Eton Bridge Partners recently published CFO Pathways, our analysis of research into the appointments of CFOs in 2019 and 2020 in the UK. Paul Bray, Partner in CFO & Finance, Interim Management, explores our analysis in more detail why ‘when hiring your next CFO, look outside your sector to bring in fresh insight.’

Most surprisingly, out of these external appointments, more than two-thirds of new CFOs – 69.5% – came from a company in a different sector.

This inspired me to reflect on my experience supporting organisations to find CFOs for both permanent and interim positions over the last 10 years. I hope this insight is helpful for anyone thinking about hiring their next CFO.

Is sector experience essential, desirable or not needed?

In certain circumstances, sector experience may be needed. Environments such as Financial Services for example have certain regulatory requirements.

In order to establish whether industry experience is essential, desirable, or not required at all, the hiring manager needs to fully analyse the content of a role, and where it sits within the management structure.

Some of the considerations for a hiring manager are:

• What characterises a successful finance leader in our business?
• What are the industry-specific regulatory requirements?
• Are we short of industry expertise on our board?
• Do the direct reports have the required industry experience or are we light?
• What makes our business complex and is that an industry-specific complexity or does it exist elsewhere?

Recruiters have an important role to play working with clients to ask the right questions in order to gain a deeper understanding of a role, rather than simply word matching a job spec with a CV. It is only by challenging “norms” that we will see a mindset shift.

Why has sector experience traditionally been so popular?

Probably the most common answer to this question is that there is an assumption that someone with experience will settle quicker and understand the business better. ‘Hitting the ground running’ is the phrase that we hear a lot, particularly with interim hires where there is often a requirement to fill a gap urgently.

Some also say, given the choice, why wouldn’t you? The market is a competitive one and if the employer has a choice it could be a deciding factor, often because it feels to be the safest option.

A lot of assumptions are made from CVs, they are used to answer the question ‘Can this candidate do the job?’ but also far too often to determine whether someone will fit in. There is a general view that if someone knows an industry, they will fit into the industry norms. However, I would argue that could also be a negative. It is those very industry norms that a CFO should be challenging and bringing in diversity of thought and experience will add a huge amount of value.

Challenging the status quo

Having spoken to thousands of candidates, at various levels throughout my career, there seems to be continued frustration that recruiters are following a tick list and won’t think outside the box or challenge hiring managers.

It’s important to challenge the status quo, to ask and understand why the criteria exist as it does and where there could be flexibility. It is only then that we can truly claim to have found our client the best person for the role.

Working together with clients to understand the complexities that exist within their business that make them feel they require specific industry expertise, will enable us to find candidates who may have been exposed to something similar, albeit in a different sector, I take true joy out of placing someone in a role who may not have initially been considered, and seeing them thrive – to feel I have truly added value is at the root of every hire I support with.

There are huge benefits to taking the time to truly understand the requirements of a role and thinking more widely about potential candidates

Benefits of hiring from another sector

With 69% of CFO hires come directly from a different industry, it’s clear that there has been a shift. Now more than ever I think businesses are required to be agile, come up with new ways of doing things, fresh innovative ideas. Of course, this is possible with one area of industry expertise but it could be argued it is more likely to come from being exposed to different ways of thinking in a broad, diverse range of environments.

Admittedly when you drill further down into the data, some of the CFO appointments had the experience of that sector earlier in their career but what really stands out is that to be a great CFO there is a requirement for the breadth of exposure and experience, both in terms of the type of roles (Reporting, FP&A, Commercial, the list goes on) and also in terms of industry/sector.

To read the full report, follow this link.