The Cost of an Unsuccessful CFO Hire
A 2015 study cited in the SHRM Daily Newsletter suggested that “the biggest cost of a bad hire might not be financial.” The study surveyed 2100 CFOs and found that their chief concern was degraded staff morale and loss of productivity. Monetary costs came in third.
Now imagine that the bad hire is the CFO themselves.
The CFO is not only at the top of the financial structure of the company, but also a member of the executive leadership team, so the cost in morale is not only in the finance line but to the executive team as well, some of whom including the CEO participated in the vetting and hiring process. Add that to loss of productivity, the time to fill the position, and the damage is very real.
The cost of onboarding a new C-suite employee has been estimated at $240,000. And, according to the U.S. Department of Labor, the price of a bad hire is at least 30 percent of the employee’s first-year earnings. A five-figure investment in the wrong person is a threat to any business.
According to Salary.com the median base salary for a CFO in the United States is $362,030, and the median total compensation package (including bonus, healthcare, and retirement) is $506,386.
Another recent survey indicates that while average jobs are filled in 43 days, it takes an average of 71 days to fill a C-level position and 76 days for a position with “director” or “vice president” in the title, so add in the cost of a vacancy in financial leadership for half a Quarter.
Especially at a young, bootstrapped company, hiring can feel like a high-stakes gamble. Here’s the hard truth: Every company will make a bad hire, and there’s no formula to ensure every new employee is a great one.
But when you treat recruitment with the reverence a company-altering decision deserves, you stack the deck in your favor. Use of an expert professional recruiting firm will significantly tilt the odds in your favor. According to the website The Strategic CFO, the average tenure of a CFO today is 5.63 years, depending on the CFO’s generation – for Millennial/Gen Y it’s 4.38 years, for the “Silent Generation” it’s 10.8 years. Using the overall average, a company that is around for 30 years can expect (assuming good hires) to hire CFO’s five or six times in that period. An expert executive recruiting firm will locate and present for hiring many times that number. Long term dedicated recruitment experience within accounting and finance, coupled with dynamic culture assessment can make all of the difference between the wrong CFO hire and the right one.
BrainWorks is a prominent boutique executive search firm offering a 29-year track record of successfully sourcing and placing top talent. By harnessing proven strategies, collaborating with stakeholders, and leveraging a diverse and talented candidate network, BrainWorks helps businesses find, attract, and ultimately hire talented professionals that create differentiated results. To learn more about how Brainworks can help you, contact us.