• CFO Secrets
  • Posts
  • šŸ¤« The Real CFO Secret: My ā€œMRIā€ Hiring Process

šŸ¤« The Real CFO Secret: My ā€œMRIā€ Hiring Process

And the 'magic' interview question

Header

A word
Leapfin

Is your month-end close process begging for automation? Check the signs šŸ‘‡

Are you:

āœ”ļø Juggling messy transaction data from Stripe, Shopify, Adyen, Apple, or Google Pay ā€“ and then struggling to get it all into NetSuite?

āœ”ļø Feeling pressure to close your books and provide revenue insights even faster?

āœ”ļø Relying heavily on consultants?

āœ”ļø Living daily Excel nightmares?

āœ”ļø Hitting growth mode or planning to go public?

āœ”ļø Drowning in new regulations or auditorsā€™ notes?

Yep, itā€™s time to automate that.

See why Leapfin is the chosen accounting automation solution for growing companies like Canva, Reddit, and SeatGeek. 

Working

Unprocessed

5 years ago I completely changed my hiring process.

My hit rate for hiring senior finance pros had always been ok. Maybe 30% knocked it out the park. 50% did well. 20% were dud hires.

Those 20% had absorbed a lot of energy. And boy, my life would be easier if more of the 50% were in the 30%.

Hiring is about the most important job of any senior leader. So just being ā€˜OKā€™ didnā€™t work for me.

I took feedback from candidates and recruiters Iā€™d worked with before on my recruitment process.

ā€œGimme it, warts and all!!ā€

Kinda like a 360, but focusing on my recruitment processes.

I was expecting to hear one big thing I was doing wrong. A silver bullet fix. That one thing that would transform my average results into something stellar.

And while there were plenty of useful tidbits in the feedback, there were no real themesā€¦

Then it hit me. My processes had all been fine. But they were all different. Hence, the different feedback.

My problem was consistency of process. The truth is, without consistency, I didnā€™t really have a process.

As a result, my hiring decisions relied on gut feel and intuition. Good leaders have great intuition, right?

Anyway, following this period of self-examination I got to work. I read a few books on hiring processes, shopping for best practice.

Within a few weeks, I had completely redesigned my process for hiring senior finance leaders. And vowed to use it consistently (refining if necessary), while being disciplined and consistent.

And I have been.

I have used that same process consistently, ever since, for hiring business unit CFOs, VPs of Finance, Senior controllers, etc. Even non-finance leaders.

In the five years or so since I made that change I have made 11 appointments using this process.

Of the 11ā€¦

  • Zero have been duds

  • Three have been good

  • Eight have been absolute stars

Not a huge sample size, but too big a shift to be a coincidence.

I have noticed that by being totally consistent with my process, there is a compound effect of one recruitment process into the next. Iā€™ve been able to compare and benchmark candidates between different processes. Improve the quality of my interview questions. Recruiters know what to expect from me, and are more consistent. Candidates too.

But most importantly, when I hire now, I do so with confidence I have the right person.

No need to hedge my bets.

Side hustle opportunity: finance advisors wanted

Are you a fractional CFO, or a finance professional interested in picking up part-time advisory work? We're launching a platform to help match you with SMBs looking for exceptional talent.

Deep Dive

This is a special edition on how I hire a CFO or other senior finance role.

The Real CFO Secret: My ā€œMRIā€ Hiring Process

In todayā€™s special edition, I share the Secret CFO Guide to hiring a CFO.

It borrows from lots of examples of best practices. But most notably from the book; ā€˜Whoā€™ by Geoff Smart and Randy Street.

Note, this process is designed for hiring senior roles. Itā€™s tailored specifically for leadership roles. It may be too heavy to use for more junior roles blow-by-blow. But it could be adapted easily enough to suit a hire at any level.

We are going to break the hiring process down into 11 sequential steps.

  1. Role Briefing

  2. Recruiter Selection and Briefing

  3. Shortlisting

  4. Chemistry Calls

  5. Narrow Down

  6. MRIs

  7. Stakeholder Interviews

  8. Selection

  9. Offer Management

  10. Due Diligence

  11. Confirmation & Safe Landing

1) Role Briefing

Most recruitment processes go wrong before they even start.

Terrible job specifications. Simple roll forwards of generic CFO responsibilities. All set against some blurb from HR on values/culture.

A good role brief needs to answer three questions:

  • Why does the role exist (mission)?

  • What 4-6 things will the role need to achieve over the next 3 years that will define its legacy (outcomes)?

  • What role specific skills and experiences are needed to be successful (competencies)?

Example:

Mission: Oversight of the accounting and finance functions, whilst transforming the business for an IPO in 2027.

Outcome:  Implement a new FP&A system by 2026, delivering long-range planning, budgeting, and in-year forecasting. Ensure this is a tool embedded in the business, understood and respected beyond the finance team.

Competence: Previous experience leading implementations of FP&A systems in venture-backed tech businesses.

You will need 4-6 outcomes and 5-7 competencies. Note, we do not include the routine or mundane. Any CFO who needs to be told to ā€˜close the books accurately on a monthly basisā€™ is no CFO. Focus on legacy-defining improvements.

Get it right, and you are on the path to hiring a CFO who specializes in the particular problem you want to solve. A far better answer than hedging your bets with a generalist.

Once you have your role brief right, you can engage a recruiterā€¦

2) Recruiter Selection and Briefing

The next job is to get your recruiter working ASAP. The next bit takes time, so getting them going as soon as you can is important.

Assuming you do not have an internal candidate, you should engage a recruiter. Even if you have a little black book of candidates, do you want the best CFO in your little book? Or do you want the best CFO for the job?

If you have a truly exceptional network, they may be one and the same. But for most people, they are not.

Also, recruiting is a ton of work. Work you probably donā€™t have time to do. Pay someone else to do it.

I have a small number of recruiters I trust to do a great job. Each has certain niches, regions, salary levels, sectors, etc. Pick the right recruiter for the job.

Note recruiter (singular), not recruiters (plural). Nearly every recruitment job Iā€™ve seen with multiple recruiters working on it is a sh*tshow.

Pick one you trust and let them do their thing. If you feel you need two recruiters for one job, it means neither of them are quite right.

Each of my select few recruiters has been recruiting for me for years (some nearly 20 years). They can assess a candidate vs. my personality type within 15 minutes.

This is priceless chemistry.

Once you have them selected. Brief them thoroughly, using what you prepared in 1. Then let them work.

3) Shortlisting

The next part of the process is for your recruiter to identify a shortlist of 5-7 qualified candidates.

This will mean researching hundreds of candidates. And interviewing dozens, taking recommendations, and getting ignored hundreds of times. This process takes time.

For a senior position, you should allow your recruiter 6ā€“8 weeks to produce a shortlist. They can do it fasterā€¦ if you want a sh*tlist.

This part of the process concludes with your recruiter presenting their shortlist of resumes.

4) Chemistry Calls

OK, you are now 2-3 months into your process. Itā€™s time to start meeting the shortlisted candidates.

At this stage, give each candidate a 30-minute Zoom or phone call. A superficial meeting designed for a quick ā€˜chemistry test.ā€™

For these calls, I use 4 different questions:

  1. Tell me your story in less than 2 minutes

  2. Why would you be the right person for this role?

  3. What part of the role would be most concerning to you?

  4. When you leave your current role, what will be your legacy?

This will not be enough to decide who you want to hire. But it will be enough to eliminate some people you definitely do not want to hire.

This stage is about elimination.

5) Narrow Down

Next up, you need a call with your recruiter to talk through your feedback on the shortlist.

You should have candidates in three piles:

  • Those you want to take through to the next round

  • Those you want to eliminate

  • Those you are not sure on

Your goal is to get your shortlist narrowed down to 2ā€“3 candidates (4 is ok occasionally, but should be rare).

After you narrow it down, the recruiter should ask the candidates to complete personality profiles. You will probably have your favorite. I use OPQ.

You may also want numerical and verbal reasoning tests done. But Iā€™ve found the further up the ladder you go, the less valuable they are.

With that done, you are ready for the most important part of the processā€¦

6) MRI

This part of the process is the biggest change Iā€™ve made to my process.

Smart and Street call it the ā€˜WHO Interviewā€™. I call it the ā€˜MRI.ā€™

Resumes and interviews tend to be a great summary of someone's experience. But with all the good bits embellished and the bad bits removed.

The MRI interview is how you cut through it.

It's a highly structured interview designed to capture a huge number of data points.

These interviews last 2.5-3 hours. Iā€™ve had some take more than 4. Itā€™s why you ideally want only 2 or 3 candidates at this stage.

Remember, an extra hour or two spent with a candidate could mean thousands of hours saved later.

There should be 5 parts to the interview:

  • Chronological walk-through of experience job by job (1.5-2 hours)

  • Competence questions (30 mins)

  • Career aspirations (15 mins)

  • Candidate questions (30 mins)

  • Feedback (15 mins)

Then, role by role (starting with the earliest) you should ask the following five questions (in order):

  1. What were you hired to do?

  2. What were your proudest achievements in the role?

  3. What were the low points in that job?

  4. The ā€˜magic questionā€™ (see below)

  5. Why did you leave that job?

Candidates should be encouraged to use numbers, especially for finance leadership roles. It always surprises me when candidates are caught off guard by this. A senior finance leader should be able to describe how sales, profit, and cashflow evolved over their tenure.

You repeat this, ideally for every job the candidate has had. But a minimum of the last five.

However, the rubber really meets the road with number 4 the ā€˜magic questionā€™ā€¦ and it goes like this:

ā€œWhat was your bossā€™s name? Can you spell that for me? When I speak to him/her about you and ask them to rate their experience with you out of 10, what will they say? And why?ā€

This question is like a truth serum. Note the language: ā€œwhenā€ I speak to them, not ā€œifā€. Spelling out the name.

With the phrasing of that question, you cut through the risk of bullsh*t immediately.

The WHO method calls this TORC - Threat of Reference Check.

Good answers to MRI questions will be:

  • Specific about detail, not generalist

  • Use ā€˜Iā€™ more than ā€˜Weā€™

  • Not bad mouth former colleagues

  • Focus on outcomes, not responsibilities

  • Specific about profit and cashflow numbers, and what they did to influence it

You should conduct the MRI interviews with a colleague (HR or someone whose judgment you trust). If only for them to make notes. Four eyes and ears are better than two.

The structured format can feel a little forced to start with. But candidates soon get the gist and will realize there is no place to hide. They are going to have to tell their story, warts and all.

And in doing so, you will learn so much more than you will with loose, floppy questions.

Once this section is over you can mop up with select competence questions. But often these will get covered on the journey of the job by job walk-through.

You should leave plenty of time for candidates to ask questions. You will learn a lot about them from their questions and will be a key part of their own DD.

Then finally, I like to give the candidate some on-the-spot feedback about how they did. And share your number one concern about them in this role. It gives them a chance to respond directly to those one or two things that are bugging you.

Itā€™s important that by the time you finish, you fully understand the person sitting in front of you. If you donā€™t have a crystal clear picture of who they are and what makes them tick, you havenā€™t got it right.

7) Stakeholder Interviews

This post assumes you are the person hiring i.e. a CFO hiring senior members of the team, or a CEO, Board, or investor hiring a CFO.

But even so, this role will have stakeholders. And you should select one or two of the key stakeholders to interview the candidates. This could be VPs of Finance, COO, board members, etc.

You musnā€™t discuss the results of the MRI with the people conducting those interviews.

You need independent feedback; unpolluted with your own judgment. Nearly every time these interviews pick up something Iā€™d missed, or confirm something I was unsure about.

8) Selection

Steps 6 & 7 serve as enormous data-gathering exercises. Now itā€™s time to make your mind up.

The WHO method recommended a rigid scoring system. Whereby you score each candidate against each component of the role brief.

I find this a useful exercise, normally grading with a +, =, or - system vs. the expectations of the role.

But I also find by this stage, you should be bringing your intuition back into play. You have collected a lot of data, so your gut feel has an opportunity to operate on the right foundation.

There is a particular profile I love for leadership roles.

I call it ā€˜promoting a specialistā€™.

Taking someone who is a perfect fit for the requirements of the role, and with plenty of potential, but they have only operated at a number 2 level before.

So while they now are moving up a shoe size, itā€™s still the same style shoe. Something familiar.

They will be eager to prove themselves at CFO level, and bring energy.. But by operating in a zone of technical comfort you know they can deliver. That is how you forge great new CFOs.

Recently, I heard Andrew Wilkinson describe a similar concept when hiring CEOs. He calls it ā€˜finding a number 2 with the right hammer.ā€™ Which is a much more elegant way of saying the same thing.

For a CFO that could look like thisā€¦

Letā€™s assume the main challenge for a particular CFO role is preparing the business for an IPO in 2 years time. Find a current VP of Finance who has led the business through IPO processes twice before. Give them their first number 1 job but with a familiar technical challenge.

Or if an ERP rollout is the key long term deliverable - hire a business unit CFO (or VP of finance) who has real hands-on experience leading ERP roll-outs. i.e. their ā€˜hammerā€™ is ERP roll-outs.

9) Offer Management

Now itā€™s up to the recruiter to do their thing and secure your candidate.

I have had candidates blow it during compensation negotiations. I have also blown it as a hiring manager at this stage.

If your recruiter has been doing their job, they will have been conditioning the candidates. They also would have been doing the same to you.

Everyone has their own style, but hereā€™s how I handle itā€¦

I make one generous, non-negotiable offer. Something that exceeds their expectation, without breaking your budget.

I donā€™t like negotiating compensation. It can get messy quickly. And I certainly donā€™t like underpaying people. They will be thinking about the next job before theyā€™ve even started with you.

That is why I go with one generous non-negotiable offer. If you have been working closely with a great recruiter, you will already know they are going to accept it before youā€™ve made the offer.

Get this right, and they will join ready to climb a mountain for you.

What about the other candidates, you might ask?

You MUST give them detailed, generous feedback. They invested in a process with you. And the MRI would have been an emotionally draining experience for them. The least you can do is give them a rich information set they can use to learn about themselves.

I frequently hear from unsuccessful candidates that they discovered something transformational from the MRI interviews. 

The recruiter will then tell that story to future candidates in future processes. In turn, those candidates will be more curious to work with you.

Remember I talked about the compound benefits of a consistent process?

Now you have your preferred candidate secured (ā€¦well almost). That offer you made was subject to reference checksā€¦

10) Due Diligence

And when we said ā€˜WHEN we talk to your bossā€™, we werenā€™t joking. You should speak to at least 2 or 3 of the former bosses discussed in the MRI.

You are looking for inconsistencies in feedback. You also need to test the numbers you heard.

You need to do this yourself (or someone you trust). By now, the recruiter will be able to smell their commission (and has probably already mentally spent it).

Likewise, a good candidate will want to do their due diligence on you and the business. Especially CFOs. They will want to know what they are picking up. That will mean:

  • Meeting board members

  • Meeting the auditors

  • Seeing most recent financial performance and forecasts

To be honest, if a CFO doesnā€™t ask for this, itā€™s a red flag.

Once due diligence is done, your offer has become unconditional. And you can start getting excited about working together.

11) Confirmation and Safe Landing

Your hiring job is not finished until they have completed 6+ months in the role.

If someone leaves a job in the first twelve months, they didnā€™t leave. They never even arrived.

Your hiring process failed, and you should be deeply upset about that.

You need to take personal ownership for making sure they are properly inducted. If you promised them the role was something it is not, youā€™ll find out fast. And that is on you, not them.

This all takes time. But it takes far less time than having to repeat the recruitment process. So, do it properly.

As I said, I have rigidly followed this process for the last five years and found it to be transformational.

Hereā€™s hoping it helps you crush it with your next senior finance hire.

Bottom
Bottom Line SCFO

  1. Once you find a great recruiter you work well with, donā€™t give them up. Friends for life.

  2. ā€˜Threat of Reference Checkā€™ TORC is the most powerful tool in any interview process.

  3. Get a consistent hiring process for finance leaders. Your ā€˜gut feelā€™ is probably not as brilliant as you think it is.

Office

Bacon from Evansville, IN asked:

Could the same principles/3 phases of the turnaround of a business be leveraged for turning around a struggling accounting/finance function?

Thanks for the question, Bacon.

As a reminder, the three phases of the turnaround are:

  1. CPR - reset the platform

  2. ICU - make changes

  3. Rehab - make the changes stick

Yes, I think you can apply the principles in a similar way. While the specific actions and dynamics will be different, the idea that you need to break the work into discrete phases is the same, I think.

The key thing with any performance improvement or turnaround is to start by creating a burning platform. Uncertainty and a healthy level of discomfort are the enemy of inertia. And a turnaround leader is great at cultivating that.

To get rapid change. you need to ā€˜declare a crisisā€™. If you donā€™t have a real crisis, then manufacture one. Itā€™s the best way to get people mobilized and accept that things need to change.

Good luck, sounds like youā€™ve got your work cut out!

If you would like to submit a question, please fill out this form.

Footnotes

Work with Secret CFO

And Finally

Next week, we begin a new series on allocating capital (like a boss).

If you enjoyed todayā€™s content, donā€™t forget to check out this weekā€™s sponsor Leapfin.

Stay crispy,

The Secret CFO

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe Iā€™m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.

Learn

Reply

or to participate.