Companies are lying to themselves…
Too many companies are not honest with themselves regarding the type of CFO they need. They don't spend the time upfront trying to identify the skills that are required, so they end up taking shortcuts. They focus on people in a particular industry, people they know, and people they've worked with before, without thinking out of the box.
Many companies don't really understand what they need and avoid investing in the research upfront. When they are identifying CFOs, they're looking at pedigree as opposed to what they can actually do and individual skills. They will just say, "Oh look, we're hiring the CFO from company XYZ. They're our biggest competitor. It's going be a great move for us."
While that person was a great CFO for a competitor, how do you know that they're going be a great CFO for your company?
… while lowballing CFOs.
Companies may be tempted to lowball compensation, leaving a bad taste in the CFO's mouth after the hire. That CFO is going to know pretty quickly what the relative compensation is at a firm. This person's going to be sitting at the table and know what the CEO is being paid and what the VP of operations is being paid. Hiding that information during the recruiting process might be a short-term opportunity, but it's going to cause long-term problems.
In public companies you can't hide that information, but private companies often will skirt around compensation disclosure. This practice is pretty rampant right now and causing a lot animosity.
Out of work CFOs are too eager to please…
When you have been unemployed for six months and your prospects are few, CFOs have a tendency to get desperate. There's nothing worse than a desperate CFO in transition.
The biggest mistake of a CFO in transition is not branding themselves properly. They will say, "I can do anything.” The truth is while most CFOs can do anything, they just like doing some things more than others.
For example, a CFO that has been fundraising as a primary part of their job for the last five years is suddenly out of a job. They really like that aspect of being a CFO, but they're between opportunities. They would be much happier in the boardroom and at lunches than crunching numbers all day or working on financial reporting duties.
Going out there and selling yourself as an “I-can-do-everything CFO” ends up with you doing work that you're not happy with, and a company with an unhappy leader in the C-suite.
… while employed CFOs are too loyal.
Most senior finance executives I know are very committed people… actually to a fault. Those five years you spent focusing on giving 110 percent and more to the company each quarter were five years spent avoiding networking or focusing on building their career
The most fortunate executive in a job negotiation situation is the CFO who is listening to opportunities while currently employed, because they don't have to take the job. And if they are number one on the list for an opportunity, they have much more power to get the kind of compensation that will incentivize them to make the move.
The only thing that's constant in today's work environment is change. You could be top-notch CFO but something happens -- the economy tanks or there is a new CEO – you're gone.
Samuel Dergel is a executive search consultant with Stanton Chase in San Francisco and the author of The Guide to CFO Success.