Successfully Navigating a CFO Transition


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Panic. That’s the sound often heard in the voice of a nonprofit CEO when their Chief Financial Officer leaves, no matter the circumstances. Timing is rarely perfect.
Recruiting the right financial management partner is critical. Make a mistake and the negative consequences will quickly spread throughout your organization and beyond, damaging credibility, relationships and, in worst-case scenarios, your ability to retain key staff and obtain or maintain funding.
Ben Franklin had it right when he said, “If you fail to plan, you plan to fail.” Thinking through all aspects of a CFO transition before you begin your recruiting efforts will improve the likelihood of a successful outcome.

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Successfully Navigating a CFO Transition

  1. 1. Sponsored by: Successfully Navigating a CFO Transition Pam Williams & Marci Moore August 21, 2013 Twitter Hashtag - #npweb Part Of:
  2. 2. Sponsored by: Advising nonprofits in: • Strategy • Planning • Organizational Development (617) 969-1881 INTEGRATED PLANNING Part Of:
  3. 3. Sponsored by:Part Of: Coming Soon
  4. 4. Sponsored by: Today’s Speakers Pam Williams and Marci Moore Principals Nonprofit Finance Pros Assisting with chat questions: Jamie Maloney, 4Good Founding Director of Nonprofit Webinars and Host: Sam Frank, Synthesis Partnership Part Of:
  5. 5. WELCOME BONUS Materials Available Following Program: Worksheet: Transition Navigation Plan© Article: Core Considerations When Recruiting a CFO Successfully Navigating a CFO Transition
  6. 6. Cash Flow Needs Billing & Grants Management Deadlines Pending Financial Projects Financial Management & Reporting Interim Options Evaluating Candidates
  7. 7. TAKEAWAYS:  The first actions you should take in the event of a CFO resignation or termination  How to plan effectively for your CFO transition  How to determine the skills, traits and experience your next CFO needs in order to be successful  How to objectively assess your CFO candidates’ skills and cultural fit
  8. 8. POLL QUESTION 1:  How many people on the call are in the midst of a CFO transition right now?  How many people have been notified that their CFO is resigning?  How many people are considering making a CFO change?
  9. 9. POLL QUESTION 2: In your opinion, what is the first thing a CEO or Executive Director should do when a CFO resigns or is terminated?
  10. 10. Restrict Identify Notify Immediate Actions: As soon as you know about your CFO transition, begin taking action. The nature of your transition (planned vs. unplanned, voluntary vs. involuntary) will drive timing and urgency.
  11. 11.  Notify bank(s) of the change  Eliminate ability to transfer funds or sign checks  Change passwords  Cancel credit cards/access to credit accounts Immediate Action: RESTRICT ACCESS POLL: How many people have a list of user ids and passwords for all financial accounts (not just banking) or know where that list can be found?
  12. 12.  Major projects and short-term deadlines  Interim financial management solutions  Legal assistance necessary?  Notification list – who needs to know what? Immediate Action: IDENTIFY
  13. 13. Immediate Action: NOTIFY  Staff  Funders  Board Members  Other Key Business Partners:  CPA Firm  Insurance Broker  Vendors Share as much information as you can, including your transition plans. Manage the message.
  14. 14.
  15. 15. If you fail to plan, you plan to fail. Benjamin Franklin Search Planning Resource: Transition Navigation Plan Worksheet
  16. 16. Search Planning Who will take the lead on your search, and who will be on the hiring team?
  17. 17. Search Planning Who is your ideal candidate?
  18. 18. Search Planning  What is the availability of your current CFO during the transition?  Is your current CFO willing to assist with the onboarding process for the new CFO?
  19. 19. Search Planning Who will stay on top of day-to-day financial management needs?
  20. 20. Search Planning If necessary, what outside resources (search firm, interim CFO, etc.) are available to you?
  21. 21. Search Planning Where will you look for candidates? • Personal Connections & Referrals • Your website • Targeted job boards • • • • • Online Social Networks • Ex: LinkedIn Nonprofit Controller’s Network Group
  22. 22. Search Planning  How does the current salary for the position align with the market?  Are adjustments necessary?
  23. 23. Search Planning How will you “sell” prospective candidates on coming to work for your organization?
  24. 24. Search Planning What will you do you to help your new CFO get up to speed quickly?
  25. 25.
  26. 26. You Need A CFO Superhero You Need a CFO With: Depth of Experience & Knowledge Ability to Translate Numbers into Meaningful Financial Story for Different Audiences Ability to Focus on Today’s Needs AND Long-Term Sustainability Relationship Savvy Bandwidth and Competence to Manage Rapid Change and Competing Priorities Determine Skills, Traits and Experience
  27. 27. What skills and traits are necessary for a candidate to perform well in YOUR organization?
  28. 28. Consider: Culture Challenges Complexity
  29. 29. REAL LIFE EXAMPLE #1 • Human Services Nonprofit • Long-term CEO considering retirement (not publicly) • 95% Funded by Cost Reimbursement Grants • No Reserves • Funding Uncertainty • One-Person Department • Occasional Delays in Grant Payments Require Careful Cash Management & Planning • Small Town TRAITS & SKILLS • Copes well with change • Attention to detail • Proactive with funders • Ability to easily move between mundane and more complex work • Demonstrated cash/vendor management • Ability to deal with significant stress • Understands the realities of living in a small town environment
  30. 30. REAL LIFE EXAMPLE #2 • Human Services nonprofit • CFO left with 2 weeks notice at the end of the fiscal year • CEO left during the search after board investigation • Widespread media coverage of issues • Funders nervous because of sudden CFO departure and CEO issues that became public • $30M budget • 40+ funding sources • Loss of over $2M prior year • Large # of Staff Reporting to CFO • Statewide organization TRAITS & SKILLS • Comfortable with uncertainty & initially chaotic environment • Ability to synthesize a large amount of complex information quickly • Demonstrated cash/vendor management • Ability to develop rapport and reassure funders • Ability to partner with board and interim CEO to “right the ship” and restore integrity • Understanding that the job will take a significant number of time for the first 18 months and that it will also entail travel throughout a large state on a regular basis • Proactive with funders • Ability to manage large number of staff and functions (HR, IT, Maintenance, Billing, Accounting) • Ability to deal with significant stress
  31. 31. The right screening tools help you make better decisions and ensure that what-you-see is what-you-get Objectively Assess Candidates’ Skills and Fit Ask Verify Validate
  32. 32. Ask Well-designed behavioral interview questions allow you to see how the candidate would respond to real-world situations they might encounter on the job. Example: Because of a payment delay with one of your major funders, there will not be enough money in the bank to make vendor payments for three weeks, although many have due dates before then. What is your course of action?
  33. 33. Ask TIP: When possible, interview in teams. You are less likely to overlook red flags when you are super-impressed with one skill, quality or story.
  34. 34. Validate Give candidates a relevant timed assignment that demonstrates their ability to do the job: • Written analysis • Presentation to the interview team
  35. 35. Verify Use skillful reference checks to validate what you’ve learned from the candidate
  36. 36. Verify 3 Keys to Reference-Check Success: 1. Ask Well-Designed Questions 2. Listen Actively 3. Ask for References with Different Relationships to the Candidate (boss, peers, employees, CPA firm, etc.)
  37. 37. Verify SAMPLE QUESTION: Based on your experience with this candidate, what will allow her to be successful in this position? Describe the position before asking this question.
  38. 38. Verify SAMPLE QUESTION: Is there anything about this candidate’s ability to perform this job, that I haven’t asked, that you would like me to know?
  39. 39. Verify Conduct a thorough background screening based on your own HR guidelines and state/funder requirements
  40. 40. Verify Consider using a behavioral assessment: • Final test for job fit • Identifies strengths, opportunities for growth • Offers tips for supervising & coaching Resource:
  41. 41.
  42. 42. Your Partner in CFO Search & Financial Transitions 727-393-2341