Making the Pieces Fit
How to avoid finance hiring mistakes.
by Kate Plourd/CFO Magazine
Soon after David Dreyer joined AMN Healthcare in 2004, he faced a personnel crisis. One of his divisional controllers was isolating himself from the team, not communicating with direct reports effectively, and hampering the productivity of the finance department.
"His reaction to really minor things became very disruptive," says Dreyer. Not only was he causing productivity problems, the CFO adds, but his demeanor left employees "unsure about how to work with him, including how to keep him informed."
In response, Dreyer spent two months trying to better integrate the controller, who was also new, by encouraging him to interact with his peers, superiors, and direct reports, and by encouraging him to improve his communication skills. Dreyer and other managers also set three-month benchmarks for the controller to meet in a performance-improvement plan. But despite those efforts and an estimated $30,000 or more in recruiting fees, travel, and other expenses, it became clear to both sides that the arrangement wasn't working. The controller resigned.
As Dreyer and other CFOs can attest, the skills-based, task-oriented nature of finance jobs, while more quantifiable than the requirements of other positions, can actually make it more difficult to hire the right candidate. Strong accounting and finance skills may mask signs of incompatibility with a company's culture. As Jim Clayton, CFO of Scripps Networks, puts it: "Technical skills are easy to see from the experience people have. The character questions are more difficult."
In fact, says Michael Watkins, author of The First 90 Days: Critical Success Strategies for New Leaders at All Levels, cultural misalignment is the most common problem that companies face when any new executive is hired. And given the current demand for finance talent, the probability of a bad fit in that department is magnified — as is the cost to the entire finance team. "You always hope the [person doing the hiring] factors in something about the organization's culture," he says. "But many people will hire the best finance executive they can find and not consider fit."
While signs of a cultural mismatch may be difficult to spot in the hiring process, it doesn't take long for them to manifest on the job. Bradford D. Smart, president of Smart & Associates Inc., a management consultancy, says indications can range from direct reports' complaints that the executive doesn't listen to the executive's failure to accept procedures that differ from his previous experience. There are also more-serious indicators of trouble, such as not keeping promises. When a finance executive routinely says, "I'll have that report to you next month," says Smart, there is a good chance the end result will not be quality work.
For Sandy Marrero, CFO of Tampa-based Your Auction Inc., it took only one reporting cycle to see that a newly hired senior corporate accountant lacked the skills and personality to fit in at the used-car auction company. "The personality traits started to come out in feedback from the other professionals," says Marrero. For example, he was not willing to take on duties that "he felt were beneath him and his abilities," she explains. Then, after the first accounting cycle, Marrero "also realized his work habits and work ethics weren't what his résumé led me to believe." In one case, she recalls, it took him two weeks to analyze a pair of income statements for variances.
Wendy DiCicco, CFO at medical-device company Kensey Nash, also believes the finance staff is the best indicator of a bad hire. When DiCicco tried to break in a mismatched director of finance, the poor fit affected other team members. "Even though he appeared to be happy, the group wasn't happy," she says. "As a CFO, when you have department members coming to you to talk rather than to their manager, you have to do something."
In both cases, the CFOs were forced to fire the individuals, despite attempts to acclimate them to the company culture and expectations. In Marrero's case, the process took seven months; in DiCicco's, two-and-a-half years.
Looking in the Right Places
Before the situation gets to that point, Smart suggests taking a coaching approach. "Clarify goals and responsibilities, provide ongoing advice, and if the person [continues to] fall short, make clear the [benchmarks] that need to be achieved," he says. "The person is apt to quit before getting fired." The method worked for AMN's Dreyer. After discussing performance goals and expectations on a Friday, the controller got the hint and submitted his resignation on Monday.
Still, making a hiring mistake leaves its mark. So much so that many CFOs hire from within to guard against it. DiCicco, for example, replaced the exiting director of finance with an internal cost accountant with executive potential. "She was much more able to rally everyone for the end of the month crunch, and the entire group already looked up to her," says DiCicco.
Since the incident with the controller, Dreyer has used internal development and AMN's corporate recruiting as a first choice for all management-level finance positions. "Our corporate recruiters understand our culture better than any outside recruiters because they live and breathe it," he says. "Our corporate values are very strong, so we hire executives who will fit well with them."
If those avenues don't work, CFOs can always fall back on their own Rolodexes. "In today's regulatory environment, it's crucial to have people in financial-executive positions who you can trust," says Mobility Electronics Inc. executive vice president and CFO Joan Brubacher, who networked with former colleagues in the Phoenix area the last time she had to look outside to hire a chief accounting officer.
Tell It Like It Is
Of course, the incoming executive does bear some responsibility, says Jack Ezzell, chief accounting officer for MarineMax. "Culture is really hard to train, but you also need someone who is willing to accept how the company operates," he says. Ezzell pairs up new executives at the Clearwater, Florida-based boating company with seasoned staff to show them the ropes.
They also have to realize that the expectations you set up front are based in reality, adds Marrero. "We start by telling people it's a very different, service-oriented organization," she says. And as a very small company, "we add that there will be times when you'll have to be hands-on. We are a team that pulls for each other, and new hires must be willing to pick up the slack."
Despite all best efforts, however, sometimes a person just doesn't fit in. "It doesn't matter how smart you are if you don't get along with others," says Clayton. As crucial as skills may be, they are just one piece of the puzzle.
Kate Plourd is a reporter at CFO.
© CFO Publishing Corporation 2008. All rights reserved.