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When a public company’s Chief Financial Officer departs, it’s more than just a vacancy; it’s a critical moment that demands swift and decisive action. To get the inside scoop on navigating this complex situation, InterimExecs CEO Robert Jordan sat down with two seasoned finance veterans, Mitch Cohen and Lawrence Firestone. Both have extensive experience as permanent and interim CFOs for public companies.
Their insights offer a candid look at the challenges, the risks, and the imperative for immediate action when a public company CFO leaves.
You can read the transcript of Bob’s chat with Mitch and Larry here.
The Stark Differences: Public vs. Private, Interim vs. Permanent
Both Cohen and Firestone have had CFO gigs in private and in public companies. The challenges are very different — being accountable to a range of stakeholders from the board to Wall Street vs. being accountable to the owner.
But, Cohen says, executives considering a public company job have one distinct advantage going in: “You get a real good look at the company through their SEC filings.”
That’s important because it means he knows what he’s getting into before he starts a new interim gig. It allows him to be effective immediately in a job with “a lot more time sensitivity because of the very strict reporting deadlines” of Sarbanes-Oxley.
And then there is the difference between taking that job as a permanent hire and taking it as an interim. The pressure can ramp up significantly for interims, Larry Firestone says.
“When you drop in as an interim, you know, you could be replaced. They could be searching for another CFO at that point in time.” Yet, the mission remains the same: “Getting the house in order.”
The “Smoke Jumper” Skillset of Interim CFOs: Speed, Decisiveness, and Trust
Firestone refers to the interim CFO role as that of a “smoke jumper,” someone who parachutes in to tackle immediate crises
Choen agrees. “There’s very little time. So it takes a different type of skill set. I can identify problems real quick and move forward. There’s no politics involved. Just get the job done on the interim basis.”
Both experts emphasize the importance of building trust quickly. “There has to be an immediate chemistry where people just will trust that you’re going to do the right thing,” Firestone says. “Absent that, they shouldn’t hire you.”
The Urgency of Filling the Void: Why “Now” Matters
Leaving the CFO seat empty poses significant risks. “The CFO, interim or permanent, is a pillar for the company,” Firestone says. And, he notes, the second in command usually has an “inward-facing role.” They often lack the outward-facing experience and skills needed to communicate with Wall Street and investors.
“When it becomes an outward-facing role, talking to Wall Street bankers, analysts or investors, you’re in a sales role. You’re selling the future of the company. And that’s not innate to a lot of the financial people that populate the inner part of the engine,” Firestone says.
“If you have a good second-in-command, possibly you can get by,” Cohen says. “But I haven’t seen where it actually worked. Generally, that second-in-command doesn’t have the experience.”
What Boards Need to Know: Finding the Right Interim CFO
When hiring an interim CFO, boards should focus on experience and temperament. “I would want to vet some of the worst situations they’ve seen and what they’ve done about it,” Firestone says. He also stresses the importance of team behavior and a hands-on work style.
Cohen recommends that boards look for proven experience. Ask the interim candidate: “Have you done it before? How many times have you done it before? What early success did you have?”
The Pitfalls of Hasty Permanent Hires
Both experts cautioned against rushing to fill the permanent CFO role. “They should take their time,” Cohen says. “But don’t jump in and hire the next permanent CFO because you think it’s good for appearances. That’s never going to work out.”
Firestone agrees that a hasty permanent hire is a bad idea. But he also points out that how the board treats the interim CFO is important, too. “Don’t treat them like an interim. Treat them like part of the fabric and let them run.”
The Bottom Line: Experience and Trust are Paramount
The message from Cohen and Firestone is clear: Public companies need a strong, experienced CFO, and they need one now. The risks of leaving the seat empty are too great.
The best approach — better than turning to the second-in-command of your finance team or asking a board member to take on the role while you search for a new full-time CFO — is to prioritize finding the right interim CFO who can quickly assess the situation, build trust, and deliver results.
That gives boards the breathing room they need to find the right permanent hire, ensuring that person will be the right fit for the long term.
Read More:
- Complete Guide to Interim Management: What Boards Need to Know
- When it Comes to Sarbanes-Oxley Compliance: Will You Choose a Babysitter or a Change Agent?
- Interim Tackles Challenges When CEO and CFO Fired for Stealing From Public Company
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Are you in need of a new CFO to guide your company? Call or text us at +1-847-849-2800 for a confidential conversation about how we can help you find the right interim CFO who can be on site in as little as 48 hours.
