The CFO'S Perspective

Aesop’s fable about the race between the tortoise and the hare provides a story to show how a race is not always for the swiftest. In the business world, some companies are very focused on short-term financial results while others are managing for the very long-term time horizon. Some companies are working to improve their operations and financial results in order to sell the business in a few years, while others are building a business for the next generation of owners.

When there is a need to hire a new CFO, the question the CEO and the owners should consider asking is: do I need a tortoise or a hare as my next CFO?

If you are reading this and don't know what ChatGPT is, you better Google the phrase and learn about what is starting to transform many aspects of society and business. It is an AI tool developed by Open AI, a company that Microsoft has recently announced it has invested billions in and is incorporating into its Edge browser. TikTok has run amok on the topic, and it was TikTok that helped create a million ChatGPT users in less than a week from launch in late 2022.

To give a very high-level summary, one aspect of ChatGPT is you will never have to start a writing project staring at a blank piece of paper. State what you want to write about in ChatGPT, and voila – a few paragraphs or much longer will quickly appear. Stories are being told of people using this tool for term papers, copywriting, and cover letters; you name it, even a judge in Colombia recently used it to write a legal opinion.

My focus is in the context of a person working on getting their first CFO job or a CFO making a change. I should issue a warning: if you have not used ChatGPT before, after reading this article, you may find yourself acting like Alice going down the rabbit hole – your family, co-workers, and friends may not see you for a while as you use the easy-to-use AI app.

As CFO Selections celebrates its 20th anniversary of providing business owners with senior finance and accounting services, I want to help business owners and hiring managers understand the challenge faced in hiring accounting employees in 2022.

Unfortunately, this challenge is not going to disappear after this year. Today I will provide some ideas later to overcome the challenge, … but first, we must understand why we have this challenge.

Alex de Soto has been a vital member of the CFO selections team for 14 years. Alex is a former Big-4 CPA and CFO who provides executive search services for owners and CEOs of Pacific Northwest-based companies looking for a CFO, VP Finance, or Controller.

He continues to lead the search practice of CFO Selections which provides talented senior finance leaders for interim, project, or part-time assignments.

CFO Selections continues to benefit from his 30 years as a Pacific Northwest-based business professional and his extensive network of business and finance leaders. Alex has worked with hundreds of CEOs and owners and interviewed thousands of CFOs. He has an exceptional understanding of the role of a CFO and the unique nature of what each CEO/owner needs in a CFO.

We recently sat down with Alex for a quick interview:

A business owner should always have a succession plan, yet at the same time be ready when a member of their executive team is ready to implement their own exit strategy, i.e., retirement. The Great Recession caused many people to need to work longer until retiring because of the loss of income and value of retirement assets. But now, a decade has passed, which has given some the time to replenish their retirement savings. As a result of the COVID19 pandemic many people are re-evaluating what is important to them, and in many instances, it means retiring a few years sooner than originally planned.

A vital part of a business’s success is the strength of its management team.  This is always true, in good times, and during a crisis.  A successful business needs all oars of the boat pulling together at the same time.  And the boat needs to be headed in the right direction.

The current economic crisis is highlighting the importance of strong financial leadership.  That is undoubtedly true, given the flurry of new government aid programs and the impact of stay at home orders.  But a business owner always needs strong financial leadership.  In a healthy economy, the owner needs to make sure they are operating at maximum efficiency to take advantage of likely higher gross margin opportunities, or to make sure an investment in a new product or service has long term value.

This article points out a few areas to consider in determining if you currently have the “right CFO” and a pointer on “buyer beware” if you are considering making a change in CFO during a time of high unemployment.

As the leader of our executive search practice, the most common question I get asked is, “What is the market like for CFOs?” 

My reply has generally been, “Well, in the Pacific Northwest there is an oversupply of experienced CFOs but not enough ‘up and comer’ CFOs”. 

I also mention: “It will cost you a lot more to get an inexperienced CFO than it did in the past.” 

Why do I say this?  It is all about demographics and supply and demand.

Ever wonder why your CFO spends more time in their office than anywhere else? Or maybe you have a CFO who is always out meeting with people outside your business when you are trying to talk with them about an issue? Do you have a Controller who feels ignored by your CFO?  Do you have a CFO who is great at talking about the needs of your business, but can’t seem to answer a detailed question about the financial statements?

In my years as a CPA/auditor, an employee within companies in finance management roles, and as a recruiter focusing on senior finance positions, it is very apparent one can put a CFO in three categories.

Of course, not everyone is a single variety grape wine, most people are a blend, but I have found these three categories quickly summarize the most common types of CFO in the eyes of the CEO and others in an organization. 

The question as a CEO or business owner is, do you have the right type for your organization?