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Do you need to be a CPA to be a CFO?

cpa to be a cfoNot too long ago, the Academy Awards took place, and they played reels of the Academy Awards that happened in the past 80 or so years. It reminded me of the time when I showed my grandson an old western movie… I thought some of the parts were hilarious, but my teenage grandson was horrified by the social commentary.

What do the Academy Awards and Old Westerns have to do with traditional CFO practices? There are norms that are acceptable now that were never allowed before. When the audience changed, the Academy adapted to the audience. So when the new generation steps into your office, you have to re-evaluate what it really takes for them to advance their career. Some might have capabilities of a CFO, even though they haven’t traditionally trained for it.

In the past, there was a certain path that you take to become a CFO. Some think the key is being a CPA to be a CFO. But now that times are changing, is it really necessary?

We like to talk about technology, millennials, current events, and politics, but they pretty much all say the same thing: if we constantly live in the past, we won’t have much of a future.

Timeline for a CFO

My friend’s nephew is graduating in accounting, and he’s wondering… “Do I need to get a CPA or MBA?” In other words, do you need financial expertise to be a financial leader?

Now don’t get me wrong… some people are really successful in this path. In fact, I definitely agree that CFOs, or any financial leader in general, should have a broad range of skills other than financial skills. Here is a pretty common path to CFO success:

cpa to be a cfo

Earn a CPA to be a CFO (and/or MBA).

Some might say you won’t have a successful financial career without a CPA license. The primary purpose of a CPA is for financial authorization, such as auditing and reviewing financial statements. Careers in finance such as accounting and auditing mostly require a CPA. Benefits of a CPA include larger salary potential, more career opportunities in larger companies, job security, and trust within larger companies. Larger and older companies with more revenues require more tenured and experienced employees.

MBAs are more broad. Studies show that those with MBAs have higher employment rates (around 60-70%) and higher base salaries. With MBAs, you can specialize in skills in addition to finance, such as supply chain, marketing, management, etc. So if you’re looking to gain new skills other than finance, MBA might be a better choice.

Gain Financial Experience Within the Company

Typically within the first few years, new hires will learn the basics such as budgets and accounting. As time and experience grows, new opportunities are formed, such as capital investments and larger accounts. Financial employees will gain expertise in skill sets before moving on to the next step.

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Take on Bigger Roles Outside of Your Comfort Zone

This is where getting an MBA and taking initiative comes in. CFOs are more than financial experts – they are leaders. By this point, basic accounting practices should be like reciting the alphabet… it’s that easy.

Financial leaders should always want to learn more skills. Taking on bigger roles outside of their comfort zones reflects that mindset and makes them stand out against their competitors.

Hold Controller Positions

This is pretty self-explanatory. The controller positions create more responsibility for the financial leader. After all, how can they handle a C-level position if they can’t handle a standard leadership position first?

This seems like a pretty solid path, doesn’t it?

Looking at companies now, however, aren’t as “solid”… and here’s why:

Modern-Day CFOs

When you think of a CFO after 2012, what do you imagine? Long gone are the days of bluetooth-talking, pinstriped suit-wearing CFOs, white-haired males. When I picture a modern-day CFO, I picture someone in a plaid long sleeve, young, and focused on multiple aspects of the company. That seems like an exaggeration, because it is! Overall, it is also a representation of how different the CFOs of today are, compared to Generation X and Baby Boomers.

The Past 5 Years

In our survey held in 2015, the average tenure for a CFO is 3-5 years. This contradicts the timeline above… Why would a CFO want to work 3-5 years after 15+ years of building his or her career?

As generations evolve, the tenure decreases. For example, the average tenure for millennials, according to our survey, is around 4 years.

cpa to be a cfocpa to be a cfo

2015 Survey Results: https://strategiccfo.com/blog/results-average-tenure-of-a-cfo-survey

Over the past 5 years, the CFO role has proven to be more complex and centered on leadership ability. CFOs now are more adaptable to change, hence the short tenure of a CFO.

The Next 5 Years

Ever heard of the “gig economy”? It’s the growing trend that contract workers and short-term “gigs” are commonly practiced. A great example of this influence is a friend of mine, who has 35-40 years of financial leadership experience. He recently quit his job, and is now looking for contract work. This puzzled me at first. He is a great person, and a very knowledgable asset to any company. As you can see, the gig economy is not only for the millennial generation. It’s a growing trend, for all leadership types.

Is this a reference for the trends to come? In the next 5 years, we can expect more contract work and less “climbing the ladder”… like getting your CPA to be a CFO.

Conclusion: Learning to Adapt

One of the ways we can grow as companies and financial leaders is to learn to adapt. If the world is shifting closer to a gig economy, explore that theory. If the average tenure for a CFO is less than 3 years, maybe we should change our hiring and training practices. Anything is adaptable if you’re constantly taking initiative and thinking one step ahead.

Don’t forget… the CFO is the CEO’s wingman. Learn how you can be the best wingman with our free guide!

cpa to be a cfo

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How to Hire a CFO Controller

How to Hire a CFO Controller

When you need to hire a CFO Controller, there are a few steps that you need to take prior to the actually hiring. Start the ad placement process by first asking yourself a few questions about your company. How does the company describe itself, its culture and industry space? What intangibles are you looking for? What sort of hard skills and experiences the position will require? You must be prepared to set expectations regarding the typical tenure and career track of that position as the company grows. Come up with a list of points to cover. Other issues to consider include the salary for the position, start date, travel expense for interviews, and relocation package. Ad Placement Options: Houston Chronicle, Monster.com

Accentuate the positives when writing the placement ad.

It is also important to manage your expectations in terms of the candidate pool. For instance, in a good economy it may not be so easy to get good candidates. Certain compromises on geographical search area, salary, and moving expenses may need to be considered. You may also need to clarify your stance on candidates with short work tenures (i.e. job hopping).

Filtering Resumes

Things to look for include: industry experience, education or Certification- CPA, MBA and specific experience sets (Ex: Systems Implementation, Financial Transformation)

Initial Screening/Phone Interview

After you have screened for your top candidates, you are now ready to begin contacting them and set up an initial phone interview. For out of town candidates, you may want to advise them of the company’s stance on interview travel expenses and/or relocation package.

Ask the following questions to candidates:

1. What are you looking for in a position?

2. Tell candidate about the position and the company

3. Would this be acceptable to you? Is this something that interests you?

4. What are your salary requirements?

5. When can you start?

6. Can you provide any references?

Summarize and review each candidate

Make sure to cover areas such as education, industry and work experience, salary expectations, etc. And then, identify the top 2 candidates from your round of phone interviews. Out of the total pool, prepare a list of 4-5 candidates for an office interview.

Office Interview

Start off by deciding who should be involved in the interview. Confirm open time windows in their schedules. Decide on the type of format that you would prefer: group or one-to-one? Start thinking about what you would like to see out of the interview.

On the candidate side, obtain the interviewee’s permission to contact their references. If they have not yet provided any, this would be a good time to ask for them.

Hiring Process

Once you determined whom you are hiring, you are now ready to begin the hiring process. Decide who should do the reference and background checks. When all reference and background checks have been completed, contact the candidate to inform them of their hiring status. Then go over the salary and benefits. Follow-up your conversation with an offer letter. Make sure that compensation is on a period basis versus an annual basis. Giving an annual pay may infer a contract which may open the company up for possible litigation in case of termination.

Background Check

There are a variety of companies that are able to conduct background checks on employment, criminal history, education, references and professional license status:

Here are some for your reference:

1. Kress Employment Screening

2. Choicepoint

3. ADP Screening and Selection Services

4. Personnel Profiles

5. Inquest

In order to determine which candidates are the right fit for your company, download and access your free white paper, 5 Guiding Principles For Recruiting a Star-Quality Team.

hire a cfo controller

Strategic CFO Lab Member Extra

Access your Recruiting Manual Execution Plan in SCFO Lab. The step-by-step plan recruit the best talent as well as avoid hiring duds.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

hire a cfo controller

See related article: How to Hire New Employees

See Also:
How to Choose An Independent CPA or Auditor
How to Control Audit Fees
American Institute of Certified Public Accountants – AICPA
How to Control Annual Audit Fees
How to create dynamic cash flow projections

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