How do firms and portfolio company leaders manage through current labor market conditions? What are the emerging trends in different roles, industries, and sectors? These were among the pressing topics in the latest BluWave-hosted Human Capital Forum on May 24.
Esteemed panelists Peter Allen of Aegis Ventures, Steven Berman of Accel-KKR, Michelle Nasir of Arsenal Capital Partners, Dan Grosh of Diversis Capital, and Damon Beyer of Warburg Pincus LLC, joined our own Erez Schnaittacher for this insightful virtual event.
Here are some highlights of what was discussed.
Find a balance in preparing portfolio companies without being overbearing.
Encourage knowledge sharing and development through forums for functional leaders.
Invest in developing the next generation of talent within portfolio companies.
The demand for leadership roles has shifted from growth-centric positions to CFOs.
Understand candidate priorities and ensure alignment with the company’s goals for higher performance and retention.
Invest time upfront in C-Level hires, including comprehensive assessments and coaching.
Navigating Through Current Labor Market Conditions
Panelists addressed how they are supporting their firms and portfolio company leaders in navigating the current labor market conditions. They discussed various considerations that have both short-term and long-term effects and whether these considerations are complementary or conflict with one another.
Uncharted economic cycles require balance between providing necessary support and respecting the autonomy of portfolio companies. Emphasis was placed on coaching and working with deal teams, managing cash prudently, and hosting functional leadership forums. These strategies ensure a well-prepared and resilient portfolio despite the labor market uncertainties.
The need for a long-term perspective was discussed, with a focus on nurturing talent for future needs and aligning compensation structures to foster loyalty and dedication. Panelists highlighted the importance of creating a conducive environment for growth, where employees feel recognized and challenged.
Emerging Market Trends
The discussion shifted toward emerging trends in different roles, industries and sectors across the portfolio companies. The panelists also shared where their focus had been this year.
In 2021, the focus was on revenue and GTM leaders, but the CFO role has recently seen a spike in demand. Companies are looking for CFOs who can manage costs efficiently, so the company can maintain a position of strength.
Panelists highlighted the challenges in filling entry-level jobs and niche roles such as business intelligence and business operations. Also, the current labor market is very competitive, particularly for C-suite roles in the healthcare sector.
In some instances, portfolio turnover is greater than 50 percent for all C-Level roles, indicating the importance of nurturing talent internally and conducting thorough assessments before making C-Level hires. Industrial and Manufacturing businesses are currently experiencing a shortage of mid-level management roles.
When you’re ready to use the same resources as the world’s best PE firms, contact BluWave to set up a scoping call with our research and operations team.
Whether navigating the labor market, investing in talent or any number of other services for business builders, we have an exact-fit solution for you on standby.
A lower-middle market PE firm required an HR consultant experienced in HR carveouts to support their project. The client needed assistance in negotiating a Transition Services Agreement (TSA) within a three-week timeframe and guidance in managing the interim transitions of insurance, benefits, and payroll.
Complicated Carveout Transition
The client was undergoing an HR carveout involving a tech/SaaS business with upwards of eight figures in ARR. The carveout involved merging two businesses previously combined by another PE firm, with the client acquiring one segment. The client sought an HR consultant to provide expertise in negotiating the TSA and managing the interim transitions.
How BluWave Helped
HR Consultant Connection
BluWave promptly presented the client with several options of specialized HR firms experienced in carveouts. The client engaged a consultant with deep knowledge in their niche. The service provider worked closely with the client to negotiate a robust TSA and provided guidance on managing the interim transitions of insurance, benefits and payroll.
With the HR consultant’s help, the PE firm successfully navigated the HR carveout process. The service provider’s expertise and proactive approach facilitated a seamless transition of insurance, benefits and payroll, while the negotiated TSA provided a solid foundation for post-close operations.
“She was very flexible with the mandate given the carveout nature of the opportunity, and she stepped up to do more when asked. The service provider is very responsive – she always makes time to discuss the company and provide updates.”
A technical recruiter is in charge of finding, interviewing and selecting qualified candidates for technical roles like software engineering, data analysis and technical writing. They seek candidates who have the necessary skills to fill specialized positions in information technology, data science and engineering.
Technical recruiters work for either a company’s human resources department or a technical recruiting agency to fill open positions within a technology-focused company. Oftentimes, an expert technical recruiter who has experience across your industry can be the best way to find an exact-fit candidate, and fast.
“Any specialized recruiter is going to have a better network. They’ll also have a much better idea of ‘what good looks like’ and can help a hiring team calibrate the applicant pool more reliably,” says Houston Slatton, BluWave’s head of technology.
The digital revolution has emphasized the necessity for specialized roles within organizations, bringing to the fore the importance of technical recruiters. They possess an intricate knowledge of the necessary skills and experiences required for these roles and are adept at identifying candidates that align seamlessly with the organization’s unique needs.
The role of a CFO is similar to a treasurer or controller because they are responsible for managing the finance and accounting divisions and for ensuring that the company’s financial reports are accurate and completed in a timely manner. CFOs also manage the company’s financial planning and analysis, risk management and overall financial strategy.
Hiring a strong CFO essential for an organization to thrive. Some of the benefits of include access to years of experience and industry expertise, the ability to predict and forecast instead of reacting, improved processes and internal systems, better data and accurate reporting.
It’s no wonder that such an important role can often be so difficult (and expensive) to fill.
That’s why it’s pays to work with a tailor-made recruiting firm that’s familiar with your specific industry and situation. The Business Builders’ Network is full of exactly these kind of organizations.
In this article, we will discuss the qualities to look for in a CFO, how to hire the right one for your company, the role of CFO executive search firms in the hiring process and the average CFO salary.
I. What to Look for in a CFO
Skills and Experience
A strong background in finance and accounting is crucial for a CFO. Their deep understanding of financial concepts and ability to analyze financial data will help them manage the finance and accounting divisions effectively. CFOs should also have experience in leading teams and collaborating with other executives, as they are responsible for ensuring the accuracy and timeliness of the company’s financial reports, financial planning and analysis, risk management, and financial strategy.
Leadership and Communication Skills
The ability to lead teams and communicate effectively with other executives is essential for a CFO. Possessing strong leadership and communication skills enables them to convey financial information to non-financial stakeholders. Since they are responsible for managing the finance and accounting divisions, CFOs play a critical role in ensuring the company’s financial reports are accurate, completed in a timely manner, and effectively support financial planning, analysis, risk management, and strategy.
In addition to having a deep understanding of financial concepts, a CFO should demonstrate strong financial acumen. They need to be able to analyze financial data and communicate their findings to non-financial stakeholders. As the person responsible for managing the finance and accounting divisions, a CFO ensures the accuracy and timeliness of the company’s financial reports while overseeing financial planning and analysis, risk management, and financial strategy.
Strategic Thinking Skills
The ability to think strategically and develop long-term financial plans is another essential quality for a CFO. A strong strategic thinker can communicate financial information to non-financial stakeholders, which is vital for their role in managing the finance and accounting divisions. CFOs are responsible for ensuring the company’s financial reports are accurate and completed in a timely manner, and they play a significant role in financial planning, analysis, risk management, and financial strategy.
Having specific industry knowledge allows a CFO to better understand the context in which the company operates. This knowledge enables them to communicate financial information to non-financial stakeholders effectively. As the manager of the finance and accounting divisions, a CFO must ensure the company’s financial reports are accurate and completed in a timely manner while overseeing financial planning and analysis, risk management, and financial strategy.
It’s essential for a CFO to be a good cultural fit within the company. This means they should align with the company’s values, mission, and work environment. A CFO who shares the organization’s vision and can adapt to its culture will foster a positive and collaborative atmosphere, making it easier for them to work effectively with other team members and stakeholders. In addition, a strong cultural fit ensures that the CFO can effectively contribute to the company’s financial planning, analysis, risk management, and financial strategy while maintaining a harmonious working environment.
II. How to Hire a CFO
Create a Job Description
Creating a job description is the first step in hiring a CFO. A job description is a document that outlines the responsibilities and qualifications for the position. It should include information about the company, the position, and the qualifications required for the position. The job description should also include information about the salary range and benefits package.
The job description is important because it helps you attract the right candidates. It also helps you screen candidates to ensure that they have the necessary skills and experience for the position.
Identify Your Ideal Candidate
This step includes determining what skills and experience are required for the position. You should also consider the company’s culture and values when identifying your ideal candidate.
When identifying your ideal candidate, you should consider the following:
Skills and experience: You should identify the skills and experience required for the position. This includes technical skills as well as soft skills such as communication and leadership.
Company culture: You should consider the company’s culture and values when identifying your ideal candidate. This will help ensure that the candidate is a good fit for the company.
Once you have identified your ideal candidate, you should conduct interviews to determine if they are a good fit for the position.
During the interview process, you should ask questions that will help you determine if the candidate has the necessary skills and experience for the position. You should also ask questions that will help you determine if the candidate is a good fit for the company’s culture and values.
Conduct Reference Checks
After conducting interviews, you should conduct reference checks to verify the candidate’s qualifications and experience.
During the reference check process, you should contact the candidate’s previous employers and ask questions about their performance and qualifications. This will help you determine if the candidate is a good fit for the position.
Make an Offer
Once you have completed all of the steps above, you can make an offer to your chosen candidate.
When making an offer, you should consider the candidate’s salary requirements and negotiate a salary that is fair and competitive. You should also consider other benefits such as health insurance, retirement plans, and vacation time.
III. CFO Executive Search Firms
A CFO executive search firm is a company that specializes in finding and recruiting top-level financial executives for businesses. The process of hiring a CFO executive search firm can be complicated and costly. However, an expertly matched executive recruiting firm can help with this process.
The staff at an executive search firm already has thorough knowledge of the industry and may already know candidates who are qualified for your position. Once you give them a detailed description of what you need in a CFO, they can search their community and find the best candidate. Engage with recruiters and executive search firms to hire the CFO based on your predetermined requirements.
The benefits of hiring a CFO executive search firm include saving time and stress. The challenges of hiring a CFO executive search firm include ensuring that you are working with the correct entity and that your preferred search firm must demonstrate expertise.
IV. CFO Salary
The average yearly salary of a chief financial officer (CFO) can vary based on a number of factors, but the median compensation for a CFO in the U.S. as of May 2021 was nearly $400,000 per year.
The primary factors that impact the median salary of a CFO include geographic location, and the experience and personal qualifications of the person. Base salary and bonuses make up roughly 80% of the total compensation a CFO should receive within a given year. The other areas of compensation are bonuses and benefits, as well as perks.
The primary factors that impact the median salary of a CFO include geographic location, the size and complexity of the organization and the candidate’s experience and qualifications. Base salary and bonuses make up roughly 80 percent of the total compensation a CFO should receive within a given year. The other areas of compensation are bonuses and benefits, as well as perks.
The CFO of a telecommunications company that specializes in wireless internet needed help building out its executive team for a new division of its business.
Specialized executive search firm needed
Looking to better serve its customers, the CFO sought an executive search firm that specialized in telecom and fiber. They saw a big growth opportunity in their market and wanted to move fast to build out its leadership team.
How BluWave Helped
The Business Builders’ Network
After a scoping call with our research and operations team, we presented multiple executive search firms that were experienced serving fiber optics companies.
Specialized firm engaged to build out executive team
One of our most-used service providers was selected to kick off the process of building out the executive team. They signed on for a three-month engagement to help the telecommunications company hit the ground running with its new telecom ambitions.
Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a bird’s eye view of the market. We recently compiled our Q1 2023 findings into our BluWave Insights Report. You can request your copy and our client coverage team will be in touch.
Key findings from Q1 ’23 include:
Value creation activity is at an all-time high, matching Q1 2022.
Human capital remains PE’s primary area of focus at 45% of all Q1 activity, also matching an all-time high.
Technology remains a priority at 11% of all Q1 PE activity.
Streamlined automation. Embrace efficiency with modern employee management software that automates labor-intensive tasks such as payroll processing, benefits administration and performance reviews, saving time and resources while improving accuracy.
Seamless communication. Foster collaboration and engagement with robust communication channels offered by employee management software, including instant messaging, email and video conferencing, enabling smooth communication between employees and managers.
Efficient performance tracking. Stay on top of employee performance with comprehensive tracking features, including goal setting, performance reviews and feedback mechanisms, allowing managers to objectively evaluate performance and provide targeted support.
Effortless time-off management. Simplify time-off management with user-friendly features such as leave requests, approvals and tracking, ensuring employees take the necessary time off while preventing staffing issues.
Streamlined onboarding. Expedite the onboarding process with employee management software that provides tools such as employee profiles, training materials and onboarding checklists, helping new hires quickly adapt to their roles.
Effective benefits administration. Simplify benefits administration with features such as benefit enrollment, eligibility tracking and claims processing, ensuring employees have access to the benefits they need without administrative hassle.
Regulatory compliance made easy. Ensure compliance with labor laws and regulations with employee management software that offers features such as time tracking, payroll processing and leave management, minimizing the risk of fines and penalties.
Data-driven decision making. Empower informed decision making with employee management software that provides reporting, analytics and forecasting tools, enabling data-driven insights for optimizing operations.
Improved employee satisfaction. Boost employee satisfaction and engagement with features such as surveys, feedback and recognition offered by employee management software, resulting in a more motivated and productive workforce.
Enhanced talent management. Attract and retain top talent with user-friendly interfaces, mobile apps and social media integration offered by employee management software, ensuring a skilled and engaged workforce.
Efficient time tracking. Effectively manage employee hours, attendance, and overtime with accurate time tracking features, improving workforce management and payroll accuracy.
Streamlined employee relations. Foster a positive work environment with employee management software that offers features for tracking and managing employee relations, such as conflict resolution, performance improvement plans and employee feedback.
Reduced litigation risk. Mitigate litigation risks with employee management software that ensures compliance with labor laws, manages employee records and documentation and provides a clear audit trail of employee interactions, reducing legal exposure and protecting the business from potential lawsuits.
Features: The first step is to identify the features that are important to your company. Do you need a software that can handle payroll, benefits, recruiting and performance management? Or do you need a more specialized solution?
Scalability: As your company grows, you will need a software that can scale with you. Make sure to choose a program that can accommodate your future needs.
Ease of use: Employee management software can be complex, so it is important to choose a software that is easy to use. Look for one with a user-friendly interface and that is customizable to your company’s needs.
Security: Employee management software can contain sensitive data, so it is important to choose a system that is secure. Make sure to choose a software that has been certified by a reputable security organization.
Cost: Employee management software can be expensive, so it is important have your budget in mind. Make sure to compare prices and features before making a decision.
Situational Capabilities: You may need a software than can cater to your specific situation. For example, perhaps they need experience with unionized businesses. Be up front about that as you send out your RFPs and make your evaluations.
The “best” option is going to depend on your company, industry and exact situation. While we can’t choose one “best” software for you, here are some of the more popular cloud-based HCM systems (in no particular order) and a brief overview of each:
Workday is a human capital management software suite that provides a variety of features for managing employees, including payroll, benefits, recruiting and performance management.
SAP SuccessFactors is another HCM system suite that offers a wide range of features for managing employees, including recruiting, onboarding, performance management and compensation.
Oracle HCM Cloud is a suite that provides a variety of features for managing employees, including payroll, benefits, recruiting and performance management.
PeopleFluent is a software that offers a wide range of features for managing employees, including recruiting, onboarding, performance management and compensation.
Ultimate Software is a cloud-based HCM that provides a variety of features for managing employees, including payroll, benefits, recruiting and performance management.
Monday.com is a little different than the others in that its more commonly used for project management than tracking employee data. (Though you can use it for that, too.) It has a user-friendly interface and can be customized to your company’s needs. It’s also a cost-effective solution for businesses that need a cloud-based HCM system.
Service Provider Type: Business Process Outsourcing – Offshoring
Industry: Human Capital
Business Process Outsourcing – Offshoring
PE firm sought offshore assistance with manual tasks to increase efficiency, lower costs and focus on higher order.
Finding an offshore partner to free up resources
The PE firm sought an entity that could get them as close as possible to a turnkey finished product for several daily manual tasks performed by one of their human-capital focused portcos. Many of their work streams were labor-intensive, and the right offshoring partner would help them free up those resources to focus on higher order while lowering costs.
How BluWave Helped
The Business Builders’ Network
After the initial scoping call to understand the PE firm’s specific needs, we reached to a pair of exact-fit resources that we knew would be great matches for this project. The firm evaluated them both and engaged with a BluWave-grade service provider that has completed multiple successful projects for other PE firms.
Lowered operation costs and freed up resources
We connected the private equity firm to a trusted, proven service provider that specializes in offshoring. They tapped into their network in high-growth emerging cities, allowing the firm to lower its operations costs and connect with tenured expertise in a less competitive environment. The manual processes were offshored allowing the PE firm to reinvest the time and money it saved its portco.
How do you identify top C-suite talent? And what’s the best way to improve culture and retention for existing employees?
These were among the most popular topics in the latest BluWave-hosted Human Capital forum March 9.
Megan Ryan Kanefsky of J.F. Lehman & Company, Kristin Brown Patrick of New State Capital Partners and Abby Wilson of Transom Capital Group joined our own Rena Frackt Zimmerman as panelists for the virtual event.
The panelists discussed the importance of creating scorecard assessments for all executive positions to test technical aptitude.
Incorporating objective criteria, such as personality assessments, can also be helpful. For example, when hiring a CFO, the process might involve screening for cultural fit, sending an assessment that models financial statements with errors and conducting behavioral interviews with key stakeholders.
To ensure success, it’s essential to communicate effectively with candidates and get alignment on what you’re looking for from the onset. Putting in the work upfront can help build a high-performing executive team that drives company growth and success.
Hiring deeper within the organization – beyond the C-suite – also came up. The panelists said that one important aspect of the hiring process is using data to evaluate talent.
Objective criteria like cognitive abilities and behavioral fit for the role can help companies focus on hiring for aptitude and growth potential rather than just credentials. Encouraging a mindset of thinking outside the box can also help identify junior talent with a strong aptitude to learn and grow.
While it may take longer to find smarter and better hires, these candidates are more likely to stay and contribute to the growth and success of the company.
Improving Retention and Culture
Creating a positive and engaging work culture – vital to retaining top talent – was the third and final topic the panelists discussed.
One way to encourage employee buy-in and create a sense of ownership is to offer profit interests to all employees, not just top executives. This can motivate team members as they feel invested in the success of the company. Leadership programs for middle managers and director-level employees can also have a significant impact on retention rates.
Regular standing events create a sense of loyalty to the organization, too. For example, weekly lunches or bi-weekly events can encourage collaboration and give different levels of the organization opportunities to interact. This can foster a sense of community and help create a more positive work environment.
Simple acts of recognition and gratitude can also go a long way toward building a more positive culture, the panelists said.