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“Get a CFO on board when you are ready to take on the world”

The title is a quote from Fred Wilson, a VC and Principal at Union Square Ventures, who recently wrote a blog titled “VP Finance vs CFO”.

It’s an interesting blog – you should read it. It certainly got a lot of attention in the social media space (CFO, Tech and VC subsector) in the time since it was published 72 hours ago.

I chose this quote to write my blog post on because it was the meatiest and juiciest for me to work with. In addition to my own direct take on the blog which I recently wrote – Does a Small yet Growing Business need a CFO? – I have written blogs that have touched this topic from different perspectives.

Let us count the ways.

1) CFO Readiness. When is a company really ready to take on the world? Are they really ready for a CFO?

2) Promoting the VP Finance to CFO. Fred says that a VP Finance is about “what happened” and a CFO is more about “What is happening right now”. I do agree with him. But that doesn’t mean the VP Finance cannot become a CFO. Here is how. And here is how as well.

3) The Successful CFO. How does a CFO become a successful? They prepare a plan, map out their relationships, get coaching, and build a strong team to support them.

4) Hiring your CFO. How do you hire them? Read this. How do you NOT hire a CFO? Read this.

Come to think of it, there are more than just these 4 ways.

Just read all my blogs.

And, to not miss any in the future, Click on the “Sign me up!” button on the right side of the blog.

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The First 90 Days of a New CFO

Contrary to the way many people in the recruitment industry work, the successful placement of a CFO does not stop once an offer of employment is accepted by the new CFO.

Actually, this is one of the most critical stages in the successful hire of a new CFO – Transition.

If you look at the timeline for any well planned project, one project stage does not begin at the point in time that another ends.

For a New CFO, Transition begins…

    • before you start on the 1st day.
    • before you sign your offer letter.

Transition begins when you are interviewing.

You need to know what you’re getting yourself into. The more you can learn about the company during the interview process, before you sign your offer and before you start, the better off you will be as you transition into your new CFO role in the first 90 days.

As part of our complete CFO Search service, we provide the new CFO with our Accelerated Transition Program. This program coaches the CFO to get them up and running smoothly and quickly. (We also deliver our Accelerated Transition Program to CFOs who were not placed by us).

The ‘bible’ for successful transitions is “The First 90 Days – Critical Success Strategies for New Leaders at All Levels” by Michael Watkins. Published in 2003, this book is the guide that we use in all our New CFO Transitions. Watkins clearly describes the process to ensure the success of a new leader, including the CFO. Our CFOs appreciate the coaching we provide in conjunction with this important handbook.

I do not want to summarize the content of the book here as I really could not do it justice. However, here are some additional recommendations that CFOs should consider as they embark on their new CFO position.

1) The numbers. A New CFO should really understand the numbers before walking in on Day 1. You should have reviewed the Financial Statements of the company for the last 5 years, including the MD&A (if publicly listed). You should review the current budgets or forecasts and the business plan going forward. You should not be learning this information when you’re at your desk – there will be too much to do once you’re there.

2) Relationships within the company. Yes. I harp on relationships. That is because they are the most important factor for your success with your new employer. I can’t stress this enough. Know your CEO, Board, your fellow VPs and your team. I urge you to follow the guidance in “The First 90 Days” on how to make the most out of these relationships. Remember, you may be the numbers guy or gal, but you will only be able to accomplish and become a Successful CFO by working with and for the people at your new employer.

3) External Relationships. Bankers, Lawyers, Auditors, and of course Investors. You are the CFO. You represent the financial face of the company. They may not have hired you, but they will have to deal with you. Don’t forget, you need them to trust you.

4) Understand the business. You need to really and truly understand the inputs, process and outputs of the company. You need to be able to internalize why people buy your product or service and understand the company’s value proposition. The role of Finance is to support the business. You can only support it if you truly understand it.

5) Smile. It’s simple. No one likes a sourpuss.

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Ask Samuel: My Company hired a new CEO

Dear Samuel,

I was hired by my current employer 3 years ago. Recently the Board decided to hire a new CEO.

The new CEO has been here for a month, and I’ve met with her a few times. I have to admit, I’m concerned about what will happen to my position.

What can I do to secure my role with my Company?

Insecure in Secaucus

Dear Insecure, 

You face a challenge that many CFOs have faced before you. A good number of these CFOs ended up in a career search.

This is not necessarily the way it needs to be.

The good news is that you can do something about it.

Essentially you need to consider your situation like you’re interviewing for the CFO role, except you have an advantage – you know a lot more about this company and position than for any other job you have ever applied for.

Prove your value. The CEO is your new boss – She didn’t hire you, she acquired you. Prove to her that you are the best person to be CFO. Listen. Ask questions. Understand her strategy. Find out what information she needs from Finance to be a Great CEO. Gain clarity on what support she needs from you in the short term and the long term.

I’ve discussed the importance of relationships for CFOs in the past. There is no more important relationship for a CFO than the relationship with the CEO. 

Making this new situation work takes work. Prepare your plan, and put it into action.

You do not need to be a casualty of a new CEO.

If you need to discuss the specifics with me about this, give me a call at (201) 961-0838. 

Good luck,

Samuel

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Does a Small yet Growing business need a CFO?

You might think that given what I do, I would say “of course”.

I recently read a great piece by Janine Popick in the Huffington Post called Small Business CFOs: Do You Need One? In this article, Janine discusses the personal story of the growth of her company, Vertical Response, the challenges they faced as they were growing, and not having the right finance resources when they needed it.

Janine’s honesty is refreshing. She mentions that there were numerous times she needed to take decisions to bring on the right finance resources, but her concerns of cost overrode her need to build value. She also admits there were things she did not know.

The fact is many entrepreneurs of growing companies face the same issues. And make the same mistakes. I highly recommend this article to any entrepreneur who is building a growing business.

So, does a small yet growing business need a CFO?

If the business is small, growing and simple, I would say no.

If the business is a complex business (where revenue is not a simple formula, where there is innovation in the product or service and where new investment is needed regularly to accomplish success) I would say yes.

My recommendation to entrepreneurs of growth companies is: If you’re not sure, there are people you can ask. You can approach an entrepreneur of a successful growth business (like Janice) for their input. You can seek advice from the people that have invested money in your business (or people you hope will invest money in your business) for input.

Or, as one entrepreneur did last week, you can ask me.

Related Blog Posts:
More companies are ready for their first Real CFO
CEO and Investors: Are you ready for your First CFO?
New CFOs and the Entrepreneurial CEO – How to make it work

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New CFOs and the Entrepreneurial CEO – How to make it work

I have been privy to viewing (from near and far) many successful entrepreneurial businesses over the last 20 years. I have always been fascinated by how one person (or a small group of people) can create an amazing business out of nothing. It takes a certain type of individual to have the motivation, drive and skills to be a successful entrepreneur.

I have also seen many entrepreneurial companies reach a ceiling on their growth potential. The management structure and style that has made them the success they have become can no longer support continued growth without a radical change in how the company is run.

This inflection point is where it can continue its growth and success.

Or it can all fall apart.

It is at this time that the Entrepreneurial CEO, driven by his or her own logic or by outside forces (usually external investors), understands that he or she needs to hire a Real CFO.

I have been called in to situations like this to help with the CFO Search. The biggest challenge CEOs face at this inflection point is emotional, not logical.

A recent article by Alix Stuart in CFO.com called How to Avoid Power-Hungry Bosses discusses this issue, and provides a 7 point check list on how to avoid a “Control Freak CEO.”

From my vantage point, the challenge for CFOs as they assess new and exciting opportunities is more than just avoiding difficult situations. The challenge is: How does a new CFO “make it work” with an Entrepreneurial CEO on the cusp of major change?

In essence, the company needs to be ready for a Real CFO. For an outside CFO candidate on the verge of accepting an offer from a growing company, this is difficult to assess.

The Question for the incoming CFO is: Are they ready for a Real CFO?

The Question for the Entrepreneurial CEO is: Are we ready for a Real CFO?

For companies facing this important point in their growth, I always recommend our CFO Readiness Program.

You can learn more about our CFO Readiness Program by reading our blog – CEO and Investors: Are you ready for your First CFO?

If you are a New CFO getting ready for (or having just started) a new role in a growth company with an Entrepreneurial CEO at the helm, you need to learn more about how this CFO Readiness Program will help you help your new company.

If you are an Entrepreneurial CEO that knows you will be facing an uphill battle in the move towards a more corporate structure, our CFO Readiness Program will equip you and your entire team to make the shift with more impact and less pain.

If you are an Investor in (or on the Board of) an Entrepreneurial Growth Company on the cusp of change, investing in CFO Readiness will take the guessing out of making the shift to the more corporate environment that will make you sleep better at night.

So, how does a New CFO “make it work” with an Entrepreneurial CEO on the cusp of major change? With the CFO Readiness Program.

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Negotiating your CFO Employment Contract

Congratulations! You have been offered the role of CFO at a company you are excited about. You’re buzzed, and pleased with yourself, and so you should be. However…

… keep the following in mind:

    1. From my experience, most CFO roles last an average of 3 years. The time to prepare for your next job is today.
    2. The best time to negotiate the terms of your employment is when you begin your employment.

Some Warnings:

    1. Be sure to have an employment contract. An offer letter may not be sufficient to protect you.
    2. Have the employment contract reviewed by competent counsel before signing.
    3. Do not resign from your previous role without ALL the details being worked out.
    4. A proper employment agreement not only protects you, it protects your new employer as well.

Now, let’s take a look at some things you should be looking for in an employment contract.

(Please note: I am not offering legal advice. I am reviewing points worth considering when negotiating your CFO employment agreement. For specific advice with regards to your employment situation, I recommend discussing it with competent counsel.)

Issues to consider for your employment agreement.

    1. Base compensation – you know how this works. You want more and they want to give you less. This is where all those years of sharpening your negotiation skills come into play.
    2. Upside – regular bonuses, special bonuses, stock based compensation etc. – many conflicts arise because of lack of clarity on how this works. Be sure it’s clear.
    3. Severance – you may be asked to leave. It happens. Having clarity on what happens if you are asked to leave is important not only for your cash flow after you leave, but for your reputation as well.
    4. Notice – you love your new job, but a better one might come along. What will your responsibilities be upon leaving?
    5. Restrictive covenants – usually includes non-disclosure and non-competition clauses, but may include others. It may be detrimental to your new employer for you to take your next job at a direct competitor. Ensure that the time limits on these restrictive covenants are reasonable, and get competent legal advice as to their reasonability.
    6. Relocation – there should be no guessing games when it comes to relocation for your new role. Will they cover moving expenses? Transition costs? Cover your ‘out-of-the-money’ mortgage? Clarity here is key.
    7. Other benefits – What will be offered in insurance (health, life, disability)? Will there be a car? Access to the corporate jet?

Issues outside your employment agreement that you will want to have a clear understanding of prior to accepting:

    1. Office – I have seen CFOs get off on the wrong foot when they get an office that was not what they were expecting. It can really sour the relationship.
    2. Resource support – Will you get an Executive assistant? Will you share one? Will you get to choose your own? (See Does a CFO need a PA?)
    3. Allowable expenses – What expenses will you be allowed to charge to the company? Is there a policy for executives?
    4. Professional Development – You should have a budget for allowing you to attend conferences you deem necessary to ensure you are on top of your game. You don’t need to be going hat in hand to the CEO each time.
    5. Coaching – Does your CEO have a Coach? If he or she does, then you should have the budget for one too. If your CEO doesn’t have one, you should recommend that he or she gets one. (See 5 Reasons why you need an Executive Coach)
    6. Team Headcount or Staff Budget – Before accepting the role as CFO, you need to know what the cost of your team is, and get clarity on the leeway you will have to make changes you feel are necessary to deliver to the rest of the company. (See A Strong CFO needs a Strong Finance Team)
    7. Onboarding – Ask what the plan for “Onboarding” is. You might get blank looks. Make sure that you have an onboarding plan that allows you to develop the internal relationships necessary for success. (If you want to know more about Onboarding, we will be posting a Blog on the topic soon. Click on the “Sign me Up” Button on the right to get blog updates directly in your email inbox).

Special situations.

In special situations, keep this in mind: When the company’s risk increases, so does yours.

    1. Restructuring – if you start off in a restructuring situation, or you are called upon during your mandate to turn the company around – you need to address the following situations.
      • Bonuses. If you accomplish the goals set out, you should have potential for an upside. Be clear on what the upside is.
      • Getting paid. You’re working hard for the company. If the company has no cash, and you’re busting your chops, what is the guarantee you will get paid.
      • What happens on bankruptcy, buy-out, new investment etc. How do you protect yourself and your career? Work these things out in advance.
    2. CEO leaves permanently or temporarily – It is time to renegotiate. (See Are you a CEO in Training?)
    3. Poison pills and takeovers – time to renegotiate.
    4. Where the CEO or other executives are getting special compensation privileges, it may be time for you to ask for more as well.

Remember, a key reason your new company is hiring you because you are supposed to be a great negotiator! Show them how you negotiate a win for all sides.

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Become a Better CFO: Be on Trend. Create your own Luck.

I received this video in my email yesterday, and I wanted to share it with you. I was fortunate to be attending a conference in May 2010 where Mike Lipkin was the keynote speaker.

[Sidenote: I have always been skeptical of Motivational Speakers. It was never my style. But I ended up in a room with Mike Lipkin and he is one person I thank for making the changes in my life and career that has brought me here today].

If you are the kind of person that does not like motivational speakers – do not watch the video.

If you are the kind of person that likes to hear new ideas, be current, and are open to change and improvement, go ahead and listen.

Based on the research done by Mr. Lipkin’s company, Environics Lipkin, Mike explains these seven powerful and current trends that have the ability to make you a Better CFO.

    1. Instrospection and empathy.
    2. New social responsibility and community involvement
    3. Social learning and cultural fusion.
    4. Vitality and effort for health.
    5. Rejection of authority and support for government.
    6. Equality of the sexes.
    7. Pursuit of originality.

If any of these trends interest you and you would like to understand them better, watch the video.

Do any of these apply to you?

Can you be on Trend?

Will following any of these trends help make you a Better CFO?

As Mike says “You may be the one that others have been waiting for.”

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CFOs: Are you a CEO in training?

The news of the replacement of Carol Bartz as CEO of Yahoo by Tim Morse, the CFO (as an interim position) brings up interesting points to ponder for the CFO about their career path and career plan.

As I was at my desk thinking about what CFOs could learn from the Yahoo news, the phone rang and it was the Wall Street Journal wanting my take on this news. You can read the article and my quotes in the article by Emily Chasan, When CFOs Become Interim CEOs.

This Yahoo succession story should make every CFO look in the mirror and ask themselves:

If I get the call to be CEO,

    • Can I take it?
    • Should I take it?
    • Am I ready to take it?
    • Do I have what it takes to take it?

Most CFOs will admit to second guessing the CEO on some of their decisions. It’s easy to think “I could do a better job”.

When a finance executive moves up the ladder to become CFO, they need to move out of their comfort zone of being technical to become a strategic finance leader. A CFO can only move to the CEO role if they have taken steps to move beyond finance.

What are you doing as CFO to learn, grow and challenge yourself? (Hint: Get a Coach or a Mentor)

Are you a CEO in training?

If you get the call, would you be ready to become CEO?

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CEO and Investors: Are you ready for your First CFO?

Companies in growth mode face great challenges. One of the biggest challenges a growing company faces is bringing in their first Real CFO.

In a previous post we reviewed an article written by Emily Chasen in the WSJ CFO Journal about how More Companies are Ready for their First CFO.

A growing company built on entrepreneurial spirit can only continue to grow so far on that spirit alone. At a critical juncture in the life of a growing business, it needs to make a transition from decisions made by the entrepreneur alone to a dynamic team that works on a business model of delegation of responsibility and co-operation between interests within the company.

This is an inflection point for many successful growth companies — when a CFO is recruited because the management disciplines that grew the enterprise to its current state will not be enough to take it to the next level.

Intellectually, the CEO and other key managers may know things need to change.  But that doesn’t mean they’ll be comfortable with a CFO who asks tougher questions, instills new disciplines or has a fiduciary responsibility to the investors as well as a loyalty to the management team.

So, what is the answer?  How do you strengthen CFO readiness when the next level of success takes people out of their comfort zones?  Courage.

That’s why we developed our CFO Readiness Program in conjunction with Dr. Merom Klein & Dr. Louise Klein, leaders of the Courage Institute.

The Courage Institute wrote the book on The Courage to Act — about 5 Courage Factors that equip effective leaders to challenge the status quo, champion new possibilities and get traction on breakthrough ideas and improvements. This is the foundation of the CFO Readiness Program.

The CFO Readiness Program is an assessment, feedback and action planning program that works to equip  the entire executive team to:

    • Strengthen and align your veteran executives — so they have the courage to welcome new thought-leadership and collaboration
    • Clarify your wish-list of expectations and priorities for the new CFO
    • Prepare for healthy debates and challenges to “the way we have done things here” as the new CFO identifies new opportunities
    • Equip the new CFO to conduct an independent assessment of your enterprise’s infrastructure, financial well-being and resources
    • Ensure career paths and mentoring opportunities for the finance executives who brought the enterprise to its current level
    • Identify fears, sensitivities and bridge-building that the new CFO could face — and ways to build courage to lift performance
    • Lift courage to embrace and accelerate change to get traction on new metrics, new ways of working and new ways to ensure regulatory compliance and good investor/board relations
    • Identify debates, deferred decisions and risk factors that the new CFO will face — and the input desired from the new CFO
    • See how to move past rivalries, turf-issues, personality clashes and other fear-inducing courage inhibitors that can reduce luminary efficiency at the executive and middle management levels
    • Invite scrutiny and transparency to sharpen up team thinking
    • Navigate matrix structures, networks and alliances — where it is not clear “who is in charge” or “who settles which debates”
    • Overcome fear and reluctance — as veteran members of the executive team are asked for courage to share decision-making discretion and authority with a new CFO

To receive a copy of our brochure and find out more about how our CFO Readiness Program can help your company, please complete this form:

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CFOs: 5 Reasons why you need an Executive Coach.

You want to be a Successful CFO. You’ve worked hard to get where you are, and you want to continue being the best CFO you can be.

If you are like most CFOs, you have never had a Coach before. Most likely, you’ve felt that you’ve never had a reason to. Your career success to date has been because of you have been good at applying and improving your knowledge, strengths and abilities.

Except…

The world is changing.

The business world is changing in front of your eyes faster than it has in your entire career. Markets and the economy are changing. Technology is changing. Customers and Suppliers are changing. The demands of your owners, board members, investors and regulators are changing.

Are you staying the same?

Now is the time to step up your game.

The good news is – most of your fellow CFOs are not stepping up their game. They are getting comfortable. They have finally achieved their career goal of becoming CFO and they feel it is time to coast.

They are coasting their way out of the CFO chair.

You, on the other hand, want to make sure that you become the most Successful CFO possible.

If you are ready to step up your game, get yourself an Executive Coach.

Why do you need a CFO Coach? Let’s take a look at the reasons why.

    1. Plan – Do you go into the office every day and just fight fires? Or do you have a plan with long-term, medium-term and short-term objectives that will help you accomplish more with less fire-fighting. Failing to plan is planning to fail. (See our Blog – From CFO Vision to Action Plan)
    2. It’s Lonely being a CFO – You need someone that will listen to you, provide you with advice, guide you, challenge you, and keep you at the top of your game. (See our Blog – The Lonely CFO)
    3. Relationships – you are no longer an accountant. It’s no longer just about being technical. You need to manage your relationships. (See our Blog – Roadmap to Successful CFO Relationships)
    4. Feedback – Now that you are at the top of the Finance Group in your company, do you really expect the people that work for you to provide you with objective feedback? You want someone candid and practical to give you the feedback you need.
    5. Stress – remember the days when you left work at the office? If you do remember those days, I’m sure it is a long time ago. Managing the stress of being CFO is difficult, yet critical to your company as well as to yourself and your family. Expressing yourself and talking about what stresses you can go a long way to actively managing your stress, ensuring you get a better job done in less time.

Wouldn’t you love to…

    • have a plan?
    • be less lonely?
    • manage your relationships better?
    • get constructive feedback? and
    • be under less stress?

Email me to arrange your first Coaching session – FREE.

You have nothing to lose.

Let’s talk!

Contact Information

You can reach Samuel by:

Telephone
San Francisco: +1 (415) 738-2070
Montreal: +1 (514) 907-0925

Email: samuel@dergelcfo.com