‘Whenever you make a good hire you kick yourself for not doing it earlier’ — Troy Pospisil, founder of InCloudCounsel
‘Whenever you make a good hire you kick yourself for not doing it earlier’ — Troy Pospisil, founder of InCloudCounsel © Getty Images

When Troy Pospisil was setting up his own business, a cloud-based platform for companies’ everyday legal work, he was given some sage advice.

“Someone said to me: ‘Whatever you are best at, I can promise you your company will be the worst at, because you will delay bringing on strong leadership in that role because you think you can manage it’.”

Mr Pospisil, who has a background in finance, recalled the words a few years later when he found himself spending more than a third of his day on the accounts of his company, InCloudCounsel.

“In reality I needed to spend my day on growing the company . . . [not] getting bogged down in how we implement our new finance software,” he says.

And so began his search for a chief finance officer.

‘When you’re raising capital . . .  investors are going to be more comfortable if you have strong financial leadership’ — Troy Pospisil

For small organisations, the decision to bring a chief finance officer on board is a critical one. Founders have to time it right, know where to recruit from, and decide what they are looking for in a role that has changed vastly over the past decade to now encompass technology and digital transformation.

Duncan Hoggett, chief finance officer specialist at executive search firm Odgers Berndtson, says arriving at the best decision is about “understanding where you are on that growth journey”.

“As a business starts, often having someone that’s a strong accountant is all that’s needed . . . Your CFO would very quickly become bored if you weren’t scaling at pace,” he says, adding that a finance director — a less executive and senior role than chief finance officer — can help smooth the transition to CFO.

“The danger is you outgrow your finance director and find yourself missing opportunities . . . As you’re looking for investors, as you’re looking to grow, as you’re looking to make decisions around strategy, to what extent is finance providing the data for those decisions? If it’s not contributing in a satisfying manner, at that point you need a CFO,” he says.

As well as wanting to free up his own time, Mr Pospisil says bringing on a professional investment partner combined with the financial complexities of becoming a global business spurred the decision to recruit.

“When you’re raising capital it’s good to have sophisticated financial experience to support the process and investors are going to be more comfortable if you have strong financial leadership,” he says.

Timing can also impact the success of the recruitment process itself. “Whenever you make a good hire you kick yourself for not doing it earlier,” says Mr Pospisil. “But the reality is when you’re smaller, your budget might not support the kind of executive hire you ultimately want to make, and you may not be able to attract the type of talent that you really want.”

CFO remuneration can vary wildly depending on various factors including company size. Smaller organisations must not “undersell” themselves either, Mr Hoggett advises. If they are not cash rich, equity and the chance to shape a company from the ground up can make the offer more attractive.

Ann Cairns, global chair of the 30% Club diversity campaign and executive vice-chair of Mastercard, says the possible “K-shaped” recovery from the pandemic — where some companies’ growth accelerates while others struggle — has made it even more important for organisations to understand what they need.

“Is it a CFO who is going to be managing costs, to stabilise a company, or is it one that’s going to try and take advantage of this?,” she says.

Ann Cairns
Ann Cairns, global chair of the 30% Club diversity campaign and executive vice-chair of Mastercard © Anna Gordon for the FT

The pandemic has emphasised the strategic nature of a CFO’s role, she adds, as technology increasingly replaces manual tasks — for instance bookkeeping software that also offers reporting tools.

Other events, such as a float or fundraising exercise, will also help decide whether sector or skills-based experience is the priority, says Mr Hoggett. However, the most important thing is that the executive team gels well.

“In smaller and growing organisations, the critical factor is that you’re effectively a small family and when you’re bringing in an outsider, you’ve got to be sure that the chemistry is there, that everyone’s aligned, because it destabilises very quickly otherwise,” he says.

This was what led Mr Pospisil to recruit from his own network, eventually hiring a former colleague. He acknowledges, however, that leveraging a personal network risks ending up with a less diverse team, an area to which he says his company has since given more focus as companies with diverse leadership are more likely to outperform.

If the network had not delivered what he wanted, Mr Pospisil says he would have used a headhunter. “If you advertise your job you might get lucky, but normally the people you want to hire are not going to apply because they are happily entrenched in a well-compensated role, and you have to pull them out of there.”

Interim appointments can also be a saving grace, Ms Cairns says. “You can find people who’ve been CFOs of other companies who will step in and help you get yours into the kind of shape you want.”

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