Why CFOs Aren’t Being Recruited from Inside
This recent article in the Wall Street Journal points to an interesting trend in recruiting CFOs, (chief financial officers) from the ranks of sitting CFOs.
Korn Ferry commented that companies are investing less in talent development.
My perspective is more nuanced. Our clients are very interested in talent development and succession planning for the finance department. Large clients with international operations and numerous locations would love to provide a “stretch” opportunity for someone within the company. Providing a stretch opportunity is definitely a talent developing investment.
There are three primary situations when Colosi Associates is hired to recruit the most senior financial officer of a company. Or put otherwise, why the company didn’t hire from within. Titles vary, so that’s why I am not limiting my comments to CFO.
1. Current Talent Not Sufficient
The company needs to upgrade from the person in the role, because the person in place is unable to contribute as a strategic, operations, business partner part of the leadership team i.e. the person had not expanded beyond the numbers “bean counter” and compliance-focus base line of the finance function. You can’t always develop this skill in someone.
To compound matters, the result is that this B-Player-at-best person definitely did not hire A-Players who could replace him/her. Maybe the company hired wrong in the first placed, or maybe the company has grown and changed in its requirements. The primary responsibility for talent development does not rest in HR. It rests with the hiring manager him/herself. Allowing the B Player to stay on the job stunted the growth of others.
2. Current Talent Won’t Move
Internal talent that could be promoted into the role will not make a geographic move to take the promotion. I receive call after call from clients frustrated with this in today’s world that often demands international experience for progression.
3. The Company Is Hiring Its First CFO
The company is growing and has never had a CFO (think Silicon Valley fast growing technology companies where the founder may still hold detailed budgets on his /her desk). Succession planning is nearly impossible until the company reaches a certain size/scale.