The increasing use of temporary and contract employees at many levels continues to infiltrate the corporate world. Does this growth translate to the executive suite? In particular, the domain of the CFO?
Companies use freelance and contract-for-hire positions all the time. Increasingly, contract employees are a go-to solution for companies not wanting, or able to, increase payrolls. In 2015, the U.S. Government Accountability Office reported that contingent or contract workers make up more than 40% of the U.S. workforce.
Seventy-six percent of organizations use contingent labor to enhance their workforce and close talent gaps, according to Adecco’s recent report, “The Definitive Guide to Building a Better Workforce.” Big or small, these companies hire outside help for a variety of reasons: to supplement busier times, for special time-sensitive projects, to help contain FTE benefit costs, among others.
What about senior level positions like your CFO? It may sound crazy, since the CFO holds one of the most critical roles in a company’s overall operations, growth and evolution. Nevertheless, it could be the best temporary hire you can make.
Temp Job: CFOs Wanted
The CFO is a key business partner in advising and collaborating with the CEO and developing a long-term strategy for the organization. So why would you hire a contractor to fill this most-important role?
Growth. If your firm has grown since you created your finance department, or your controller isn’t ready or suited for a promotion, bringing on an interim CFO can be a natural next step in your company’s evolution, without having to make a long-term commitment. It can allow you to take the time and fully understand what you need from the role — and what kind of person is the best fit for your company’s future.
“Some companies have a greater need for experience and education yet do not require the full-time role or expense of hiring someone in-house,” said Rachel L. Anevski, M.A.O.B., PHR, SHRM-CP and president and CEO of Matters of Management, LLC. “The benefits here are cost containment and flexibility. You scale up as necessary.” There are also, according to Anevski, down sides. “They don't get to see the whole picture and they are not valued all the time as part of the executive team due to their part time or external status.”
If your company is looking for greater financial skill or advice to expand into a new market, or turn around an underperforming division, you may want to bring on an outsourced CFO with a specific set of objectives and timeline in mind. You can bring someone onboard to develop growth strategies, make course corrections, bring in new financing, and update operational processes, without necessarily needing to keep those skills in the organization once they finish their assignment. Your company benefits from this very specific skill set without the expense of having a talented but expensive resource on your permanent payroll.
Departure. The best laid succession plans often go astray. If that’s the case when your CFO departs, your organization may need to outsource the CFO function to fill the gap. When your company loses the leader of company-wide financial functions, you may need to find someone who can come in with those skills and get right to work. While they may need guidance and support on specifics to your company, they should be able to adapt quickly and keep financial operations running smoothly. Articulating short-term goals and setting deadlines for naming a new CFO can help lay the foundation for a successful engagement.
Cost savings. If your company is the right size to have a part time CFO, it can be less expensive than bringing on a full-time in-house CFO. Depending on your operational and financial rhythms, you may need the CFO role full time in parts of the year, and not in others. Initially, an interim CFO can bring a new perspective from a professional who is coming in with fresh eyes and experience outside of your company.
After the immediate need or initial crisis passes, you can review your options. Once the temporary CFO’s agreement expires, you can bring someone new in depending on your needs, or keep the contract CFO in place by extending their assignment.
The decision and its ramifications
Making the decision between hiring someone full-time or bringing in temporary contract help can be difficult. Although it oversimplifies the decision a bit, a good rule of thumb is: the more strategic the role will be, the more important it is that you have a long-term person in the job. CFOs can have a wide range of duties, including, but not limited to:
- Financial risk management, including planning and record-keeping
- Management of compliance and regulatory requirements
- Creating and monitoring reliable control systems
- Debt and equity financing
- Financial reporting to the Board of Directors
If the focus is primarily overseeing the financial functions of the organization and/or developing a skilled finance department, you can rely — at least initially — on a CFO for hire. Working with a skilled placement firm or professional can help you find the right match for your company. You should contact one of the many companies nationwide that specialize in temporary CFO assignments. They can help you find the right fit for your specific needs.
Regardless of what you choose to do, your decision will have an impact on the financial health of your organization — from avoiding finance department dissatisfaction or turnover to capitalizing on new market opportunities. Getting outside advice or a more objective view may be an important part of making the right choice for your company.
Further reading on the executive suite: Crisis Averted: Six Steps to Take if Your CEO Leaves Abruptly