Cash and capital are the fuel that allow an organization to move forward; cash to pay current expenses and capital to invest in the people, processes and initiatives that will ensure future success. The steward of cash and capital is the Chief Financial Officer (CFO), and the role — and the responsibilities it entails — are changing rapidly. Choosing a new CFO is one of the highest risk hires you will make. A poor one can run the organization out of fuel, stalling the company. They can strangle growth by being overly conservative. They can mismanage reporting responsibilities and trigger unwanted oversight — even regulatory sanctions or investor lawsuits.
A good CFO can squeeze extra performance from available resources, keep investors and stakeholders happy and find that little bit extra to act fast when an unexpected opportunity pops up.
At the same time, traditional measures of organizational value are changing. Quarterly share price and earnings will always be crucial benchmarks, but demands for social responsibility are creating new values to be accounted for. The ROI of acquiring a competitor can be figured in dollars, but how to measure the ROI of an initiative that revitalizes a neighborhood around your headquarters? Flexibility of thinking and the ability to mirror and live up to your organization’s core values are essential qualities.
At Grayhawk, we’ve interviewed thousands of CFO candidates for our clients, and we’ve compiled an exhaustive list of interview questions to help you find the right Chief Financial Officer for your organization.
Key Characteristics of Successful CFOs
The best CFOs aren’t “bean counters,” they’re more like the crew chief on a racing team: They take a comprehensive view of the performance of the human, technological and competitive systems and are able to anticipate their needs. Having just the right tires on hand when it starts raining halfway through a race is the hallmark of a great crew chief; having the right resources on hand to manage an emergency or opportunity is the hallmark of a great CFO.
While taking a wide view is essential, so is the ability to focus on details and to delegate the daily oversight of critical metrics — like cash on hand and expense forecasts — to diligent lieutenants.
Accounting and finance competence
A baseline expectation of any CFO is the demonstrated ability to construct and manage an accounting and finance structure — people and systems — that complies with Generally Accepted Accounting Practices (GAAP) and all applicable regulatory oversight such as the requirements of the Sarbanes-Oxley Act. A background as a Certified Public Accountant (CPA) is helpful but not mandatory so long as the CFO candidate has a thorough understanding of accounting principles and regulations.
There are few safety nets for a CFO: Either there’s enough cash to bankroll the organization or there’s not. They must be able to grasp the overall economic environment and the economics of your industry. They have to understand how those economics will affect the organization’s revenues, expenses and plans going forward. They must communicate their analysis clearly and concisely to their team, to their peers in the C suite and to the board of directors, investors and external stakeholders. They must also plan for contingencies foreseen in their analysis, tapping the brakes or hitting the accelerator as necessary to optimize the organization’s fortunes. Increasingly, that means using advanced modeling and AI to more accurately predict alternative outcomes.
The CFO needs a deep understanding of the organization as a whole, not just its financial operations. That means understanding the needs of the drivers of revenue and expenses and the interactions between them. There’s a natural — even healthy — tension between finance and operating units like IT, production, marketing and sales. IT will make a case for upgrading infrastructure every year. Production needs more people or equipment. Sales is infamous for sandbagging revenue estimates. And the marketing folks can always use more promotional funds. An excellent CFO will use data, history and their own acumen to harmonize the revenue and expense ledgers, and will be able to get the agreement — if not wholehearted buy-in — from the organization’s other leaders.
Partner for growth
In most organizations, nothing gets done without a budget and a father. Finding people with the initiative to take on competitors and launch or optimize products and services isn’t hard; making enough room in the budget for competing claims on resources is. The CFO must be more than just a brake on spending, they also have to direct resources to places where growth can happen. This means working with the other arms of the organization to see what they see, to understand their visions and make an independent judgement of the costs and opportunities. In this role, the CFO needs to do more than just mitigate risk, they need to actually take risks — responsibly — when appropriate.
As you’re vetting candidates for CFO, ask yourself if you could see each of them stepping in for the CEO in a board meeting, analyst call or public appearance. The kinds of leadership skills required of a CEO are also needed by the CFO. Business acumen, communications ability, emotional intelligence, empathy and social skills are all important. And there’s one other: A winning personality. The CFO must collaborate smoothly with peers and colleagues from other departments and be liked as a great person in addition to being respected as a great professional.
Interview questions for a CFO
Before the first candidate interview, write out your hiring criteria: the qualities, attributes, abilities and experience a candidate must have. These should be turned into a scorecard that each interviewer fills out after interviewing the candidate.
Research shows that having a structured list of questions, formalized on a common rubric or scorecard that’s used by each person who interviews the candidate, is a proven way to ensure candidates have the critical qualifications and to defeat hiring biases. You can download our scorecard worksheet and template here.
We’ve collected the interview questions that have given us the best outcomes when evaluating CFO candidates and organized them into five lists that correspond to key attributes. We’ve also selected the top 10 questions that can quickly uncover a CFO’s skills and deficiencies for our short list.
Shortlist: Our 10 Most Effective Interview Questions for CFOs
- Discuss your financial department’s performance over the last three years. What initiatives did the business undertake, how did finance support those initiatives and what were the actual results?
- What attributes make you a strong leader and coach? Give us specific examples of team members who became high performers as a result of your mentorship.
- Describe how you acquire and use data to guide financial decisions and evaluate results.
- What do you believe are the most important components of an effective finance organization?
- Tell us about your experience in hiring, managing and growing a finance team. What characteristics do you look for when hiring? In a specific example, what was your recruiting approach? Why and how did you target the person you were recruiting and how did you approach the vetting process?
- What do you think is the most significant macro-economic threat or opportunity for our organization right now? How would you mitigate that threat or respond to that opportunity?
- Has an organization you worked for ever been sanctioned by the SEC, the IRS or another federal or state governmental body? If so, what was your role in the activities that led to the sanctions? What actions did you take to mitigate financial and reputational damage to the organization?
- What is the one thing you do that is not common among other CFOs that you believe has contributed to your success?
- Describe a financial emergency — a market collapse, catastrophic revenue drop, regulatory change or penalty — and how you responded to it. What was the eventual outcome?
- Describe the legacy you’ve left in previous finance organizations. How are they better equipped than they were when you joined?
These questions will help you understand a candidate’s values, behaviors and character traits.
- Tell us about a couple of the best — and worst — decisions you’ve made in the past year with regard to your team.
- What are the characteristics that make you a strong leader? A strong coach? Can you share past examples of how these have played out in relationships with your teams?
- Can you tell us about your approach to decision making when faced with difficult situations? Are you decisive and quick, or do you work through the process more deliberately? Are you intuitive, or do you go strictly on the facts? Please share one or two examples of difficult decisions you’ve made, how you reached those decisions and the results.
- Give us a few examples of big risks you’ve taken in the recent past: An investment or merger you supported, an expansion or a major change in your financial or accounting practices. Include those that worked out well, and not so well.
- Describe the biggest challenges you’ve faced and overcome during your career.
- When you’re not at work, what do you do to enjoy yourself?
- What is the one habit you perform without fail that is important to your success?
- On a scale of one to ten, rate how satisfied you have been in your career path. What would you have done differently?
- Describe your relationship with the CEOs of your current and most recent organizations. How did those relationships develop? What key events tested them over time?
These questions assess the candidate’s grasp of the fundamentals of financial management.
- What is your technical experience in accounting practices? Are you a CPA, and did you practice as an accountant?
- Explain your familiarity with GAAP.
- Describe your experience in regulatory compliance.
- How do you ensure accuracy and transparency in an organization’s financial reporting?
- What do you think the economic climate will be in our industry over the next 24 months? How would you optimize our performance in that climate?
- What has been your role in communicating financial results to your CEO, board of directors, investors and external stakeholders? Give specific examples of how you handled “bad” news, and how that news affected the organization (share price, analyst projections, reputation).
- Over the past three years, where did your organization end in relation to your forecast, both revenue and expense? What were the effects on share price? How did your forecasts vary from actual results, and what caused the variations?
- How do you approach financial forecasting for an organization? Who initiates the process, what guidelines are given and how are the results shaped and integrated in your department?
- What role has data gathering and analysis played in your decision making and in shaping financial strategies? Have you used AI in your modeling? How was it incorporated and how did it affect accuracy?
- Describe your vision of a robust finance operation and how you implemented it in the recent past.
- In the past year, what have you done specifically to remain knowledgeable about our industry’s competitive environment, market and trade dynamics, products, services and technology trends, innovations and customer behavior?
- If you joined our organization, what specific actions would you take in the first month, and why?
- Give specific examples of how you have communicated — to peers inside the organization and to those outside — about your financial analyses. What specific techniques or processes do you use to inform and persuade your C-suite peers?
Partner for growth
- In your experience, how should sales, production, marketing and finance work together to optimize results for the organization?
- What pushback have you gotten when communicating unwelcome forecasts or results to your peers? How did you handle it?
- Describe a situation in which your analysis required you to question a strategy under discussion or underway in your organization. How did you handle the discussion with your CEO and other leaders? What was the outcome?
- Describe a situation in which you were able to support an unplanned opportunity championed by one of your peers. What did you do to free up resources? What was the outcome?
- Describe one or more situations in which you advocated or supported an undertaking that represented a large financial risk for your organization? What were the stakes? What led you to support it? What was the outcome?
Leadership and communication
High-level organizational leadership is a critical attribute for effective CFOs. These questions will help assess a candidate’s leadership style and potential.
- Can you describe how you interacted with your peers in the other parts of organizations you’ve been a part of? Did you have a formal or regularized way of discovering what their perceptions, ideas and needs were? What was that?
- What role does “likability” play in effective financial management?
- Tell us about your relationship-building skills and style with regard to:
- Your external customers
- Your financial team
- Your internal connections with senior management, support staff, IT etc.
- Describe your experience in managing the financial expectations of your CEO and other C-suite peers, directors, investors and external stakeholders.
- Was there a time when information generated by your finance department showed an imminent threat or an opportunity? Can you describe how you became aware and what information sources led you to your conclusions? How did you communicate that to the CEO and your peers?
- Can you give examples of situations where information gathered by finance turned up an opportunity or threat and you were able to create a strategy to overcome or exploit the situation? How did you gain acceptance for your solution among the organization’s leadership? What were the results?
- What has been your direct role in external communications? Can you give an example of a high-stakes communication situation, how you handled it, and what the results were?
- What was the most difficult personnel decision you’ve had to make? What made it difficult? How did you resolve the situation?
- Thinking about your own extended network, who do you currently know that would be interested in joining you in our company’s finance department right now? Would they be a fit? What would they bring to the table?
- How much feedback do you like to get from people you report to? Do you prefer written feedback or face-to-face?
Finally, a closing question can provide insight into how the candidate feels about the position and the company in general:
- Do you have any concerns at this stage of the interview process?
- Do you have any questions you’d like to ask me?
After the interview, fill out your scorecard and think about the following questions:
- Is this candidate better than, equal to, or worse than the person in the same job at our top three competitors?
- Is the amount of disruption this candidate will cause within the limits of the disruption the company can handle?
- How can I obtain verifiable proof that this candidate has actually performed in the ways they reported during the interview?
- Reviewing the scorecards filled out by the different people who interviewed the candidate, how consistent were the candidate’s answers and the interviewers’ reactions?
- Do the candidate’s values align with our company’s culture?
The answers to these last questions, along with the hiring criteria on a formal scorecard, will help you significantly improve your chances of making the right hire. A CFO influences your business strategy, your people and your organization’s viability, so it’s critical that your interviews identify the one outstanding leader who’s a fit for your business.