How To Hire A CFO

A Chief Financial Officer (CFO) is an executive-level person who is in charge of everything to do with finances for a company. They determine and formulate financial policies and coordinate any financial activities at the highest level of management with the help of subordinate executives and managers.

A good CFO will help make the right financial decisions for a business to ensure growth and profit, and it is important that they have the right skills and abilities to make that happen in the most effective way possible.

Finding the right candidate for the role can be challenging, but in this article we will discuss what a CFO does in the role, what specific skills and abilities you should be looking for in a candidate, and the best way you can test for those competencies early in the recruitment process for quicker and more effective hiring.

What should a CFO be able to do?

The main role of the CFO is to manage financial policies, procedures, and functions at the highest managerial level for a company. CFOs might work in the public sector or for non-profits, and they can also work for private companies or those that are publicly traded.

At a very top-line level, the CFO will direct and coordinate financial and budget activities for the business. This includes setting budgets and targets specifically to fund operations and activities, make the most of investments, and increase efficiency with the aim of improving profit margins.

The CFO will determine areas that could see some cost reduction, and work with other executives to work through budgets for approval. They will need to be able to develop and implement systems for budget control and bookkeeping, and ensure that all contracts and agreements are negotiated appropriately and fairly.

As the leader of the financial side of the business, the CFO will also have responsibility for appointing department heads and managers, establishing departmental responsibilities and coordinating functions across multiple departments and sites where necessary. They will need to assign and delegate responsibilities so that subordinate executives and managers are clear on their own duties and can manage their departments effectively.

In terms of the executive function of the role, the CFO will need to meet with other director-level staff to discuss issues, and resolve problems, as well as coordinating work activity with a focus on improving efficiency and reducing wastage. They may need to work with board members and other interested parties, including making presentations and hosting information sessions.

Skills to look for in a CFO

Aside from the extensive experience that you would expect someone who has applied for a top executive-level role to have, there are some other prerequisites that you might be looking for, such as an MBA or equivalent. However, there are some other skills that a successful CFO needs, including:

• Accounting Software: accounting software skill is necessary at any level of the finance department, and skills in one type of software are often transferable to others. While they might not be directly inputting data into these systems, they need to know about them to be able to perform good financial analysis.

• Complex Problem Solving and Critical Thinking: a logical and methodical mindset is needed to solve financial problems and come up with a consistent course of action to follow when solving problems. This will also help with the financial analysis side of the role.

• Mathematics: a leader in the finance department needs to have strong mathematical skills, especially when it comes to manipulating data for analysis and making forecasts.

• Management of Personnel: executive-level positions are most likely to come with high-level people management, so the skill of handling personnel resources is a necessary one for the CFO.

• Negotiation and Persuasion: CFOs often need to make tough decisions to get the best financial outcome for a business, which means that they need to be able to successfully negotiate with others and persuade them to follow a specific course of action.

Useful abilities for a CFO

Abilities are another part of the profile of a CFO, and they are not always easy to identify through a resume or even in an interview - but they are essential to success. Some of the abilities that a CFO should have include:

• Oral and Written Comprehension and Expression: the CFO needs to be able to understand the information given to them both orally and in writing, and they also need to be able to express themselves effectively in the same way.

• Inductive Reasoning: making decisions at the executive level can mean using unfamiliar or broad data and using it to formulate specific conclusions - so inductive reasoning is the ability to turn generalized information into specific decisions.

• Mathematical Reasoning: aside from the skill of mathematics, the ability to use math principles to gather and manipulate data into usable information which leads to reasoned decisions is something that a CFO needs to be confident in using.

• Fluency of Ideas and Creativity: although logical and considered thinking is needed to be a CFO, when dealing with problems and issues, whether financial or personnel-related, a degree of thinking outside the box can make decision-making more effective and efficient.

• Selective Attention: the CFO has many different roles to play on a daily basis, and while they need to be adaptable to survive, they also need to be able to focus entirely on the information that is in front of them and the task they are currently involved in.

Which soft skills tests could I use to hire a CFO?

Soft skills are essential to success in any role, and these tend to be the transferable skills that are not always obvious either in an interview or during the resume paper sift. There are tests that can be used to evaluate the level of soft skills that a candidate has, and the best tests to use when looking for a CFO include:

• Leadership: managing an entire department needs strong leadership skills, including everything from encouraging to delegating. The CFO needs to be able to demonstrate that they are comfortable with every aspect of leadership and managing people, budgets, and material items too.

• Decision Making: as part of the executive suite, the CFO is responsible for a range of different decisions that have to be made - so they need to be able to demonstrate that they can make good decisions based on all the available information.

• Communication: as with any top-level job, a CFO needs to be able to communicate effectively with everyone in the business, using appropriate language and conveying information in a sensible manner so that everyone can understand.

• Accountability: leading people and a whole department means taking ownership of everything that happens in that area - including mistakes. A CFO is ultimately accountable for everything that happens in the finance department and in the wider business in general when it comes to money matters.

• Project Management: the CFO is likely to be involved in a number of projects, often running concurrently - from increasing investment to making budget cuts. Project management skills are all about managing groups of people and actions, and also using delegation and negotiation skills to ensure that a project is completed effectively.

Which technical or aptitude tests could I use to hire a CFO?

Aside from the software knowledge that a CFO might need to be successful in a company (many bigger businesses might have bespoke accounting software that they use, for example), there are some aptitudes and abilities that should be evaluated in a potential CFO. Tests that can be used to look at aptitude include:

• Abstract Reasoning: abstract reasoning assessments are all about working with unfamiliar data and spotting patterns that can be used to make reasoned decisions. The CFO needs to be able to work through large amounts of data from different sources to be able to make good decisions.

• Situational Judgement: through a series of fictional workplace scenarios, a potential CFO can demonstrate how they would deal with different problems, using their best judgment and demonstrating their work behavior and personality.

• Numerical Reasoning: as mentioned before, working with mathematical skills is only one part of the role - the CFO also needs to be able to manipulate numerical data with basic mathematical functions to be able to make decisions and perform analyses.

• Verbal Reasoning: in this assessment, the candidate has to read and understand written information on various subjects, and use this to make reasoned deductions and reach the right decision.

• Emotional Intelligence: emotional intelligence is particularly useful in leaders; by being able to recognize different emotions in themselves and others, they are more able to manage people and get the best from them in a given situation.

Our recommended test battery for a CFO

There are a lot of skills, abilities, and competencies that a CFO needs to be successful - but using individual tests for all of these would be time-consuming for the recruitment team and quite off-putting for the candidate.

The following tests are the recommended battery for assessing the CFO candidates, taking into account the most important skills and abilities.

• Numerical Reasoning: the numerical reasoning assessment is a multiple-choice test. Each question consists of numerical data in the form of a table or graph, or a word problem. The candidate needs to use basic mathematical operations on the data provided to choose the right answer to the question.

• Abstract Reasoning: in this non-verbal assessment, the candidate is given a series of shapes and images in a sequence, with one item missing. They need to find the pattern or rule that governs the sequence, and apply it to the multiple-choice options to find the missing item.

• Leadership: in this assessment, candidates are given fictional yet realistic workplace scenarios to read. They will then need to choose the right course of action from the multiple-choice options provided to solve the problem through leadership skills.

• Communication: similarly to the leadership test, the communication skills test is scenario-based, with candidates needing to choose the best course of action to use their communication skills to solve a given problem.

For more details about how to hire the perfect CFO, there is a guide full of information on our CFO job knowledge test page.