When recruiting a new finance chief, Reinhold notes, executives may describe a situation as "ideal" or at least "very favorable." But he cautions, they might "be less forthcoming about challenges in the businesses you may face."
Even when a CFO leaves a company on decidedly good terms, veteran finance chiefs say, care should be given to how that departure is handled. It's crucial, for instance, that a finance chief makes sure an employer sets the exit apart from any negative company news. Otherwise, assumptions get made, reputations tarnished.
One finance chief, who spoke to CFO.com on a not-for-attribution basis, regrets having gone along with his former employer's decision to announce his departure about the same time the company was reporting poor quarterly results. The CFO concedes his boss might have wanted to avoid the "one-two punch" that would surely have come from stringing out the two announcements. While the finance executive says he could have pushed harder to get the company to announce his resignation sooner, he says he wanted to exit "in a classy way."
Sometimes, class has a price. Although the company did report that the CFO was leaving voluntarily, the timing of the announcement made it seem otherwise. Says the former finance chief: "You start cursing the visibility you have."
Such visibility comes with the territory, however. As Perpetual Robatics' Wasko points out, over the past decade, CFOs have evolved from being mere "uberaccountants" into "significant business partners." With the added responsibility, Wasko says, CFOs have assumed a bigger share of the credit — and the blame — for corporate performance.
Should I Stay or Should I Go?
Recruitment experts say the surest way to avoid taking the rap is to get out of a troubled company while the getting's good. But gauging whether a business is truly in a death spiral or merely going through a rough patch can be a tough call. Making the decision even tougher: a CFO's reputation can be boosted substantially by engineering a successful turnaround. And no finance chief wants to be known as a quitter.
Perceptual Robotics' Wasko, for instance, doesn't consider himself a turnaround specialist. But he made the decision to stay the course when he found himself in choppy waters at his previous job.
Wasko signed on as CFO at metal-processing company Connector Service Corp. in 1998. Over the next three years, the Connector finance chief faced a barrage of problems. The biggest headache: Connector was moving from a pure services business to one with a stake in its operations. Under the company's old business model, if Connector produced a new stamping dye, a customer would pay for the product's license up front. That "kept the barriers to change low" for clients by making it easier for them to switch to different services providers, Wasko notes.
The change in strategy, however, resulted in a more asset-intensive business — and heftier near-term cash requirements. Responding to the business's changing finance needs, the company's management began to borrow, rather than raise private equity capital. "We did a lot more creative stuff with banks," says Wasko.
While the change in direction spawned some short-term financial pain, Wasko says, it made sense in the long term. But he admits he was under less pressure to produce immediate results because Connector was privately held. Would he have stayed on in such trying circumstances at a public company? "Thinking about me personally," he says, "if I had a good handle on the plan, I would have."
Diligent Due Diligence
Indeed, CFOs have a better chance to succeed in a new job if they know the situation going in. "I think it's tremendously important that a CFO do a great amount of due diligence" before taking on a job, says Jeff Naylor, CFO of Big Lots, the Columbus, Ohio-based closeout retailer.
The most basic thing a prospective CFO should find out, Naylor advises, is whether an employer has a "sustainable business model." That model should include products and costs that aren't carbon copies of those of competitors. Big Lots, for instance, differentiates itself by the way it buys products and sources real estate, Naylor says.
Big Lots is able to sell items cheaper, he explains, because the retailer buys goods that are discounted due to packaging changes, excess production runs, and the like. "We will typically buy from a competitor that has moved from a smaller facility," says Naylor, "and we'll lease that real estate — usually at very attractive rents."
By Naylor's lights, that's a sustainable differentiation. Still, he acknowledges he did his homework before taking the job at Big Lots. "I did an enormous amount of due diligence going in," he notes. "A misstep can have a dramatic impact on your career."
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