be both a doer and a leader. As an internal advisory position, it requires strong interpersonal skills. Beyond education and experience, the critical thinking and technological skills of each candidate are also important factors.

“With the rate that technology is changing, it is possible for those who are not focused on constantly improving their skills to be left behind,” said Lord.

Interviewing is not a one-way street. During the hiring process, the organization should expect to disclose information about its financial health to serious candidates. If the incumbent in the CFO role is still active within the organization, select candidates may request to have a candid conversation before accepting an employment offer.

If you anticipate a hiring need within financial leadership, or have questions about the qualifications of this role, please contact us to connect with a Helbling search consultant.