Why the CFO’s perspective is so valuable in the recruiting process

3 mins, 54 secs read time

What’s one thing that everyone who touches the hiring process can agree on? Bad hires are expensive. These costs might be associated with onboarding and training, lost productivity, disruption to daily operations or employee turnover and can lead to a myriad of budget cuts in an attempt to rectify savings.

However, there is an undervalued resource in many organizations that can help prevent this issue from the onset – the Chief Financial Officer (CFO).

With a unique blend of financial acumen and strategic insight, CFOs are well-equipped to optimize the hiring process for maximum efficiency and impact. Let’s delve into why their perspective is invaluable when it comes to building a top-notch team.

Bad hiring costs are sometimes difficult to quantify

Let’s start out by saying that modern talent acquisition (TA) teams are more than capable of using their strategic minds to optimize their hiring processes and assess where inefficiencies lie. However, today’s most successful TA leaders know that there’s power in collaboration.

As HR teams know, some costs associated with making a bad hire are more difficult to quantify, such as the time and effort it takes to find suitable replacement candidates and the cascading adverse impact on the morale, productivity and retention of the surrounding workforce. These costs can also be self-perpetuating if and when the employer brand attractiveness takes a hit, as top candidates might choose other employment options. The results can be devastating when employees critical to the success of the business begin to leave during major company events (such as re-orgs or M&As), causing important strategic initiatives to fail.

A CFO can help provide insight into all areas of the business to help bring color to the true costs so that they can be properly addressed.

Proactive holistic guidance to get ahead of challenges

When CFOs buy into hiring from the start, they can help hiring teams foresee challenges before they arise, rather than surfacing remedies after the fact or having to initiate a pause in hiring until appropriate changes are made. CFOs have the full picture of the business as a whole and can offer astute guidance on how to make the most informed decisions and maximize hiring ROI.

They should collaborate with HR to develop a big-picture plan for recruiting, hiring and post-hire employee-related investments that contribute to employee retention, such as Employee Lifetime Value (ELTV). Think of ELTV as a shared language between finance and TA leaders that’s defined as the net value an employee contributes over time, factoring in all costs and investments and all sources of value delivered. With a strong ELTV measurement and optimization plan in place, CFOs and HR leaders can work together to make hiring a true competitive advantage.

It’s a mistake when CFOs put limited analytical focus on talent decisions because organizations that sustain their HR focus maximize growth by retaining shining employees.
– Paul Todgham, Greenhouse CFO in Forbes

Data-driven decision making

In my years of experience in corporate HR and HR technology leadership roles, I’ve come to appreciate the unique perspective that CFOs bring to the table. Their data-driven approach ensures thorough analysis in people-related decisions, especially when quantifiable data is available. One everyday scenario where CFO involvement makes a massive difference is what I call the “Five typical resourcing options”: hiring a regular employee, procuring a contractor, upskilling an incumbent, arranging an internal transfer, or outsourcing a role. This common decision is an important one, but is sometimes made without adequate analysis simply because HR teams do not always have the full picture.

CFOs can advise on replacing headcount with third-party service providers or engaging staffing firms for hiring support. Their expertise helps shape service level agreements, success metrics and contract terms, ensuring optimal outcomes.

Optimizing benefits and rewards

When it comes to hiring and retaining top talent, CFOs play a crucial role in structuring benefits, rewards and total compensation packages, particularly for senior positions. Their insights are valuable for policy decisions around development programs, remote work options, competitive PTO and flexible work arrangements.

During periods of tight budgets, CFOs can also help organizations think outside the box to retain top performers. Their guidance enables HR departments to anticipate hiring needs, whether for strategic workforce planning or day-to-day operations.

Overall, the CFO’s perspective is vital in ensuring a successful hiring strategy. By leveraging their financial expertise, strategic mindset and big-picture planning, organizations can build strong, cost-effective teams poised for long-term success.

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