While exceptions can be made, industry experience matters more for upper-level finance hires than for other hires in an organization.
Ask any group of talent acquisition professionals how essential industry experience is when hiring senior to C-level finance talent, and you get responses ranging from “less important than financial expertise” to “a strategic advantage and priority.” Although opinions vary, we’ve seen more success in hiring for senior finance positions when candidates have relevant industry experience. And, it becomes even more crucial for upper-level roles in highly regulated industries such as financial services, pharmaceuticals, oil and gas, and hospital management.
Unlike a mid-level accountant who can take the time to learn the business and systems, a new CFO is expected to hit the ground running and quickly ascertain how effectively the company is delivering on its business objectives. An industry-experienced CFO can quickly serve as a strategic partner to both the C-level team and non-financial areas of the business such as marketing and operations. They also have a deeper understanding of the financial position of the company relevant to the marketplace.
Qualifying Industry Experience
While the number of years acquired in a particular sector or industry are important, the quality and relevance of achievement are far more important, albeit more difficult to assess. It’s particularly problematic for recruiters who may not fully understand what a CFO does daily. Although the hiring manager — who in this case would be the president or CEO — makes the final hiring decision, this lack of understanding can delay the hiring process or result in bad hires.
To zero in on the right candidates with minimal delay, talent acquisition teams need to start by asking as many questions as possible — first with executive leadership and then with the candidates. The hiring manager can improve the team’s understanding of the organization’s competitive positioning, projected growth, reason for hiring, structure of the finance department, day-to-day responsibilities of the CFO, and key points candidates need to have on their resumes. The hiring manager (or executive leadership team) interview is critical as candidate searches should be based on its findings.
Candidate interviews have one purpose: deciding whether the person in front of you has what it takes to get the required job done and beyond. These interviews need to concentrate primarily on the bigger picture, how candidates envision their first 100 days, and the role they see themselves playing long term. Candidate interviews for the CFO or other senior finance role should focus on:
- Similar and relevant industry experience and technical skills
- Background and detail on every position held, including company size, the scope of work, and financial accomplishments. Here are a few sample questions to ask:
- Did you save the company money, and if so, how?
- Have you gone through an M&A or other change management initiatives?
- What did you do daily?
- What were your greatest accomplishments?
- How the candidate can leverage industry experience and contribute to the overall success of the company. They need to be able to provide specific examples of where they’ve contributed to company success.
- Building rapport with the candidate and gaining insight into life outside of work. This can help assess cultural fit and identify subtle differences between candidates A and B.
Companies are actively hiring for finance roles, particularly senior managerial positions. Only about 19,000 CFOs are actively looking for their next opportunities compared to about approximately 122,000 open positions, according to Career Builder’s supply and demand report from March. As in any candidate market, there is intense pressure to fill open positions, and even hiring managers who recognize the value of industry experience may need to relax requirements a bit.
Any concessions around a must-have attribute like industry experience should be based on a risk assessment of hiring an industry outsider. For example, finding a candidate who is highly collaborative, a good listener, and an agile team player can help minimize risk. Professional references are also key. Talking to former supervisors and colleagues is extremely helpful in assessing an individual’s capacity to quickly fit into a new environment.
Human resources and talent management teams can help narrow the industry experience gap by creating onboarding programs that include meetings with partners, customers, and outside stakeholders, and complete and quick immersion in the day-to-day operations of the company. Scheduling one-on-ones with the immediate team as well as with leadership and business unit heads can help newcomers quickly get up to speed on industry trends, market challenges, and what needs to be improved and how fast.
There are scenarios in which a financial candidate’s industry experience is less of a must-have. The pet or food and beverages industries, for example, might seek someone with specialized manufacturing or consumer goods experience. The same is true for organizations that are more mature or privately held, have less complex models and smaller teams, or are in industries less subject to heavy regulations.
While there are always exceptions, analytics, projections, and certifications — while still important — no longer take precedence. Times have changed, and the pandemic has created an even more competitive economic environment. A CFO with solid industry knowledge can more confidently guide an organization to stay relevant by making the smartest business decisions with the least amount of hesitation.
Yasmine O’Brien, a former financial analyst, is currently the director of professional and executive search for Orion Talent in all things financial.