Advice to MDs and Investors Recruiting an FD – Part 1

I spend most of my working life helping business owners, MDs and investors recruit senior finance people. Typically FDs, Heads of Finance and FCs.

Sometimes they’re replacing someone who’s been there for 20 years. Sometimes they’re making their first senior finance hire.

Either way, it can be a game-changing appointment.

Get it right and the ROI can be enormous. Get it wrong and you’ve potentially bought yourself a very expensive migraine.

So how do you tilt the odds in your favour?? Recruitment is like anything – marginal gains will compound and make a difference.

For me, a lot starts with the quality and depth of the brief.

And I don’t just mean a list of responsibilities and a salary bracket.

Let’s look at four examples.

Business 1

You’re a £15m business. Your long-serving FD is retiring.

You want to grow steadily, remain profitable and manage risk. The long-term plan is to pass a healthy £20m+ business to your children.

The finance team is lean, so the FD needs to be mega hands-on. The systems are a bit clunky and could do with an upgrade.

Business 2

You’re a £15m business that’s just welcomed PE investment.

You’re growing at a rate of knots. Finance processes and controls are struggling to keep up.

The investment gives you the firepower to make some interesting acquisitions. You’ll probably be a £30m+ business pretty swiftly.

You need an FD who can help drive that growth, integrate acquisitions and ultimately play a significant role in a successful exit.

Business 3

You’re a £15m business. But you used to be £25m.

Cash is tighter than a duck’s pocket.

The finance team has been through the mill. You’re juggling cash, managing stakeholders and trying to complete a refinance.

The good news? You’ve secured a monster new project starting in two months.

Once the refinance is done, things should get easier. But there’s still some pretty choppy water to navigate.

Business 4

You’re a £15m business that’s recently passed from first-generation to second-generation family ownership.

You’ve started trading overseas for the first time.

The boardroom looks completely different following the retirement of several long-serving directors.

You’ve acquired a manufacturing business, which is new territory for everyone.

You’ve invested in an epic new ERP system. Unfortunately, it’s not quite delivering what you’d hoped.

The ambition is to grow towards a trade sale. Or perhaps bring in PE investment further down the line.

On paper, all four businesses are recruiting for exactly the same job.

FD of a £15m business…

Same title. Similar turnover. Probably a similar salary bracket.

But are they really looking for the same person?

Absolutely not.

And that’s where the depth of the brief becomes so important.

Of course, there are some brilliant FDs who could navigate all four scenarios.

But the skills, experience, personality and temperament required to thrive in each environment can be very different.

One FD might love the challenge of a turnaround and managing cash through a crisis. Another might be brilliant at building the infrastructure to support rapid growth and acquisitions.

One might relish the autonomy and long-term relationships of a family-owned SME. Another might thrive on the pace, scrutiny and expectations that come with PE ownership.

Neither is necessarily a better FD. They’re just better suited to different environments.

And that’s the point.

The more time you spend properly understanding what the business is trying to achieve, the challenges it faces and the type of person who will genuinely enjoy that environment, the better your chances of getting the appointment right.

Not just recruiting someone who can do the job.

Recruiting someone who will thrive in it.

And when you get that match right, and keep hold of a great FD for several years, they have the opportunity to really understand the business, build relationships and add a bucketload of value.

My advice? Spend more time on the brief than you think you need to.

It might be the most valuable part of the entire recruitment process.

Thanks as always for reading, John