The Questions Top CEOs Should Be Asking in the CFO Interview

06/07/2024 15:30:00 +0800
 Understand the crucial questions that CEOs should ask prospective CFO candidates to ensure that your next CFO hire will be the strategic partner you need to enable you to focus on what's important.
Utilise a detailed checklist designed to assess the strengths and areas for development of each CFO candidate, ensuring a thorough evaluation of their skills.
Gain insights into the personal and professional qualities that define a world-class CFO.

The CFO position plays a crucial role in the performance of a business. The hiring process in general can be fraught. Hiring a new CFO is so critically important to the overall performance of the business however that it can be a particularly daunting task.

The right candidate for this role must, as a first step, assure you that they have the technical knowledge to break down complex financial information into the kinds of insights that will inform the strategic planning process.

Yet a good CFO should not be consumed only with managing numbers and financial data.

They must be trustworthy, transparent and proactive enough to manage financial risks and regulatory challenges. However they cannot be too risk averse because they will need to step up alongside you and be the voice of reason and optimism at investor briefings during turbulent economic climates.

They must have enough attention to detail to be able to do their due diligence and ensure that their teams are complying with accounting best practices. Yet they have to have the ability to step back, look at the big picture and contribute to strategic initiatives.

They must be conservative enough to keep everyone out of jail yet innovative enough in their thinking to keep up with emerging technologies and AI powered financial systems.

Beyond that, they must possess the right blend of soft skills to build strong relationships within the finance department, across the broader business and with the board of directors. They need to have the leadership skills to successfully implement cost savings initiatives without alienating their cross-functional peers.

How to hire a great CFO

Hiring a great Chief Financial Officer (CFO) begins with asking good questions.

For CEOs on the lookout for a second-in-command who can not only follow but lead, knowing the right questions to ask in a CFO interview can be the difference between hiring a capable financial manager and securing a transformative leader.

Below, I outline 9 CFO interview questions that CEOs should pose to potential CFO candidates to help them determine whether the candidate is capable of more than just financial analysis and reporting.
The following questions are designed not to simply test knowledge of financial mechanics but to unearth a candidate's ability to integrate robust financial strategies with broader business objectives. From gauging their role in company culture to assessing the strength of their problem-solving skills, each question is designed to reveal facets of the candidate's expertise and their potential to drive the company forward.

Whether you're in the midst of hiring or planning for future leadership needs, understanding these key questions will prepare you to make a discerning choice, ensuring your next CFO is not just competent but world-class.

Question 1: "How have you aligned financial strategies with broader business goals in your past roles?"
Why ask this question: Asking this question digs into the candidate's ability to not only devise but also execute financial strategies that complement and enhance the overarching business objectives. It provides insight into the CFO's strategic integration skills - how they map financial management to the pulse of business activities and future goals. This question is fundamental for CEOs who need a CFO that can transcend traditional financial roles and act as a co-pilot in steering the company towards its strategic targets.
What to expect from a good response: A strong candidate will describe specific instances where their financial planning directly supported and drove key business initiatives, perhaps detailing how they aligned budget allocations with company priorities or how their financial forecasts enabled proactive business decisions. Look for responses that include a blend of tactical financial management, accounting best practices and strategic business thinking. A proficient CFO should demonstrate a clear understanding of how their financial strategy not only safeguarded the company's assets but also catalysed growth and innovation.
Red Flags to watch out for: Be wary of candidates who struggle to provide concrete examples or who depict a more siloed approach to finance, disconnected from the broader business strategy. Responses that focus solely on cost-cutting measures without addressing growth or adaptation in dynamic markets might indicate a lack of strategic depth. Also, a red flag would be a candidate who does not mention collaboration with other departments, as this is crucial for aligning financial strategies with company-wide goals.
Question 2: "Can you describe a time in a recent role when you had to champion a difficult financial decision to the board or investors?"
Why ask this question: This inquiry is crucial as it tests the candidate's ability to navigate complex stakeholder relationships and advocate for tough financial decisions that may not be immediately popular. It highlights their persuasive skills, resilience, and strategic thinking. For a CEO, understanding how a CFO handles these challenging scenarios is essential since these situations are often pivotal moments that can significantly impact the company's direction and financial health.

What to expect from a good response: A commendable response will detail a specific scenario where the candidate successfully convinced the board or investors to take a difficult but necessary financial path. Where they sold the initiative as a tough but necessary and responsible decision. The key here is to listen for the rationale they provided, the strategy employed to gain buy-in, and the communication tactics used to ensure transparency and understanding. A capable CFO will demonstrate how their decision was grounded in thorough analysis and aligned with long-term company goals, reflecting their leadership and strategic foresight.

Red Flags to watch out for: Watch out for candidates who show signs of hesitancy in taking ownership of their decisions or who lack clarity in their communication about complex financial issues. If a candidate speaks about bypassing concerns of board members or investors without attempting to engage them in meaningful dialogue, this could be a significant concern, indicating potential issues with stakeholder management and poor conflict resolution skills. Additionally, a lack of concrete outcomes or learning points from the experience suggests a shortfall in reflective capacity and strategic impact.
Question 3: "What role do you believe a CFO should play in shaping company culture?"

Why ask this question: This question is pivotal as it reveals the CFO's perspective on their role beyond the fiscal responsibilities. The interview process is the perfect place to put the spotlight on the CFO's likely approach to finance team management and their leadership style. It explores their understanding of the impact financial leadership has on company culture and their potential contribution to a positive work environment. For CEOs, knowing how a CFO views and intends to influence company culture is critical. A CFO who actively participates in cultural development is likely to drive more holistic and sustainable business success.

What to expect from a good response: A strong response will illustrate the CFO's proactive approaches to influencing company culture through ethical financial practices, transparency, and strategic investment in people and projects that align with the company's values. Expect to hear how they have previously fostered a culture of accountability, integrity, and innovation within their teams. The best candidates will also discuss how they align financial goals with employee well-being and corporate social responsibility, demonstrating an understanding of the symbiotic relationship between a healthy company culture and robust financial performance.

Red Flags to watch out for: A red flag in this context would be a candidate who has little to say about company culture or sees it as outside the scope of their role. If they focus solely on how they interacted with their direct reports, this may indicate that they had limited influence across the broader organisation or that they operate in silos and would not make a good fit for your organisation. Be cautious of responses that focus solely on financial metrics without acknowledging the human elements of the company. Additionally, disregard for the importance of ethical practices or a lack of examples where they have actively contributed to positive cultural initiatives should also be considered warning signs.

Question 4: "In your last role, how did you approach risk management, particularly in new or uncertain environments?"

Why ask this question: This question is crucial to understanding how the potential new hire manages the delicate balance between risk and innovation; a balance that is particularly vital in industries facing rapid technological changes or market volatility. It sheds light on their risk assessment methodologies, resilience, and adaptability to unforeseen challenges. For a CEO, identifying a CFO who can navigate these complexities while still driving innovation is key to sustaining competitive advantage and achieving long-term success.

What to expect from a good response: Look for a response that demonstrates a strategic and structured approach to risk management, incorporating both quantitative and qualitative assessments. A proficient CFO will discuss how they identify potential risks, evaluate their impacts, and develop mitigation strategies that align with the company's appetite for risk and innovation goals. They might also mention the use of advanced analytics, scenario planning, and continuous monitoring to stay ahead of potential financial threats. Importantly, the ideal candidate will illustrate their flexibility in adapting strategies as external conditions change and new information emerges. Lastly, they'll appreciate the importance of not allowing bureaucracy to discourage innovative thinking.

Red Flags to watch out for: Be cautious of candidates who seem to lack a systematic approach to risk management or those who focus too heavily on either minimising risk or pushing innovation without a balanced perspective. A candidate who fails to mention team involvement or cross-departmental collaboration in their risk management practices may also be a concern, as effective risk management often requires broad organisational engagement. Additionally, a disregard for learning from past mistakes or an absence of forward-thinking in their risk strategies should raise doubts about their suitability for a dynamic leadership role.

Question 5:"In your current role, what financial metrics do you prioritise in evaluating the company's health, and how do you balance these with non-financial metrics?"
Why ask this question: This question is essential as it dives into how the candidate's experience has influenced how they evaluate and balance the various aspects of business health. You want a CFO who views the overall business not just through traditional financial lenses but who also incorporates broader, strategic metrics in their assessments. Understanding which financial and non-financial metrics a CFO prioritises provides insight into their holistic view of the organisation and their ability to foster a balanced approach to corporate success. It reveals their depth of understanding in aligning financial performance with other key performance indicators like customer satisfaction, employee engagement, and environmental impact.
What to expect from a good response: A compelling response should clearly articulate specific financial metrics such as cash flow, profit margins, and ROI, alongside non-financial metrics like customer loyalty rates, employee turnover, and sustainability measures. The candidate should demonstrate how these metrics are integrated into a comprehensive dashboard to track and measure overall organisational health. Effective CFOs will also discuss how these metrics influence strategic decision-making and facilitate evidence-based operational adjustments, ensuring they foster long-term sustainability and value creation.
Red Flags to watch out for: A major red flag would be a candidate who focuses solely on financial metrics without recognising the importance of non-financial metrics in assessing the company's overall health and sustainability. Also, be wary of candidates who lack clarity in explaining how they use these metrics to drive business decisions or those who do not have a systematic approach to regularly reviewing and adjusting these metrics. Another concerning sign is the absence of any mention of adapting metrics to align with evolving business goals or market conditions, which could indicate a lack of strategic flexibility.
Question 6: "Describe a financial strategy you implemented that failed. What did you learn, and how did you adapt?"
Why ask this question: This question is critical because it touches on the candidate's ability to handle failure and learn from it, an indispensable trait for any leader. It explores the CFO's capacity for self-assessment, accountability, and resilience, providing insights into their problem-solving and adaptive strategies in the face of setbacks. This question also offers a glimpse into their risk management prowess and their commitment to continuous improvement; a vital aspect of driving a company towards long-term growth.
What to expect from a good response: An effective response will candidly discuss a specific financial strategy that did not pan out as planned, including the context and reasons behind its failure. The candidate should articulate what lessons were learned from the experience and how these insights shaped subsequent strategies. Look for detailed descriptions of adjustments made to avoid similar issues in the future, which might include enhancing analytical methods, revising risk assessments, or improving communication and collaboration across departments. The response should demonstrate a reflective approach and an openness to learning, underscoring the candidate's maturity and strategic depth.
Red Flags to watch out for: Red flags in this response would include a reluctance to admit failure or a tendency to place blame on external factors or other team members without acknowledging personal responsibility. Additionally, a lack of clear learning outcomes or specific examples of how they adapted their approach post-failure indicates a potential inability to evolve from experiences. Also, watch out for overly vague responses that fail to provide concrete details, as they may signify a lack of genuine insight or strategic thinking. Lastly, any candidate that has never experienced a failure in financial management is either so conservative that you have to wonder whether they'll keep pace with the rate of technological change coming our way, or they're lying.
Question 7: "How would you ensure transparency and maintain investor confidence during economic downturns?"
Why ask this question: This question is vital because it probes into how a CFO communicates and manages relationships with investors under stress, which is critical during economic downturns. It tests the CFO's ability to maintain trust and confidence through transparent and effective communication strategies. This ability to keep stakeholders informed and engaged, even when the news is not positive, is crucial for sustaining long-term relationships and ensuring financial stability. This question also reveals the candidate's understanding of the broader impact of their role and their strategic approach to crisis management.
What to expect from a good response: A robust response should outline a clear and proactive communication strategy that includes regular updates to investors about the company's status and the steps being taken to mitigate negative impacts. Look for mentions of using comprehensive, data-driven insights to support communications and decisions, ensuring that investors understand the rationale behind each move. A skilled CFO will also discuss how they leverage technology to maintain open lines of communication and provide real-time updates to keep the investment community informed and engaged.
Red Flags to watch out for: Red flags include a lack of specific strategies for enhancing transparency or a general approach to communication that does not adjust based on circumstances. Be cautious of candidates who underestimate the importance of maintaining investor relationships during downturns or those who lack a clear plan to manage communications during crises. Additionally, failure to mention the use of data to support communications or a non-strategic approach to investor relations could signal a deficiency in both communication skills and strategic thinking.
Question 8: "In what ways have you leveraged technology to improve financial operations?"
Why ask this question: This question delves into the CFO's ability to integrate and harness technological advancements to enhance financial operations and overall business efficiency. It's crucial for identifying how the candidate stays current with tech trends and applies innovative solutions to streamline processes, reduce costs, and improve accuracy in financial reporting. A CFO who effectively leverages technology can provide a significant competitive edge, ensuring the company not only keeps pace with industry standards but sets new benchmarks.
What to expect from a good response: Expect to hear detailed examples of how the candidate has implemented technology such as ERP systems, AI, and data analytics tools to optimise financial processes. The response should illustrate a clear understanding of the specific technologies adopted, the challenges faced during implementation, and the measurable benefits achieved, such as enhanced data accuracy, faster processing times, or improved compliance and risk management. A good response will also reflect an ongoing commitment to technological advancement as a core element of financial strategy.
Red Flags to watch out for: Be cautious of candidates who provide vague or outdated examples of technology use. A lack of specific technological solutions or a minimal impact on financial operations from these tools are red flags that the candidate may not be adept at using technology to its fullest potential. Also, watch for a candidate who seems resistant to new technologies or lacks enthusiasm about the possibilities technology can offer, as this could indicate a reluctance to innovate or adapt, which is crucial in today's fast-evolving business environments.
Question 9: "What's your vision for the evolution of the CFO role in the next 5 years?"
Why ask this question: This forward-looking question is crucial as it examines the candidate's ability to anticipate and prepare for future changes in the business landscape and the evolving role of a CFO. It helps gauge whether the CFO is not just a steward of financial integrity but also a leader who can adapt as the business model evolves alongside upcoming technological advancements. Understanding their vision is vital for assessing alignment with the company's long-term goals and their potential to drive innovative financial leadership.
What to expect from a good response: A thoughtful response will encompass the candidate's insights into significant trends affecting the financial sector, such as digital transformation, data-driven decision-making, and increased focus on sustainability and corporate responsibility. They should articulate how they see these trends influencing the CFO role, discussing specific skills and strategies that will become essential, such as proficiency in predictive analytics, expertise in global economic conditions, and a strong emphasis on ethical leadership. A visionary CFO will also mention fostering inter-departmental collaborations and enhancing stakeholder engagement as key components of their evolving role.
Red Flags to watch out for: A red flag would be a candidate who shows little awareness of current trends or lacks a clear, articulate vision for the future role of CFOs. Also, be wary of overly generic or non-strategic answers that fail to connect with broader business objectives or fail to mention adapting to technological advancements and changing regulatory environments. Another concerning sign would be overlooking the importance of sustainability and social responsibility, which are increasingly critical in today's corporate world.
How to use the CFO Skills Checklist
Choosing the right Chief Financial Officer is more than a matter of reviewing resumes and conducting interviews; it requires a strategic evaluation of each candidate's potential to not only manage the company's finances but also to contribute to its broader strategic goals. To aid in this critical decision-making process, we have developed a comprehensive CFO Skills Checklist. This tool is designed to help CEOs systematically assess the core competencies and developmental needs of each candidate based on their responses during the interview process.

The checklist serves several vital functions. Firstly, it provides a visual representation of each candidate's strengths and areas where further growth is needed, allowing for an at-a-glance comparison between potential hires. Secondly, it helps ensure that all relevant skills are evaluated uniformly across all candidates, reducing bias and focusing on the specifics of what each individual brings to the table. By marking each skill as a strength or a development area, you can gauge not only the current capability of the candidate but also their potential for growth and adaptation in alignment with the company's evolving needs.

Utilising this checklist, CEOs can identify candidates who not only excel in financial acumen but also embody leadership qualities and strategic insight necessary for the CFO role. This thorough evaluation supports a more informed and strategic hiring decision, ensuring the selected CFO can fully support the CEO in driving the company forward.
CFO Skills Checklist
Choosing the right CFO is crucial, as their role extends far beyond managing numbers; it encompasses shaping the strategic direction and cultural tone of your organisation.

Modern CFOs are invaluable strategic partners who work shoulder to shoulder with CEOs. The ideal CFO brings a blend of robust financial expertise, strategic foresight, and ethical leadership, playing a crucial role in not just safeguarding the company's assets but in shaping its future.
A strong partnership between CFO and CEO enables the CEO to step up and into the big impactful work that has outsized impact on a company's performance such as shaping culture and driving product innovation.

Therefore, selecting the right CFO is not just a hiring decision; it is an essential step towards building a lasting legacy.
Hiring a new CFO or upskilling an existing one?
Speak to Alena Bennett about how she can help take
your candidate from good to world-class.

Author: Alena Bennett

Alena works with leaders and their teams to connect technical and leadership skills so they can deliver to deadline without killing their people.
She is a mentor, trainer, facilitator and coach. Contact her today on [email protected].
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