19 Nov 2019
How to assess if your next CFO is the right one
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Appointing the right CFO demands a thorough assessment process so CEOs, Chairs and audit committees can identify the senior financial leader who is right for now and the future.
When a 2015 global survey by KPMG, 53% of CEOs said that, out of all the C-suite roles, the CFO function will gain the most importance over the short term, that prediction proved to be a sound one.
We expect that many of the trends we are seeing with respect to the expanding CFO role and increased strategic focus will continue.
With the role’s rising importance and complexity, filling your CFO position is more critical than ever. Ensuring there is a CFO successor who can meet increasingly- demanding requirements, whether internally or externally sourced, is a vital job for the CEO, the Chair and members of the Audit Committee.
The best candidate for the CFO position
This is how we ensure that you and the team have the best possible information and insight before you fill the CFO role. It begins with asking the right questions, and these are the ones our Leadership Assessment Services team will start with.
Key assessment questions. And answers.
The key questions for the decision-makers about potential CFO candidates are:
- Will they command leadership respect?
- Can they confidently deliver the technical brief?
- If they’re not ready now – when will they be, if ever?
To answer these questions, we take account of the following factors:
- Leadership capabilities (50% of their performance).
- Track record and expertise (40% of their performance).
- The motivation for the top job (the final 10% of performance).
- Leadership agility: their potential to address, and be successful when faced with new and different challenges.
Three-level evaluation of candidates
Having discussed and agreed on the success profile of the ideal CFO, we apply some key evaluation principles when assessing candidates.
- We gather data: this combines 360°views of internal candidates with independent profiles generated from online questionnaires, completed by the executives being considered. These cover:
- Intellectual capacity and flexibility, which remains the prime predictor of performance
- Personality traits, which tend to drive behaviours and the strength behind their leadership capabilities
- Self-awareness, which is a key driver of higher performance in C-Suite executives
- We validate the data: this is done via in-depth interviews and a leadership impact simulation (via an investor’s briefing and town hall call). The next stage is to benchmark the executive’s achievements, ambitions and capabilities against our LeaderFit model (which defines world-class leaders’ behaviours).
A CFO that’s ‘ready-to-go’ will have significant exposure to Group reporting, treasury and balance sheet management, as well as advising the board and investor relationships.
They will also achieve level 4 or 5 ratings in the following areas:
- Strategic clarity. Plus a strong contribution to future-proofing the chosen strategic direction.
- Results and change execution. Ensuring the portfolio of business and functional activities apply the right trade-offs and optimise the value from their assets.
- Stakeholder influencer. Capable of navigating adeptly as the CEO’s sounding board, a business partner for peers, custodian of company assets for the board, honest broker for shareholders (and regulator) and figurehead for the function.
- Dexterity of thought. Able to absorb, process and reach a satisfactory conclusion on issues of multiple complexities, beyond the finance and short-term perspective.
- Personal spirit. With the inner confidence, values and resilience to offer and withstand challenge, sprint when circumstances require it without sacrificing performance, despite prolonged ‘marathon’ circumstances.
- Growth proficiency. Successfully delivering an intentional leadership impact across a range of contexts because of regular, disciplined self-reflection.
- We apply judgment: We are always conscious that our reports and advice can have significant consequences on an executive’s future, as well as the fortunes of your organisation and its shareholders. This certainly justifies investing the time to reach a conclusion that rigorously considers all the implications of our rich data set.
Potential is the most difficult question
If a candidate is not quite ready now, how will you know when they might be, or if they’ll ever be ready? It’s an important question to answer when considering those eager to step-up, and in matters of succession and career development.
Our experience and expertise can help you weigh up the combined data, as well as the potential impact of the intellectual capacity, dominant personal traits and self-awareness that will determine the extent of a candidate’s potential, and whether it will be best realised on the CFO track.
The evolving CFO
Finally, to help you understand the skills and traits of a great CFO as the role evolves, we've produced a downloadable guide. It draws on our experience of leading successful CFO searches and assessments for some of the world’s biggest companies, reflects on our clients’ evolving expectations and needs when hiring CFOs, and analyses market trends across our global network.
The evolving CFO
Register to download 'The evolving CFO' guide now.Register now