Hiring Finance Help – How do I Find Great Candidates?

I recently wrote blog posts addressing signs it’s time to hire finance help, as well as what role you should be hiring for and when. To continue this discussion, a number of True Founders and partners have asked that I share thoughts on the specifics of the actual hiring process, namely:

• What are the best ways to surface candidates?
• How should I think about the role of a search firm?
• How long will this process likely take?

So, without further ado, here are some thoughts:

1. What are the best ways to surface candidates?

As you might expect, the answer to this question depends a little bit on the level of seniority of the candidate you are looking for (e.g. CFO versus a controller). However, there are some common themes to keep in mind:

• The very best source of candidates at all levels is a personal relationship or referral. Someone you know and have worked with at a prior company can be an easy cultural fit. One of the first things I suggest to Founders is to think about prior situations where they had a great finance resource, and reach out. Finance people tend not to network broadly and sometimes need to be prodded to think about new opportunities.
• Along the same lines, be sure your personal network is aware of your need, as there may be someone close to one of your colleagues who is not “in the market,” but might be convinced to take a look at your opportunity.
• Researching competitive companies that are having issues occasionally surfaces a candidate who might be uneasy about their current situation, but not yet openly in the market looking for their next opportunity.
• Searches on some of the classic tools liked LinkedIn can also bear fruit, although I have personally found this to be a bit of a needle in the haystack situation unless you have HR/recruiting resources with a lot of experience.

If you used a CFO/accounting firm in the early days of your company, you may find a quality candidate through them. In many cases, the engagement letter with these temporary firms will stipulate a “finders fee” if you hire one of their people, so proceed with caution in offering a temporary person a permanent spot.

You may ultimately decide that a search firm supporting the hire may be best, which brings us to our next question: 

2. How should I think about the role of a search firm? 

As with many decisions you make as a Founder, the decision about hiring a search firm to assist in finding finance talent is mostly dollar cost weighed against the use of management time. You do not want to waste time and money evaluating too many candidates, or worse yet, hiring the wrong candidate.

As the seniority of the position you are filling increases (e.g. CFO, VP Finance, Controller), the benefits of using a professional search firm outweigh the cost. Unless you get lucky with your personal network, hiring a CFO is best done with support from a search firm, while the benefits in hiring a controller or VP finance using a search firm are a little less obvious. For these positions, you may be best served with a “contingent” search firm, rather than a “retained” search firm.

First some details on these two types of search firms, as working with each is fairly different:

Contingent Search Firm

A contingent search firm is often the best partner for lower-level searches. I have seen contingent search firms that are focused on controllers in particular to be useful in my prior lives. The fee levels paid to a contingent search firm are generally 10–15%, and nothing is owed unless you hire the employee. My key advice here is to avoid working with multiple contingent firms at the same time, and to not accept any resumes from a contingent search firm until you have engaged them. Every resume you get in your hands in a bulk mailing of resumes entitles them to some fees, even if this is somebody you might find in your own network.

Retained Search Firms

Retained search firms charge a specified fee that is generally computed to be 25–35% of total cash compensation paid to a candidate. Sometimes the fee will be set at a specified amount, and sometimes the final fee will be   calculated at the end of the engagement. Retained firms generally specify payment of their fee over three installments. Fees to a retained search firm are owed whether or not you find and hire the “dream” candidate.

3. How long will this process take?

As you plan to hire finance help, I would suggest that hiring a candidate in fewer than 60 days is unlikely, unless it is someone you already know. If you decide to do a search for a senior leader in the CFO role, it is much more likely to take 120 days or more.

My next set of posts will address reviewing resumes, and when it makes sense to start reporting financial performance using Generally Accepted Accounting Principles (GAAP). If there are any other topics you’d like to see covered, please tweet your request to @trueventures.