Square-Off: Should U.S. Trade Agreements Be Renegotiated?
Running on a campaign to "Make America Great Again," Donald Trump pledged to tear up trade deals that he claimed hurt American companies and cost jobs for American workers. Since his election as president, his administration has swiftly pursued that agenda, stepping away from the Trans-Pacific Partnership and moving toward a renegotiation of the North American Free Trade Agreement. Is turning away from decades of free-trade policy a good thing or a bad thing from the perspective of U.S. corpo ..
Over the past 15 years, I have helped place a good number of CFOs in new jobs. Many have made successful transitions — from industry to industry, from public to private companies and back — as well as adapted to wildly different cultures from company to company.
But in my experience, there is one divide that very few seem to successfully bridge: the transition from a large company to a small one.
By “small,” I generally mean a growth-oriented company, usually backed by venture capital or private equity, that plans to grow exponentially (i.e., not $25 million looking to grow to $50 million, but $25 million looking to grow to $500 million or more, usually followed by some type of exit via sale, IPO or some other transaction). Regardless of how well these companies are funded, their resources are constrained compared to the level of support a big-company CFO is accustomed to. As a result, their CFOs require not only a high level of financial and business sophistication to handle the complexity of managing rapid growth, but also a high degree of self-sufficiency and a strong hands-on orientation.
Finding a financial executive who can operate on those levels and, as importantly, is motivated to do so, is a challenge for the company, the search firm and the candidates. As a result, the growth-company landscape is littered with the CFO casualties. Despite their previous successes, and despite the fact that top-notch finance chiefs are generally smart, flexible and pragmatic, they failed in their effort to make the transition.
What differentiates the CFOs who thrive at small growth companies? Based on my experience, here are some common attributes that stand out:
- They don’t mind doing work below their pay grade. CFOs who successfully make the transition from large to small don’t mind fixing the jam in the copy machine when they have to. I often hear new CFOs in growth companies say, “I’m finding myself doing things I haven’t had to do in 20 years.” The ones who are going to make it say this with real enthusiasm.
- They have a strong operational orientation. The most successful growth company CFOs I know have more than a bit of COO in them. They can effectively lead departments outside of their core functional areas, such as IT, facilities and human resources.
- They lead with an absence of ego. In a venture-backed growth company, the CFO is often the most experienced member of the management team, particularly if the CEO is a pure founder or entrepreneur. The successful ones have a leadership style that allows them to transfer their knowledge to the rest of the management team without coming off as arrogant.
- They effectively manage relationships with their financial sponsors. The ultimate goal of a venture-capital firm is to deliver the best possible return to its limited partners in a timely manner, an objective not always in sync with that of the management team. A successful CFO in this environment must be a strong relationship builder and communicator to effectively manage this tension.
To put it succinctly, the CFO most likely to make a successful transition from a large company to a small growth company possesses strong strategic and tactical skills and enjoys using them.
Unfortunately, it’s not a simple task to tease those qualities out of a résumé or interview. In most interviews I conduct, I start by telling the candidate that I have thoroughly read his resume and have a good understanding of what he has accomplished during his career. My goal for the interview is to find out how he accomplished it. It’s important to obtain a step-by-step understanding of how a leader accomplishes goals and overcomes obstacles.
It’s also important to ask for clarification and push for specificity in the candidate’s responses. At the end of the interview, candidates should feel like they have been put through their paces — in a good way, of course.
That sort of due diligence is essential. I have seen too many venture partners and CEOs become enamored with a résumé bursting with leadership roles in marquee companies only to find that their new CFO got to his or her results by making use of an infrastructure simply not available to them in a small growth company.
So what’s the best way to avoid adding to the growth-company CFO graveyard? Research the candidate with the blue-chip résumé to make sure his qualifications are specific to the goals and operating model of your company.
John Touey is a principal at executive search firm Salveson Stetson Group with 20 years of experience providing executive-search, human-resources and management-consulting services to organizations in the healthcare, financial services, utilities, manufacturing and pharmaceutical industries. Follow him @JohnTouey.